A new cluster of research is pointing to financial strain from legal online sports betting. Since the Supreme Court struck down PASPA in 2018, 38 states have legalized some form of sports gambling, and nearly $300 billion has been wagered through newly legalized markets from 2018 to 2023, with most of the money flowing through online channels.
Fortune reported that Scott Baker’s study found household bets increased by $1,100 per year in states that legalized online sports betting, while net investments fell by nearly 14%. Baker described the activity as a money-losing proposition for most participants and said the extra gambling, plus spending tied to games, bars and restaurants, was putting pressure on budgets and crowding out longer-run equity investing.
A separate paper from UCLA Anderson reaches a similar conclusion about balance sheets. Using the University of California Consumer Credit Panel, a 2% sample of U.S. adults with credit reports, the authors tracked 4.4 million unique people and 90 million quarterly observations from March 2016 to June 2023. They found average credit scores fell by roughly 0.3% after legalization, with the decline about three times larger in states that allow online or mobile betting.
The UCLA study also found substantial increases in bankruptcy rates, debt collections, debt consolidation loans and auto loan delinquencies. Financial institutions responded by tightening credit through lower limits and a higher ratio of secured to unsecured loans, although credit card delinquencies fell. The effects were generally larger for young men in low-income counties and tended to show up about two years after gambling became legal.
A New York Fed staff report, Sports Betting Across Borders: Spatial Spillovers, Credit Distress, and Fiscal Externalities, found that legalization increased total sportsbook spending roughly tenfold and lifted take-up by 3.1 percentage points. It also found spillovers across state lines: counties in non-legal states within 15 miles of a legal border saw spending equal to about 14% of the direct effect, with the impact fading to near zero by 60 miles.
That report found median credit scores fell by roughly 1 point and overall delinquency rose 0.3 percentage points from a 10.7% base. Among consumers under 40, auto loan delinquency increased by half a percentage point and credit card delinquency by 1 percentage point. Scaled by take-up, the authors said the implied delinquency increase was about 10 percentage points among induced bettors.
A University of Kansas working paper, Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households, found a similar pattern. Kevin Pisciotta and co-authors used transaction data from a U.S. analytics platform with more than 60 million users and found online sports betting pushed up credit card balances, reduced available credit and cut net investments, especially among financially constrained households. Betterment’s 2026 Retail Investor Survey added a consumer angle, finding that more than a quarter of Gen Z investors treated sports betting as part of a long-term financial strategy and more than half shifted money that had been meant for stocks into betting instead.
The strain appears concentrated in a relatively small group of users. In Connecticut, Gemini Research found that problem or at-risk gamblers, who make up 7% of residents, account for 71% of legal gambling revenue. Fortune also reported that the Connecticut Lottery Corporation took in $587,000 in gross revenue in July from more than $4.8 million in patron winnings from sports retail wagers, money that goes to the state’s general fund for public health, libraries and public safety. Michelle Malkin of the Public Health Advocacy Institute said it is still difficult to know the full extent of the harm because legalized sports betting is relatively recent.
The industry has pushed back by pointing to responsible-gaming tools and the role of entertainment. The American Gaming Association highlighted wager and deposit limits, DraftKings offers users a spending stat sheet, FanDuel has partnered with Operation HOPE and both companies belong to the Responsible Online Gaming Association. Jennifer Shatley, the group’s executive director, said responsible-gaming programmes are meant for the whole customer base, not just people with a gambling problem, while Joe Maloney of the AGA argued that consumers see sports wagering as entertainment rather than an investment. The NFL also has a $6 million, three-year partnership with the National Council on Problem Gambling to expand visibility of resources and educational materials.
