Subhi Agrawal
Researchers have found a distressing picture after measuring the impact of legalized sports gambling on American households, saying it affects bettor’s finances and increases bankruptcies.
A Reduction In Savings
In a report academics have claimed that the states in households where gambling was legalized saw notably reduction in savings, including lower investments in assets like stocks.
“Legalization is not a free lunch,” said Scott Baker, associate professor of finance at Northwestern University’s Kellogg School of Management.
The “lunch” has been quite profitable for state budgets: According to Legal Sports, New York, with its 51% tax rate on mobile sports betting, generated $862 million in tax revenue last year and over $2 billion in the past three years , benefiting education. New Jersey, the pioneer in online sports betting, has a lower tax rate and is considering an increase, yet has accumulated $549 million in tax receipts from sports betting since 2018.
“It’s Not Just Moving Entertainment Dollars”
North Carolina is the most recent state to offer online betting with 30 plus states. Online sports betting is legal in the District of Columbia and Puerto Rico, and as per authors estimate total monthly wages raised from an average of $1.1 billion per month in 2019 to $14 billion in January 2024.
“It’s not just moving entertainment dollars from one company to another.Rather, they’re drawing from sources of their household budget that policymakers are trying to increase” like stock investment accounts, Baker said.
Baker’s team found that it not only affects individuals but bettors were more likely to have received pandemic-era child tax credits, regardless of income, indicating they were more likely to have children.
“A Corresponding Concern That The Introduction Of Sports”
Another research led by Brett Hollenbeck, an associate professor of marketing at UCLA’s Anderson School of Management found, “While many consumers get real enjoyment from legal gambling, and states benefit in the form of additional tax revenue, there is a corresponding concern that the introduction of sports gambling and the ease at which consumers can now bet online are negatively harming consumer financial health.Our paper provides evidence that this concern is well founded.”
The most recent data found by the New York State Gaming Commission is a 26% increase in problem gambling-related calls to the Office of Addiction Services and Supports from 2021 to 2022.
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