Increase in sports betting can lead to decrease in investments, study suggests

Sports betting is widely popular and played by many Americans since it became legalized in most states.

This recreational activity can be entertaining and pricey to the point that some people who place bets are tapping into their investment accounts to cover wagers.

A recent study implies that people in financially strained households who participate in sports betting tend to experience a decline in investment funds, noting that $1 of betting reduces a net investment by more than $2.

RELATED: As sports betting spikes, help for problem gamblers expands in some states

Data for the study was collected by researchers using financial transactions for a large population of Americans that offers a breakdown of investments, purchases, and transfers to online betting sites.

Researchers assessed the effect of sports betting on financially strained households’ investments, spending, debt management, and financial planning decisions. 

The team also uses statistics from an analytics firm that measures customer transactions at major banks, credit card firms and brokerages from 2010-2023. Using the data, researchers built a model to determine if legalized sports betting impacts a person’s ability to manage other financial risks.

Characteristics of bettors were evaluated in the study too, with researchers including a small sample of households in their report that placed online bets who have similar incomes, after-tax equity investment, and credit card debt. 

According to the study, bettors are more likely than non-bettors to have ever invested in crypto or to have ever overdrawn their bank account, and more likely to have played online poker or bought lottery tickets. 

Researchers concluded that the results of their study infer that sports betting leads financially strained households to use savings and investments to increase spending on gambling, possibly affecting their longer-term financial health.

Where is sports betting legal?

Sports betting is legal in 38 states as well as Washington, D.C. and Puerto Rico. Forbes noted that online sports betting is available in 30 states, while 22 states have legal sports betting through tribal gaming compacts.