Credit scores drop, bad debt increases and more people go bankrupt when states legalize online sports betting, a recent study shows.
The UCLA and Harvard-based, titled “The Financial Consequences of Legalized Sports Gambling,” quantified the effects of legalized sports betting on the financial health of nearly five million people living in 33 states which licensed in-person sports betting between 2018 and June 2023.
Researchers compared the impacts of in-person sports betting to those of online sports betting, which 19 of the 33 states adopted during the study period.
The results are shocking. While retail sports betting correlated with a small decrease in the average credit score — less than a point — and an 8% increase in the default rate on auto loan payments, the introduction of sports betting coincided with:
A more than 12-point drop in the average credit score.
A 25% increase in the delinquency rate on auto loan payments.
A 27% increase in the delinquency rate on credit card payments.
A 9% increase in the average amount of money in collections.
Researchers determined the increase in average amount in collections was not due to the same or fewer individuals owing larger amounts, but because more people owed money than before the introduction of online sports betting.
This finding dovetails with anecdotal evidence suggesting online sports betting does not keep existing gamblers from betting on the black market, as the gambling industry claims, but entices people who may never have otherwise gambled to start doing so.
Perhaps most disturbingly, researchers found the introduction of sports betting increased a person’s likelihood of filing for bankruptcy by about 25%.
“The rise in bankruptcy rates translates to one more bankruptcy per 10,000 financially active consumers, or roughly 30,000 more personal bankruptcies in the U.S. per year,” the paper explains.
These harms would be jaw-dropping if they truly impacted an entire state’s population equally. But they don’t.
The negative financial effects of introducing online sports betting hit people with credit scores below 600 points the hardest, followed by people with credit scores between 601 and 780 points.
“Overall, these results suggest that the adverse effects of online sport gambling implementation on financial health are primarily concentrated among the financially less secure,” the study reads.
Perhaps most importantly, researcher repeatedly emphasized that, because most of the financial data didn’t come from people with gambling addictions, the impact of sports betting on the “gambling population” is far greater.
This ominous fact correlates with what we know of the gambling industry, which makes a large portion of its money off people who are addicted to gambling. In fiscal year 2019, the sportsbook PointsBet made 70% of its profits off bets from just 0.5% of its customers, according to The Wall Street Journal.
National Director of Stop Predatory Gambling Les Bernal once told the Daily Citizen:
The financial harms exhibited in this paper are just one example of Bernal’s point — you pay even if you don’t play.
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