Gambling Away Stability: Sports Betting's Impact on Vulnerable Households

We estimate the causal effect of online sports betting on households' investment, spending, and debt management decisions. Employing household-level transaction data and a staggered difference-in-differences framework, we find sharp increases in sports betting following legalization. This increase does not displace other gambling activity or consumption but significantly reduces households' savings allocations, as negative expected value risky bets crowd out positive expected value investments. These effects concentrate among financially constrained households, who become further constrained as credit card debt increases, available credit decreases, and overdraft frequency rises. Our findings highlight the potential adverse effects of online sports betting on vulnerable households.

Keywords: Sports Betting, Gambling, Household Finance, Stock Market Participation JEL Classification: D14

JEL Classification: G11, G18, G51, D14

Suggested Citation: Suggested Citation

R. Baker, Scott and Balthrop, Justin and Johnson, Mark J. and Kotter, Jason D. and Pisciotta, Kevin, Gambling Away Stability: Sports Betting's Impact on Vulnerable Households (June 30, 2024). Available at SSRN: https://ssrn.com/abstract=4881086 or http://dx.doi.org/10.2139/ssrn.4881086