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Concerns on how legal sports betting will affect households who are already struggling financially have been rekindled by a recent academic study. This study, written by specialists from Northwestern University, Brigham Young University, and the University of Kansas, was published on July 9 and explores the financial effects of sports betting since PASPA was repealed in 2018. The results highlight a concerning pattern: legal sports betting disproportionately hurts families with lower incomes by taking money away from safer financial investments.
After examining consumer data from more than 230,000 households, the study found a significant rise in sports betting. Spending on other gambling or consumption did not decline as a result of this gaming boom. Rather, they frequently diverted money from conventional assets, such as stocks and bonds, to sports betting.
The impact was measured by the researchers, who found that every $1 wagered on sports betting resulted in a decrease of over $2 in net investment. The analysis found a strong correlation between the growth in legal sports betting and a 14% decline in net investments during 2018.
In addition to the decline in investments, the study revealed that sports bettors did not cut back on other gambling activities, such as lottery tickets. Instead, they increased spending on related goods like dining out and cable television. This pattern of behavior highlights a concerning shift in financial priorities.
Echoing previous research from Southern California, this study points to significant negative effects on consumer credit, particularly among those with limited financial flexibility. The study states, “Sports betting exacerbates the financial constraints of households already operating with less flexibility.” It suggests that these households are not merely reallocating their spending but are accumulating more debt to support gambling activities.
The study concludes that sports betting can lead to a “lasting deterioration” in financial health for lower-income households. By shifting funds from savings to debt and increasing expenditures on gambling-related activities, these households face greater financial instability.