Research has shown that the expansion of legalized sports gambling in the United States has had a negative impact on the financial well-being of American households. Studies have found that in states where gambling was legalized, savings were reduced, investments in assets like stocks decreased, and aggregate credit scores dropped while bankruptcies increased. However, despite these negative consequences for individuals, states have benefited financially from the tax revenues generated by sports betting. In New York, for example, tax revenues from sports wagering have exceeded $2 billion over the past three years, with much of the money going toward education.
Online sports betting is legal in 30 states plus the District of Columbia and Puerto Rico, with total monthly wagers estimated to have increased from $1.1 billion per month in 2019 to $14 billion in January 2024. While this has created significant revenue for states, it has also come at a cost for individual households. Studies have shown that legalization has led to higher credit card balances, reduced access to credit, and a decrease in longer-term and higher-yield investments. Financially constrained households have been particularly affected, with increased credit card debt and a rise in lottery play.
Research has also found that states that legalized sports gambling saw a decrease in credit scores, an increase in bankruptcies, and a rise in debt transferred to debt collectors. Auto loan delinquencies and use of debt consolidation loans also increased in these states. These negative financial impacts have led some lawmakers to take notice and consider measures to address problem gambling. In New Jersey, for example, a bill has been introduced to create a gambling treatment diversion court to help individuals with gambling disorders.
Despite the negative consequences associated with sports gambling, states continue to see it as a lucrative source of revenue. Many states are introducing legislation to further capitalize on the growth in gambling, whether through increasing tax rates or exploring new funding opportunities. The industry is expected to continue to grow, although the rate of growth may slow until major states like California and Texas decide to legalize sports betting. Gambling platforms are also taking steps to address problem gambling, with the establishment of the Responsible Online Gaming Association to fund research, education, and awareness campaigns.
While efforts are being made to address the negative impacts of sports gambling, there are concerns that the financial well-being of many households continues to be at risk. The industry’s focus on growth and profit, driven by shareholder expectations from publicly traded companies, may limit efforts to restrict gambling activities. As the debate over the social and financial implications of sports gambling continues, it is clear that a balance must be struck between the economic benefits for states and the potential harm to individual households.
