After states legalize sports betting, Americans see financial strain, studies show : NPR

Online sports betting is more popular than ever, with Americans expected to legally wager billions of dollars on this year’s March Madness basketball tournament. But a growing body of evidence shows that the boom in sports betting is causing financial stress for bettors.

A recent report from the New York Federal Reserve found that sports betting was linked to a decline in credit in more than 30 US states where the activity was legal, as well as in neighboring counties where it was not.

Credit delinquency rates, primarily due to missed payments on credit cards and auto loans, increased by about 0.3% overall in states where sports betting is legal, despite legal sports bettors making up only 3% of the population. But, considering only 3% of the population took up sports betting after their state legalized it, credit delinquency among gamblers increased by more than 10%. Credit late means that a credit payment is at least 90 days past due.

Sports betting has grown into a multibillion-dollar industry since a 2018 Supreme Court decision paved the way for states to legalize the practice. And now the ability to bet not just in the casino, but on your phone has made it much more accessible.

For March Madness alone, the American Gaming Association estimated that Americans will legally wager $3.3 billion on this year’s tournaments – an increase of more than 50% over the past three years.

Since the pandemic, the Federal Reserve study found that speculators have more than doubled their quarterly spending, from less than $500 in December 2019 to more than $1,000 by June 2021.

New mobile apps dedicated to bringing betting tables directly to consumers and aggressive marketing campaigns from online gambling companies gave it a massive boost.

Brett Hollenbeck, associate professor of marketing at the UCLA Anderson School of Management, co-authored a study published last year that produced similar trends. Their research found that in states that had legalized sports betting, the average credit score dropped by 0.8 points.

Hollenbeck said, “We found that when gambling was legalized in a state, after a period of time, consumer financial health declined significantly. We saw worse credit scores, more crime.”

Their findings were in some ways even more harsh than the NY Fed report. Both studies found that while access to sports betting did not lead to significant changes in bankruptcy filings, the 2025 study found that online access did.

In states that allowed online betting, the study reported a 10% increase in the likelihood of bankruptcy and an 8% increase in the amount of debt collection – results that emerged nearly two years after the practice was legalized.

“We observed substantial increases in the average bankruptcy rate, loans sent to collection, use of debt consolidation loans, and auto loan defaults,” the study said. “Together, these results indicate that ease of access to sports gambling is harming consumer financial health by increasing their debt levels.”

The gaming industry has acknowledged that gambling can be addictive, and the American Gaming Association has responded by launching a “responsible gaming” awareness initiative. AGA representatives could not immediately be reached for comment. However, the association also notes that, despite the increase in betting activity, a study it conducted showed that overall sports betting advertising spending and volume has declined in recent years. The industry opposes federal regulation aimed at protecting consumers, arguing that such legislation would weaken state authority.

States that legalize are profiting from drugs

In addition to the financial costs, experts also warn about the increased risks of gambling addiction.

one 2024 wall street journal For example, the report found that 70% of an online gambling company’s profits came from less than 1% of its users. So while states have a financial incentive to legalize gambling, they have a potential conflict of interest in harming their residents.

Christopher Welsh, an addiction psychiatrist at the University of Maryland School of Medicine, said it’s not surprising that people’s credit is suffering because online sports betting has grown so rapidly.

“It’s not like other forms of gambling,” said Welsh, who is also director of research at the Maryland Center of Excellence on Problem Gambling. “We are still getting calls about casino gambling, but now it is almost all online sports betting.”

Gambling will not turn into problematic behavior for most users, he said. But for those who are vulnerable to addiction, the rush of drama can force them to make the kind of costly financial decisions that the NY Federal Reserve report shows.

And research shows that young people are particularly at risk of sports gambling problems, often lured by celebrities and flashy advertisements with promises of low risks and high rewards. The Fed study found that the sharpest decline in loan default rates occurred among people under 40.

“We’re also getting more calls from parents of college or high school kids. They have no idea anything is going on, and then they get a call from a bookie saying ‘Your kid owes me $50,000. What are you going to do about it?'” Welsh said.

Even if gamblers don’t have the financial means to continue their habit, Welsh said, they will often find a way to fill their own coffers to keep betting, making it easier to get into debt and stay behind.

“In the case of gambling, people almost always resort to getting money from other sources to do it.”