Sports betting is fun. It's neat to place a couple of bets on your phone, kick back, and watch the game. It adds an extra edge to an experience you likely already enjoy, and, hey, if that makes the whole thing a little more entertaining, good for you. But that's not what everyone who gambles on sports is doing. A small but not insignificant amount of the population is in over their heads in a way that's getting increasingly scary. They're winding up in the laps of debt collectors, missing car payments, and, in dire cases, they're going bankrupt.
A new working paper from researchers at the University of California, Los Angeles, and the University of Southern California takes a look at what's happened to consumer financial health in the 38 states that have greenlighted sports betting since the Supreme Court in 2018 struck down a federal law prohibiting it. The findings are, well, rough. The researchers found that the average credit score in states that legalized any form of sports gambling decreased by 0.3% after about four years and that the negative impact was stronger where online sports gambling is allowed, with credit scores dipping in those areas by 1%. They also found an 8% increase in debt-collection amounts and a 28% increase in bankruptcies where online sports betting was given the go-ahead. By their estimation, that translates to about 100,000 extra bankruptcies each year in the states that have legalized sports betting. The number of people who fell dangerously behind on their car loans went up, too. Oddly enough, credit-card delinquencies fell, but the researchers believe that's because banks wind up lowering credit limits to try to compensate for the rise in risky consumer behavior.
"We look at the general introduction of sports gambling and separately the introduction of online access, which is mostly these mobile apps like DraftKings and FanDuel," said Brett Hollenbeck, an associate marketing professor at UCLA's Anderson School of Management and one of the paper's authors. "Where we find the big effects is when the online mobile access goes in."
It tracks: The closer you live to a casino, the likelier you are to develop a gambling problem. The proliferation of sports-betting apps means the casino now lives in people's pockets. The addictive nature of a slot machine, with that rush of pulling the lever over and over again, faster and faster, is now in a hyperaccessible format from the couch. When the researchers broke it down, they found that young men, in particular, were vulnerable.
"Everything looks like the problems are biggest for younger men and especially younger men in low-income counties," Hollenbeck said.
It makes sense that the explosion of legal sports gambling in the US — on which Americans spent $119.84 billion in 2023 — might be accompanied by an increase in problem gambling. The greater the number of people who get exposure to any form of potentially addictive behavior, the greater the number who could be vulnerable. About 1% of US adults have a severe gambling problem, according to the National Council on Problem Gambling, and 2% to 3% have a mild or moderate problem. That amounts, in total, to somewhere between 7.5 million and 10.5 million people. In states across the country that have legalized sports betting, calls to addiction hotlines have been on the rise, too.
Problem gambling can have several negative consequences, financial and otherwise. It affects people's relationships, their jobs, and their bank accounts. If it gets severe enough, it can cause legal harm, too. Studies have found that 27% to 60% of people with a gambling disorder have engaged in a related illegal activity.
It's really emotional debt that really sucks.
The tricky thing about gambling addiction is that people see their problem as their solution. The habit gets someone into a hole, and instead of deciding to stop gambling and try to slowly pay down their debt, they will keep at it, believing that the next big win will get them out of the red and, perhaps, allow them to stop. But that's not how it works — continuing to gamble makes the hole they're in even deeper, and even if they do win, they can't walk away.
"It's never enough," said Michelle Malkin, the director of East Carolina University's Gambling Research & Policy Initiative. "You've got to keep on gambling. So it's this cyclical thought pattern of, 'I can fix my problems by keeping gambling and getting that next win.'"
People can fall victim to the gambler's fallacy, where they think past events make future events more or less likely even though they're completely disconnected. Say a bettor is on a losing streak, so they feel like that makes it more probable their next bet will hit, even though the odds haven't changed at all.
Gambling money that used to just come from the entertainment budget — the same pile of cash that's spent on movie tickets or a restaurant — starts to come from other, nondiscretionary budgets to fund someone's problem gambling habit. Suddenly, people find themselves wagering money that was supposed to go to their rent or mortgage or car payment or tuition. And it just snowballs from there.
