The proliferation of online sports betting has disproportionately impacted “financially constrained households”, according to an academic research paper.
In 2018, the Supreme Court reversed a federal law ruling that previously meant online sports gambling was outlawed, but over the last six years, the activity has expanded in popularity and prominence.
Sportsbooks are now legalized and operational in 38 states, with more than $120 billion staked on bets and $11 billion in revenue, across 2023 alone.
Those figures have swelled the state purse but it comes at a cost, as detailed in the study, “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households.
This paper has outlined how sports gambling has a detrimental effect on the personal finances of households with lower incomes, with a link to increased betting activity including lottery games, higher credit card balances, and less scope for investments.
The term “financially constrained households” was not strictly defined, but it was about those people with a relatively low amount of cash and savings and higher debt obligations.
230, 171 households were polled, across all US states which have now introduced sports betting with around 7.7% of those canvassed confirming they actively made sports bets.
The average amount staked, per household, was $1,100 per year.
Negative financial impact as a result of gambling
People experiencing financial difficulty displayed some worrying trends. Those with higher levels of credit card debt showed not just a use of credit funds for gambling activity or swapping lottery play for online sports betting. The consistency showed a sustained level of debt to fund “an addictive losing proposition” according to the study.
The authors further explained how “the increase in betting and consumption drives an increase in financial instability in terms of decreased credit availability, increased credit card debt, and a higher incidence rate of overdrawing bank accounts.”
It was stated the largest increase in spending on sports betting relative to income was among the bottom third of households by income, which is a stark indicator of the impact of gambling on the poor.
Even those on similar incomes who are non-bettors were found to display less risky financial behavior, with bettors more than twice as likely to have invested in cryptocurrency or to have a bank account in overdraft. Bettors were said to be four times more likely to have played online poker or to have purchased lottery tickets, compared to non-bettors.
The findings highlight the quandary for policymakers and representatives.
Yes, the tax dollars from the gambling industry provide scope and options for states to make investments in certain areas, but the harm has implications for constrained households. They are less likely to be financially stable, to be able to invest, or to save for retirement.
Legalized sports gambling continues to grow and prosper but as the report suggests, “it potentially undermines government efforts aimed at promoting savings through tax incentives and financial literacy programs.”
Image credit: Via Ideogram
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