After states legalize sports betting, Americans see financial strain, studies show : NPR

Advertisements for sports betting apps are seen in downtown Kansas City, Missouri, in November.

Charlie Riedel/AP

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Charlie Riedel/AP

Online sports betting is more popular than ever, and Americans are expected to legally bet billions of dollars on this year’s March Madness basketball tournament. But growing evidence reveals that the sports betting boom is causing financial hardship for bettors.

A recent report from the New York Federal Reserve found that sports betting is linked to plummeting credit in more than 30 U.S. states where the activity is legal, as well as neighboring counties where it is not.

Default rates, primarily due to missed payments on credit cards and auto loans, increased by about 0.3% overall in states where sports betting is legal, even though legal sports bettors make up just 3% of the population. But if you consider just the 3% of the population who took up sports betting after their state legalized it, defaults increased by more than 10% among gamblers. Credit delinquency means credit payments are at least 90 days past due.

Sports betting has become a multibillion-dollar industry in the years since a 2018 Supreme Court ruling paved the way for states to legalize the practice. And the ability to bet on your phone, and not just in casinos, has made it more accessible.

In March Madness alone, the American Gaming Association projects that Americans will legally bet $3.3 billion on this year’s tournaments, an increase of more than 50% over the past three years.

Since the pandemic, the Federal Reserve study found that punters have more than doubled their quarterly spending, from less than $500 in December 2019 to more than $1,000 in June 2021.

This trend has been fueled in large part by new mobile apps dedicated to bringing betting tables directly to consumers and by aggressive marketing campaigns from online gaming companies.

Brett Hollenbeck, associate professor of marketing at the UCLA Anderson School of Management, co-authored a study published last year that produced similar trends. The average credit score in states that legalized sports betting fell 0.8 points, according to its research.

“We found that when gambling was legalized in a state, after a period of time there was a pretty significant decline in the financial health of consumers. We saw worse credit scores, more delinquency,” Hollenbeck said.

Its conclusions were, in some ways, even darker than those of the New York Fed report. Both studies found that while access to sports betting did not lead to significant changes in bankruptcy filings overall, the 2025 study found that online access did.

In states that allowed online gambling, the study reported a 10 percent increase in the likelihood of bankruptcy and an 8 percent increase in debt collection amounts — results that tended to appear about two years after the practice was legalized.

“We see substantial increases in average bankruptcy rates, debts sent to collections, use of debt consolidation loans, and delinquencies on auto loans,” the study says. “Together, these results indicate that easy access to sports gaming harms consumers’ financial health by increasing their debt levels.”

The gaming industry has recognized that gaming can be addictive, and the American Gaming Association has responded by launching a “responsible gaming” awareness initiative. Representatives for AGA could not immediately be reached for comment. However, the association also noted that despite the growth in betting activity, a study it commissioned showed that the overall spending and volume of advertising for sports betting has declined in recent years. The industry opposes federal regulation aimed at protecting consumers, arguing that such legislation would infringe on state authority.

States that legalize profit from addiction

Besides the financial costs, experts warn of the growing risks of gambling addiction.

A 2024 The Wall Street Journal One report, for example, found that 70% of an online gaming company’s profits came from less than 1% of its users. So even if states have a financial interest in legalizing gambling, they risk a conflict of interest if they cause harm to their residents.

Christopher Welsh, an addiction psychiatrist at the University of Maryland School of Medicine, said it’s not surprising that people’s credits are suffering when online sports betting has seen such explosive growth.

“It’s not like other forms of gambling,” said Welsh, who is also research director at the Maryland Center of Excellence on Problem Gambling. “We still get calls about casino games, but now it’s almost all online sports betting.”

For most users, he says, gaming won’t turn into problematic behavior. But for those predisposed to addiction, the rush of gambling can lead them to make the kinds of costly financial decisions highlighted in the New York Federal Reserve report.

And research shows that young people are particularly at risk of problems with sports gambling, lured by flashy advertisements often featuring celebrities and promises of low risks and high rewards. The Fed study found that the biggest drop in loan delinquency rates was among people under 40.

“We’re getting more and more calls, even from parents of college kids or even high school kids. They have no idea what’s going on, and then they get a call from a bookie saying, ‘Your kid owes me $50,000. What are you going to do about it?'” Welsh said.

Even if gamblers don’t have the financial means to maintain their habit, Welsh said, they will often find a way to replenish their own coffers in order to continue betting, making it easier to get into debt and fall behind.

“With gambling, people almost always resort to other sources of money to do it.”