The rapid expansion of legal sports betting across the United States is quietly draining household savings, pulling down credit scores, and forcing consumers to liquidate long-term investments to cover gambling losses, according to a series of recent academic studies and financial reports.
Surging Revenues and Legalization Spread
Since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018, legal sports betting has transformed from a regional pastime into a multi-billion-dollar corporate juggernaut. According to data tracked by Sportsbook Review, annual U.S. sports betting revenue skyrocketed from $441 million in 2018 to nearly $5.7 billion by 2024. Billion-dollar partnerships between professional sports leagues and online platforms such as DraftKings and FanDuel have normalized wagering, culminating in an estimated 73 million Americans planning to place bets ahead of the 2023 NFL season alone.
This widespread corporate integration has fueled massive industry growth, but researchers warn it has also created severe financial strain for everyday consumers. Scott Baker, an associate professor of finance at Northwestern University’s Kellogg School of Management, noted that the trend is a losing venture for the vast majority of participants. Baker authored a yet-to-be-peer-reviewed study showing that household bets increased by an average of $1,100 per year in states that legalized online sports betting.
Depleted Portfolios and Strained Household Budgets
The financial impact of online sports gambling extends far beyond entertainment budgets. Baker’s research revealed a nearly 14% drop in net household investments following the introduction of legal online sports betting. Gamblers frequently siphon cash away from equity portfolios and cryptocurrency holdings to chase losses or fund immediate wagers.
This behavior mirrors real-world cases documented by financial researchers. For instance, Rob Minnick told Fortune that he began liquidating portions of his stock portfolio and selling off Bitcoin and Ethereum holdings during the COVID-19 pandemic to sustain a mounting gambling habit that initially began during his college freshman year.
“We’re seeing that this gambling plus increases in consumption are both detracting from some of the longer run equity investments—or positive, easy, risky investments that people have been making—and tend to put more pressure and strain on their budgets in general,” Baker told Fortune.
The secondary spending associated with sports betting—such as attending live games or patronizing bars and restaurants to watch matchups—creates a compounding snowball effect that accelerates the depletion of personal savings.
Measurable Declines in Consumer Credit Health
The macroeconomic fallout of expanded sports gambling is also visible in consumer credit data. Brett Hollenbeck, a marketing professor at the UCLA Anderson School of Management, analyzed consumer credit data across the 38 states that have legalized sports betting in some capacity. His working paper found that individual credit scores dropped by an average of 0.3% four years after legalization took effect in a given state.
Hollenbeck’s research additionally linked the proliferation of legal sports betting to higher rates of bankruptcy filings, debt collections, debt consolidation loans, and auto loan delinquencies. “What’s really unique about this is not just that sports gambling is a big, important industry,” Hollenbeck told Fortune. “But it gives us a window into how gambling causes people’s behavior to change.”
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