As sports betting booms across the U.S., new studies highlight alarming links between its growth and rising financial hardships for consumers, from ballooning credit card debt to declining savings.
A Rapidly Expanding Industry
The sports betting landscape has seen explosive growth in recent years, particularly after a 2018 Supreme Court ruling legalized sports gambling in states across the U.S. In 2023, Americans placed a staggering $121 billion in bets, signaling a sharp rise in consumer engagement with the market. By October 2024, New Hampshire, an early adopter of legalized betting, saw $69.5 million in wagers, a 33% increase over four years. The state’s take from gambling revenue has soared, contributing millions to its Education Trust Fund.
However, while the financial gains are undeniable, they come with hidden costs for consumers. Experts are increasingly sounding the alarm on the risks of sports betting, particularly for those whose financial stability is already fragile. The convenience of mobile apps has made betting more accessible, but it also increases the risks, especially when it comes to problem gambling.
Gambling and Financial Instability: A Dangerous Link
Academic studies published this year are shedding light on the troubling financial consequences of legalized sports betting. One particularly concerning study, conducted by researchers at UCLA and USC, analyzed the credit data of over 4 million consumers. The findings were stark: as sports betting grew, so did the rates of financial strain, particularly in the form of lower credit scores and rising bankruptcy filings.
“This data ultimately suggests that gambling legalization does harm consumer financial health,” the study concluded.
Another analysis from Southern Methodist University revealed that states introducing online casinos alongside sports betting saw an increase in problem gambling rates. This suggests that the more accessible gambling becomes, the greater the likelihood of individuals struggling to control their betting habits.
Even more concerning, a third study examining 230,000 households across 26 states found that legalized sports betting disproportionately impacts lower-income families. The research highlighted that these households are diverting funds away from savings and investments, with net investments dropping by 14% in states where sports betting is legalized.
In an interview, Justin Balthrop, a co-author of this study, explained the long-term risks: “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.” The shift in spending from savings to gambling could have long-lasting repercussions, especially for families already living paycheck to paycheck.
Consumer Education and the Role of Transparency
The growing body of research underscores the need for better consumer education and transparency in the sports betting industry. The complexity of odds and the risks associated with betting are often downplayed, leaving bettors with little understanding of the potential financial consequences.
Balthrop urges a shift in perspective for bettors: “Pretend that the hundred bucks you’re bringing to the casino is an entry fee. Maybe you get to leave with some of it, but you need to mentally know that money’s gone.” His advice encourages bettors to treat gambling as a form of entertainment, not an investment strategy—a sentiment that highlights the need for more honest and clear communication from the industry.
State and Federal Responses to Growing Concerns
As the evidence mounts, several states have begun to tighten their regulations around sports betting. New Jersey, for example, has proposed a ban on prop bets involving college athletes, a move that follows the lead of 13 other states with similar restrictions.
On the federal level, lawmakers, particularly Senate Democrats, are pushing for national standards to address the growing issue of gambling’s financial toll. Proposed bills would limit advertising during live sporting events, ban certain betting practices, and place daily deposit caps on sports betting accounts to curb excessive gambling. Sen. Richard Blumenthal (D-Conn.), a vocal advocate for these reforms, criticized current state regulations as “faint-hearted and half-baked,” calling for a more coordinated approach to better control the rapidly expanding industry.
While some argue that stricter regulations are necessary, others, including industry groups like the American Gaming Association (AGA), push back against claims that legalized sports betting is wreaking havoc on consumer finances. The AGA defends the industry, pointing out that legalized sports betting helps reduce the influence of illegal markets and provides funding for problem gambling programs. Joe Maloney, senior vice president of the AGA, acknowledged that more research is needed but remained skeptical of the studies linking gambling to widespread financial harm.
Despite the pushback, growing concern over the negative financial effects of sports betting is prompting lawmakers and researchers alike to scrutinize the industry more closely.
