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Recent research on the effects of legalized sports betting in the US has revealed alarming results, according to a white paper from the Anderson School of Management at UCLA and the Marshall School of Business at the University of Southern California. Easy access to sports betting has a negative impact on consumers’ financial health, according to the study.
States have been able to allow sports betting ever since the U.S. Supreme Court ruled in 2018 that the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional. As a result, the practice has quickly expanded; just twelve states have not yet legalized it. According to the American Gaming Association, there was a 24.5% growth in gross gaming revenue (GGR) from January to May of this year in the legal betting sector, totaling $5.72 billion.
However, the study titled “The Financial Consequences of Legalized Sports Gambling” warns that the widespread legalization of sports betting poses significant risks to consumer financial health. Researchers analyzed data to assess the impact of legal sports wagering on consumer finances.
The findings indicate a troubling trend: “Overall consumers’ financial health is modestly deteriorating as the average credit score in states that legalized sports gambling decreases by roughly 0.3%.” This decline in credit scores is linked to increased indicators of excessive debt. Specifically, there has been a notable rise in debt consolidation loans, auto loan delinquencies, debt collections, and bankruptcy rates.
Financial institutions have responded to the reduced credit scores by imposing stricter credit access restrictions. The study reads, “Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt.”
The negative effects on consumer financial health are more pronounced in states where mobile and online sports betting is available, compared to those allowing only in-person betting. The researchers concluded that the findings clearly demonstrate a link between the ease of access to sports betting and the deterioration in consumer financial health and credit scores.
As the legal sports betting market continues to grow, it is crucial to address these financial risks and implement measures to protect consumers.