New Study Explores Online Sports Betting Impact on Household Finances

A recently published study has assessed online sports betting‘s impact on households’ finances in the US. Following the Supreme Court’s decision to overturn a federal law prohibiting sports wagering, the industry has substantially expanded, leading to an inevitable shift in how families manage their investments, spending, and debt.

As researchers have pointed out, the growth of the sports betting industry was fast-paced, “generating over $120 billion in total bets and $11 billion in revenues in 2023 alone.” While this surge has brought about considerable state revenue from gambling taxes, it has also disadvantaged gamblers and their families.

Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households, authored by scholars from Northwestern University, the University of Kansas, and Brigham Young University, has utilized household-level transaction data, “spanning a large population of US consumers” and denoting “sharp increases in sports betting following legalization.” More specifically, a total of 230,171 households’ finance data was used spanning a period from 2010 to 2023.

Researchers have concluded that expanded access to land-based and online sports betting facilities “exacerbates financial difficulties faced by constrained households.” Following the legalization of betting, net investments were reduced by nearly 14%. As evidenced by the study data, sports betting spending was at the expense of consumers’ long-term financials.

Of all households that have placed online bets, or 7.7%, the average spend was $280 per quarter and over $1,100 per year. It is worth pointing out that the share of income that low-savings households spent on betting was approximately 32% higher than the share spent by high-savings households.

Study Authors Suggest that the Full Financial Impact of Sports Betting Is Yet to Be Assessed

Scott Ross Baker, an Associate Professor of Finance at the Kellogg School of Management and the study’s lead author, explained that researchers were primarily interested in the source of funds that consumers utilized to bet on sports.

Instead of displacing funds from other gambling activities, forms of recreation, or consumption, the increased sports betting has negatively impacted households’ savings allocations, a consequence, particularly prominent in low-income populations. As a result, they have become overburdened by credit card debt and increased overdraft frequency.

“The reduced payments towards credit card bills, coupled with rising debt levels, indicated that these households are not merely shifting funds from one type of entertainment to another but are instead becoming more indebted to fund an addictive losing proposition.”

The Finance Professor has further noted that the full financial impact of sports betting is yet to be assessed as spending in states that have legalized the activity is still on the rise.

Overall, the study’s findings align with similar academic papers, indicating the adverse impacts of legal sports betting on lower-income populations.