Legal online sports betting reduces how much US households save and invest, according to research highlighted by the University of Nebraska-Lincoln (UNL) on 3 November.
The paper, “Gambling away stability: Sports betting’s impact on vulnerable households”, was published in the Journal of Financial Economics. Its authors include Justin Balthrop, assistant professor of finance at UNL, and Scott R. Baker of Northwestern University’s Kellogg School of Management.
What the study found
- The researchers used transaction data from 183,821 US households and compared states before and after they legalised online sports betting.
- Betting participation rose after legalisation.
- Betting did not replace other gambling or consumer spending; instead, it significantly reduced savings and investment.
- The effects were concentrated in financially constrained households, which showed higher credit card debt, less available credit and more overdrafts.
An earlier working-paper version found net investment fell by nearly 14%, with households investing about $2 less for every $1 they bet.
Balthrop said in the university’s release:
“Online sports betting does more than compete for consumers’ entertainment dollars.”
“People are taking money out of their retirement and out of their savings.”
“I don’t want to abolish sports betting, but we need guardrails that don’t exist now.”
Congress turns to college campuses
The research comes ahead of a hearing titled “The Rise of Sports Gambling on College Campuses”, to be held by the House Committee on Education and Workforce’s Subcommittee on Higher Education and Workforce Development on 11 November. Rep. Burgess Owens of Utah chairs the subcommittee. Witnesses had not been announced by 7 November.
Subcommittee member Rep. Michael Baumgartner of Washington sponsors the PROTECT Student Athletes Act, which would ban prop bets on individual college athletes’ performances.
Sources: University of Nebraska-Lincoln release via EurekAlert and House Education and Workforce Committee.
