Measuring the Impacts of Legalized Sports Betting & Gambling
Clinical Review by:
Published:
Aug 15, 2024
,
08:38 p.m.
ET
Updated:
Sep 12, 2024
,
02:38 p.m.
ET
The legalization of sports betting across the United States has sparked a wave of economic activity, but it also brings significant concerns about financial well-being. Following a 2018 ruling by the U.S. Supreme Court, 38 states have legalized sports gambling, leading to a nearly $300 billion wagering market from 2018 to 2023. While this boom has contributed to state revenues and provided entertainment for millions, it has also raised alarms about its negative effects on consumer financial health.
How legalized sports betting impacts financial wellbeing
Legalized sports betting has subtly but steadily eroded the financial stability of many consumers. Credit score measures the overall financial health of a consumer. The higher the score, the healthier the consumer. According to a recent study published in the SSRN Blog, the average credit score in states that legalized sports gambling decreased by approximately 0.3%. This decline is more pronounced in states that have legalized online betting, where credit scores drop nearly 1%, triple the decline seen in states with only in-person betting options.
Bankruptcy rates, debt collections, debt consolidation loans and auto loan delinquencies are indicators of excessive debt, and changes in these indicators were identified in the study, contributing to lowering credit scores.
One of the most troubling findings is the rise in bankruptcy rates among those who engage in online sports betting. The likelihood of filing for bankruptcy increases by as much as 25-30% within three to four years of legalization. This surge is accompanied by an uptick in debt collections and debt consolidation loans, particularly among young men in low-income counties, who appear to be the most affected demographic.
The study also uncovered a concerning rise in auto loan delinquencies, which increased by approximately 9% in states that legalized sports betting. This trend contrasts with a slight decline in credit card delinquencies, which might be attributed to proactive measures taken by financial institutions to mitigate their exposure to risky borrowers. For instance, banks have been lowering credit card limits to protect themselves, leading to fewer delinquencies in this category but exposing consumers to more severe forms of debt. In effect, consumers are managing riskier loans due to their declining creditworthiness. Therefore, sports gambling appears to be more detrimental to financial health through forms of loan accessibility rather than credit cards.
The social ripple effect
Beyond the numbers, the social implications of legalized sports betting are profound. The financial strain it imposes can disrupt family life and relationships, contribute to health problems, and negatively impact job performance. In some cases, it can even lead to criminal activity or suicide. The ease of access to online gambling, in particular, has made it more challenging for vulnerable populations to avoid the pitfalls of gambling addiction.
The data suggests that while gambling was already a widespread activity in the U.S. before legalization, with 75-80% of Americans engaging in some form of gambling annually, the introduction of legal sports betting has intensified the financial and social consequences. The lure of easy money, combined with the convenience of online betting platforms, has led to an increase in high-risk behaviors and financial instability.
Impact on young men in low-income counties
The study highlights a disturbing trend: young men in low-income counties are disproportionately affected by the financial stresses of legalized sports betting. This group is more likely to experience bankruptcy, use debt consolidation and unsecured loans and face declining credit card limits. The allure of online betting, with its promise of quick gains, can be particularly enticing for this demographic, leading to a cycle of debt and financial ruin.
The impact on this group is not just a matter of numbers. It's a reflection of deeper societal issues, including economic inequality and the lack of financial literacy. As these young men struggle to manage their finances, the broader community also suffers, with increased demands on social services and a potential rise in criminal activities linked to financial desperation. While states look to the legalization of sports betting for tax revenue, the benefit is partially offset by a decline in consumer financial health.
Gambling Addiction resources & treatment
The negative consequences of legalized sports betting underscore the urgent need for effective gambling addiction resources and treatment options. At Birches Health, we recognize the importance of addressing the root causes of gambling addiction and providing comprehensive support for those affected.
If you or someone you know is struggling with gambling addiction, Birches Health offers a range of services designed to help individuals regain control of their lives:
How to get help from Birches Health:
For immediate assistance, contact Birches Health at 833-483-3838 or email hello@bircheshealth.com.
Sources:
