Study: Bankruptcies Up 28% In States With Online Sports BettingUCLA And USC Researchers Find Some Negative Consequences Of Legalization |
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A new study points to higher bankruptcies in states with legal online sports betting. Researchers at the University of California, Los Angeles and University of Southern California reported that bankruptcies rose 28% in the states where wagering on sports is more easily accessible.
The study was conducted by professors and scholars in the two universities’ business schools – Brett Hollenbeck, Poet Larsen, and Davide Proserpio. Along with a rise in bankruptcies, the study found some other negative consequences to residents’ personal finances in these states.
“We find a substantial increase in bankruptcy rates, debt collections, debt consolidation loans, and auto loan delinquencies,” the study notes. “We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit.”
Growing Industry, But Some Negative Consequences
A total of 38 states now allow some form of sports betting since the Supreme Court overturned a virtual ban on sports wagering outside of Nevada in 2018. A new report by Goldman Sachs stated that the industry has grown to a value of $10 billion since 2018 and could reach $45 billion once the industry is fully matured.
“We expect growth to be driven by a combination of new state openings and a higher share of the consumer wallet being spent on sports betting over time,” Goldman Sachs Research Europe head of leisure and travel Ben Andrews said.
The authors’ research found that about 75-80% of Americans gambled in some form over the course a year. Another 10% reported gambling twice per a week or more.
From 2018 to 2023, the study found a total of almost $300 billion wagered with most of that coming through online platforms. The study notes that white sports betting can be fairly inexpensive and harmless for most Americans, a fraction become problem gamblers and experience serious financial stress and negative family issues, poor job performance, criminal
activity, and even suicide. That was found to be particularly significant among young men, especially those in low-income areas.
“Overall, we find that the legalization of sports gambling decreased consumer financial
Health,” the study notes. “These results seem to be particularly pronounced when states legalize online betting, suggesting that the ease of access to gambling increases the problems associated with it.
“While many states may have opted for legalization with the hope of increasing tax revenue, the negative effect we document can partially offset tax revenue benefits as more consumers’ financial health deteriorates.”
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