The Financial Consequences of Legalized Sports Gambling

Abstract

Following a 2018 ruling of the U.S. Supreme Court, 38 states have legalized sports gambling. We study how this policy has impacted consumer financial health using the state-by-state rollout of legal sports gambling and a large and comprehensive dataset on consumer financial outcomes. Our main finding is that overall, consumers' financial health is modestly deteriorating as the average credit score in states that legalize sports gambling decreases by roughly 0.3%. The decline in credit score is associated with changes in indicators of excessive debt. We find a substantial increase in bankruptcy rates, debt collections, debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit. These results are stronger for states that allow sports gambling online compared to states that restrict access to in-person betting and larger for young men in low-income counties. Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt.