When legal sports betting surges, so do Americans' financial problems

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

                Charlie Riedel/AP
                
            
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    Charlie Riedel/AP
    

Online sports betting is more popular than ever, with Americans expected to legally wager billions of dollars on this year's March Madness basketball tournament. But a growing body of evidence reveals that the sports betting boom leads to financial strain for bettors. A recent report from the New York Federal Reserve found that sports betting is linked to plummeting credit in the more than 30 U.S. states where the activity is legal, as well as in neighboring counties where it was not. Credit delinquency rates, primarily driven by missed payments on credit cards and auto loans, rose about 0.3% overall in states where sports betting is legal, despite legal sports bettors making up only 3% of the population. But, looking only at the 3% of the population who took up sports betting after their state legalized it, credit delinquencies spiked by more than 10% among gamblers. Credit delinquency means credit payments are at least 90 days past due.
Sports betting has boomed into a multi-billion dollar industry in the years since a 2018 Supreme Court decision paved the way for states to legalize the practice. And the ability to place bets on your phone, no longer just at casinos, has made it more accessible.

For March Madness alone, the American Gaming Association projected that Americans will legally wager $3.3 billion on this year's tournaments — a more than 50% increase over the past three years. Since the pandemic, the Federal Reserve study found bettors more than doubled their quarterly spending, going from under $500 in December 2019, to in excess of $1,000 by June 2021. This was fueled in large part by new mobile apps dedicated to bringing the betting table directly to consumers and aggressive marketing campaigns from online gambling companies. Brett Hollenbeck, an associate professor of marketing at the UCLA Anderson School of Management, co-authored a study published last year that produced similarly concerning trends. The average credit score in states that had legalized sports betting dipped 0.8 points, his research found. "We found that when gambling was legalized in a state, after some period of time, there was a fairly significant degradation of consumer financial health. We saw worse credit scores, more delinquencies," Hollenbeck said.
His findings were in some ways even more stark than the NY Fed report. Both studies found that while sports betting access overall didn't lead to significant changes in bankruptcy filings, the 2025 study found that online access did. In states that allowed online betting, the study reported a 10% increase in the likelihood of bankruptcy and an 8% increase in debt collection amounts — outcomes that tended to appear about two years after the practice was legalized. "We find a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies," the study read. "Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt."

The gaming industry has acknowledged that gambling can be addictive, and the American Gaming Association has responded by starting a "responsible gaming" awareness initiative. AGA representatives could not immediately be reached for comment. However, the association has also noted that, despite the growth in betting activity, a study it commissioned showed overall sports betting advertising spending and volume has declined in recent years. The industry opposes federal regulation aimed at protecting consumers, arguing that such legislation would undermine state authority. States that legalize are cashing in on addiction In addition to the financial costs, experts warn of the rising risks of gambling addiction. A 2024 Wall Street Journal report, for example, found that 70% of the profits from one online gambling company came from less than 1% of its users. So while states have a financial incentive to legalize gambling, they have a potential conflict of interest in causing 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 as online sports betting has grown so explosively.
"It's not like the other forms of gambling," said Welsh, who is also a director of research at the Maryland Center of Excellence on Problem Gambling. "We're still getting calls about casino gambling, but it's almost all online sports betting now." For most users, he said, gambling won't turn into problematic behavior. But for those who are predisposed to addiction, the rush of the play can cause them to make the sort of costly financial decisions evidenced in the NY Federal Reserve report. And research shows young people are particularly at risk of sports gambling problems, lured in by splashy advertisements often featuring celebrities and promises of low risks and high rewards. The Fed study found that the sharpest drop in credit delinquency rates were among people under 40 years old. "We're getting more calls from even parents of college kids, or even high school. They have no idea anything is going on, and then they're getting a call from a bookie who's saying 'Your child owes me $50,000. What are you gonna do about it?,' " Welsh said. Even if gamblers don't have the financial means to keep up their habit, Welsh said, they will often find a way to replenish their own coffers in order to keep betting, making it easy to fall into and behind on debt. "With gambling, it's almost always people are resorting to getting money from other sources to do it."