"By the time everyone gets all excited, we're talking about really large credit-card debt, really large debts to friends and family. I'll give you five grand here, or 10 grand, whatever. A lot of online debt," said Timothy Fong, a clinical professor of psychiatry at UCLA and a codirector of its gambling-studies program. "It's not the kind of debt you can easily repay because it's a large sum."
He recently met with a patient — a man in his mid-20s — who was making somewhere between $40,000 and $50,000 a year and had accumulated over $300,000 in gambling debts. The desire to get rid of that debt is now driving his gambling.
"That debt was really shameful," Fong said. "He wanted to hide it. He didn't like it. It was a reminder that he was a quote-unquote loser. It's really emotional debt that really sucks, for lack of a better word."
The tech that fuels sports-betting apps — as well as, where legal, iGaming, like online slot machines and blackjack — isn't the only innovation exacerbating people's addictions and accompanying debt, Fong added. The tech that's made it easier and faster to get loans is a factor, too. He sees clients who are able to get hundreds and even thousands of dollars from online lenders in a matter of minutes to fuel their habits. Bettors get cash "in the middle of the night with no collateral, no credit score, nothing," he said, so they can continue to gamble it away.
Young men's finances appear to be most at risk in the proliferation of sports betting in America. A 2023 study on the prevalence of gambling in New Jersey found that men had double the rate of high-risk problem gambling than women and that those ages 18 to 44 were at the highest risk. In the sports world, we've recently seen some high-profile examples of young men getting into hot water from sports betting. The MLB player Shohei Ohtani's former interpreter Ippei Mizuhara pleaded guilty earlier this year to taking almost $17 million from the baseball star to pay off gambling debts. The NBA player Jontay Porter was barred from the league for betting on basketball games and has pleaded guilty to federal conspiracy to commit wire fraud after agreeing with other gamblers to withdraw himself from games. He said he did it to "get out from under large gambling debts."
We're running a nationwide experiment with the legalization of sports betting, and we don't know the results.
Men are socialized into gambling and sports at a young age, Malkin said, which means they'll bet on sports more than women earlier. However, she said a lot of them bet on sports even when it's illegal, which isn't true for women, who have been likelier to get in on the game once states legalize sports gambling. In other words, women aren't immune to gambling addiction or related debt. Still, as it stands, it's men who are getting into trouble at higher rates.
"Gambling disorder is anywhere between 1% to 8%, depending on what state, what jurisdiction, and what community you're looking at, and for young people, it's much higher, especially for young men," Malkin said.
As much as legal sports gambling has become normalized in many parts of the country, it's still pretty new, and as such, we're learning about its impact on the fly. What does it mean for addiction? For finances? Even for the benefits lawmakers and lobbyists promised when pushing legalization through? We're still getting answers. For most people, gambling doesn't become a problem, and if it does, it doesn't happen overnight. Disordered gambling can take months and even years to set in.
It's also not clear whether some of the trade-offs states have made in rubber-stamping sports betting are worthwhile. Yes, it's generating revenue, but reasonable minds can disagree about whether that revenue is worth it, given the risks. Sports-betting revenue being used for gambling-addiction programs is probably a good thing, but it's also a little strange. Legal sports betting is better than what was going on in the shadows, but it also means more people are betting in the first place.
"It's not necessarily a bad thing that we have legalization," Malkin said. "What's bad is we don't have the states and the federal government taking the responsibility piece of that, at least not universally."
Sportsbooks have mechanisms in place to try to keep gamblers from going off the rails, including cooling-off periods and features that let bettors set limits on their deposits and wagers. But, of course, their business model is not to stop people from gambling — it's to turn them into lifelong customers.
We're running a nationwide experiment with the legalization of sports betting, and we don't know the results. But some of the preliminary data points seem pretty disturbing.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.