As sports betting continues to gain momentum across the United States, new studies reveal troubling links between the expanding industry and financial difficulties for consumers. While states like New Hampshire celebrate the revenue generated by legalized sports gambling, researchers warn of potential consequences, including rising credit card debt, declining savings, and falling consumer credit scores.
With mobile apps making betting more accessible, the risks of problem gambling grow. According to the National Council on Problem Gambling, the rate of gambling issues among sports bettors is at least twice that of other gamblers.
In 2023 alone, Americans wagered over $121 billion on sports, according to the American Gaming Association. The surge follows a 2018 Supreme Court decision allowing states to legalize sports betting, now operational in 39 states and the District of Columbia.
New Hampshire, an early adopter in 2019, illustrates the rapid growth. By October 2024, residents placed $69.5 million in bets, a 33% increase from October 2020. The state’s revenue share climbed to $2.4 million, supporting its Education Trust Fund.
However, as revenues soar, research highlights significant concerns about consumer well-being in states where sports betting is legalized.
Research Highlights Financial Risks of Sports Betting
Several academic studies published in 2024 have underscored the financial risks associated with legal sports betting. An August working paper by researchers from UCLA and USC linked online sports betting to lower credit scores and higher bankruptcy rates. Analyzing data from over 4 million consumers, the paper concluded, “Our results ultimately suggest that gambling legalization does harm consumer financial health.”
Another study from Southern Methodist University observed a rise in problem gambling when states introduced online casinos alongside sports betting. A third paper, drawing on data from 230,000 households across 26 states, found that legalized sports betting disproportionately affected lower-income households, reducing net investments by 14% as funds were diverted from savings and investments to gambling.
Justin Balthrop, a co-author of the study, noted that the shift from savings to gambling could have long-term consequences. “What’s happening is they’re pulling money from what I think we would argue are more long-term productive uses of their funds to do this instead.” he said.
The findings emphasize the need for consumer education and transparency about the odds and risks involved in betting. Balthrop warned bettors to treat their wagers as entertainment expenses rather than investments: “Pretend that the hundred bucks you’re bringing to the casino is an entry fee, and maybe you get to leave with some of it, but you need to mentally know that money’s gone.”
States and Lawmakers Respond
In response to these concerns, some states are tightening regulations. In New Jersey, lawmakers have proposed a ban on prop bets involving college athletes, joining 13 other states with similar restrictions. At the federal level, congressional Democrats have introduced legislation to establish national standards for sports betting. Proposals include banning advertising during live sporting events and limiting deposits to five per day.
“State regulation is faint-hearted and half-baked,” said Sen. Richard Blumenthal, D-Conn. “That’s why we need a national standard – not to ban gambling, but simply to take back control over an industry that is out of bounds.”
However, the American Gaming Association defends the industry, arguing that legal sports betting reduces reliance on illegal markets while funding problem gambling programs. Joe Maloney, the group’s senior vice president of strategic communications, acknowledged the need for further research but questioned claims linking sports betting to widespread financial harm.
A study by Timothy Bersak of Wofford College echoed this sentiment, finding no significant correlation between legalized sports betting and adverse mental or financial health outcomes among most participants. Bersak noted that while a subset of individuals may face harm, many enjoy sports betting without experiencing negative effects.
Source:
“Growth of sports betting may be linked to financial woes, new studies find”, newhampshirebulletin.com, December 6, 2024.
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