From CNBC: 2024-08-21 09:39:28

The explosion of online sports betting is causing financial distress, according to a recent paper. Since the legalization of sports betting in 38 states, it has become a $120 billion industry, but it’s taking a toll on gamblers. Those who participate tend to invest less, have higher debt levels, and experience financial instability.

Households that engage in sports betting tend to have lower savings, higher debt, and less available credit. They are also more likely to have overdrawn bank accounts and increased credit card debt. Financially constrained households are particularly vulnerable to these negative effects.

Bettors have less money to invest, with a noticeable drop in net investments in states that have legalized sports betting. Every dollar spent on sports betting reduces net investment by $2.13. This decrease in investing can have long-term negative effects on bettors’ financial stability and wealth accumulation.

Financially constrained households are especially impacted by sports betting, with lower-income households spending a larger proportion of their income on gambling. Bettors exhibit riskier behavior, such as overdrawn bank accounts and higher instances of crypto investment.

Legalized sports betting presents a dilemma for policymakers, conflicting with initiatives to promote saving money for retirement. While the government sees it as a personal choice, it undermines efforts to encourage saving and investing. Policymakers should consider the negative impact of betting on household financial stability and wealth accumulation.

Read more: The explosion of online sports betting is taking a toll on how people invest