Study Finds Sports Betting Legalization Causes Financial Implications to Vulnerable Households

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People in legal sports gambling states are investing in stocks less and betting on sports more, according to a study published at SSRN.

The study by faculty members at Brigham Young University, Northwestern University and the University of Kansas looked into the impact of legal sports betting on vulnerable households.

The study suggests that sports betting could be one of the key reasons why deposits into brokerage accounts have decreased for financially constrained households.

It also infers that sports betting has caused financial issues for struggling households.

"We find that more constrained households reduce their credit card payments and increase overdrafts of their bank account," the study reads. "Combined, these results suggest that sports betting exacerbates the financial constraints of households already operating with less flexibility."

The study implies that people could be more interested in placing their money in sports betting accounts than brokerage accounts due to the possibility of an immediate return.

"The excitement and potential quick returns from sports gambling could lead to more active engagement in financial markets, particularly in high-risk, high-reward investment options," the study reads. "Alternatively, sports betting may displace savings-motivated investing if bettors view the expected returns to betting as higher than the returns to investing."

Evidence suggests that the legalization of sports betting is causing financial harm to households.

"The legalization of sports betting has far-reaching implications for household financial behavior and health," the study concludes. "Our results show that not only does sports betting lead to increased betting activity, but it also leads to higher credit card balances, less available credit, a reduction in net investments, and an increase in lottery play."

About the Author
Chase is a news writer at The Action Network. He specializes in college sports, golf and soccer but will watch anything you can bet on. Catch him on the golf course either carrying a bag or playing with his buddies.

Follow Chase Howell @chasehowell__ on Twitter/X.

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