The impact of sports betting on finances is sobering: poorer debt management and reduced creditworthiness are among the negative consequences revealed by a recent study. The most financially vulnerable population groups are hit hardest. In addition, the current development of sports betting could make it one of the most addictive forms of gambling.
“Our findings are concerning from the perspectives of individuals, voters and politicians,” said Justin Balthrop, co-author of one of the studies and assistant professor of finance at the University of Kansas. Balthrop emphasized that precise diagnostics are necessary to better understand the problems.
The US Supreme Court overturned the Professional and Amateur Sports Protection Act in May 2018, allowing individual states to enact their own sports betting laws. Sports betting is now legal in 38 states and the District of Columbia, with revenue rising 30.3% to $7.56 billion through July. Balthrop’s study shows that for every dollar invested in online betting portals, households reduce their investment by two dollars. The frequency of account overdrafts and declining credit card payments also increases.
Davide Proserpio, a marketing instructor at the University of Southern California, found in his research that the average credit score of a state’s population fell by 0.3% after legalization. In states with legal online betting, it was as high as 1%.
Dr. Jamie Torrance of Swansea University pointed to three key factors that make sports betting so devastating: access, frequency of betting and the illusion of control. Betting is now available almost 24/7 on apps like DraftKings and FanDuel, causing players to overestimate their expertise and feel in control.
But the “house” always wins, as the current research results show, which should be used by politicians to take regulatory measures. Australia has already taken initial steps to slow betting. In the US, lawmakers in Missouri and Oklahoma recently introduced legalization bills, while two Democratic congressmen are calling for federal regulation of advertising and artificial intelligence in the industry.
It remains to be seen whether these efforts can stop the alarming developments in time. “In reality, I don’t think that will be the case,” warns Torrance.
