The Cost of Legalized Sports Betting on American Households

• New studies show that Americans are withdrawing from their investment portfolios to have more liquid funds for sports betting.

NEW YORK – Over the past few years, the expansion of legalized sports betting across the United States has painted a stark picture of its financial impact on American households.

While the industry has generated substantial sports betting revenues for states, studies reveal a troubling downside: significant financial strain on bettors.

In states where sports betting is legal, households have seen reduced savings, lower investments, and deteriorating credit scores. One study led by Scott Baker, an associate professor at Northwestern University, found that the introduction of sports betting correlated with increased credit card debt and lower participation in sound financial practices.

“This is a money-losing proposition for most of these individuals,” said Baker to Fortune. “On average, this is representing a drain to people’s finances.”

Another study by Brett Hollenbeck of UCLA reported a 28% increase in bankruptcies and a rise in auto loan delinquencies in states that legalized sports gambling.

These financial strains are not just isolated incidents, as this behavior is becoming increasingly common, with many Americans diverting funds from savings and investments to sustain their sports betting.

“It’s not just moving entertainment dollars from one company to another,” said Baker. “Rather, they’re drawing from sources of their household budget that policymakers are trying to increase… We’re seeing that this gambling plus increases in consumption are both detracting from some of the longer run equity investments—or positive, easy, risky investments that people have been making—and tend to put more pressure and strain on their budgets in general.”

The broader impact on society is also becoming clear. In states like New Jersey and New York, while the government rakes in millions from sports betting taxes, the increase in problem gambling is evident. And in Connecticut, half of sports bets are made by problem gamblers. With this, reports of gambling-related calls to addiction services have surged, and the rise in bankruptcy and debt consolidation cases is alarming.

Tax Revenue Comes From Losing Bettors

Despite these concerns, the legal sports betting industry continues to grow. The ease of access through mobile sportsbook apps and aggressive marketing tactics lure more people into the betting world. While platforms like DraftKings and FanDuel have made commitments to responsible gaming, their primary focus remains on growth and profit, driven by the demands of shareholders.

Experts warn that without stricter regulations, the situation could worsen. As Michelle Malkin, a criminology professor at ECU, points out, gambling disorders can lead to devastating consequences, including the loss of homes and financial security.

“We can’t be winning everything off the backs of the people who are suffering most,” she said.

While legalized sports betting has brought in substantial revenue for states, the financial and social costs on American households are significant. As the industry continues to expand, it is crucial to balance the economic benefits with measures to protect consumers from the potential pitfalls of gambling addiction.

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