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 using household transaction data and a staggered difference-in-differences framework. Following legalization, sports betting spreads quickly, with both the number of participants and frequency of bets increasing over time. This increase does not displace other gambling or consumption but significantly reduces savings, as risky bets crowd out positive expected value investments. These effects concentrate among financially constrained households, 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