Online sports betting is more popular than ever, with Americans expected to legally wager billions on this year’s March Madness. But a growing body of evidence shows the sports betting boom is tied to rising financial strain for bettors.
A recent New York Federal Reserve report found sports betting is linked to falling credit health in the more than 30 U.S. states where it is legal and in neighboring counties where it is not. Credit delinquency rates — driven mainly by missed payments on credit cards and auto loans — rose about 0.3% overall in states that legalized sports betting, even though legal sports bettors make up only roughly 3% of the population. Among the 3% who began betting after legalization, delinquencies increased by more than 10%. (Credit delinquency here means payments at least 90 days past due.)
The industry has grown rapidly since a 2018 Supreme Court decision allowed states to legalize sports betting. Mobile apps and aggressive marketing have made betting far more accessible. For March Madness alone, the American Gaming Association projected Americans would legally wager $3.3 billion — a more than 50% increase over the past three years. The Federal Reserve study also found that since the pandemic bettors more than doubled quarterly spending, from under $500 in December 2019 to more than $1,000 by June 2021.
A 2024 study co-authored by Brett Hollenbeck of UCLA Anderson produced similar findings. It reported the average credit score dipped 0.8 points in states that legalized sports betting and documented broader financial harm tied to online access: a 10% increase in the likelihood of bankruptcy and an 8% rise in amounts sent to debt collection. Those outcomes tended to emerge about two years after legalization. The study also found increases in bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies, concluding that easy access to sports gambling increases consumer debt and harms financial health.
The gaming industry acknowledges gambling can be addictive, and the American Gaming Association has launched a responsible-gaming awareness initiative. The AGA has also noted that overall sports betting advertising spending and volume have declined in recent years. The industry opposes federal regulation aimed at consumer protections, arguing it would undermine state authority.
Critics point to state revenue incentives as a potential conflict of interest: a Wall Street Journal report found 70% of one online gambling company’s profits came from less than 1% of its users, suggesting a small group of heavy bettors generates outsized revenue for operators and states.
Addiction specialists warn the financial impacts are predictable given the design and reach of online betting. Christopher Welsh, an addiction psychiatrist at the University of Maryland School of Medicine, says most people will not develop problematic gambling behavior, but those predisposed to addiction can spiral quickly. He and other researchers note young people are particularly vulnerable, often drawn in by flashy ads featuring celebrities and promises of easy wins. The Fed study found the sharpest increases in credit delinquencies were among people under 40.
Clinicians report cases in which families discover large debts owed by teenagers or college students who used apps to place bets. Even when gamblers lack funds, they often seek money from other sources to keep betting, which can accelerate debt accumulation and missed payments.
Together, the evidence suggests that while legalized sports betting has expanded consumer choice and generated revenues, its rapid growth—especially through online platforms—has coincided with measurable declines in individual financial health for some groups, including higher delinquency, increased bankruptcies, and greater use of debt-related remedies.