Gambling Away Our Students’ Futures

Since the Supreme Court overturned the Professional & Amateur Sports Protection Act (PASPA) in 2018, 38 states have legalized sports betting, and consumers have consistently increased the portion of their paychecks dedicated to sports betting.

Approximately 82.2% of U.S. adults have gambled in the past 3 years. The industry earned over $11 billion in 2023, and Goldman Sachs projects the industry could grow to $45 billion per year by 2030. Americans are expected to legally wager $35 billion on football alone – an increase of $8.3 billion since last season.

This recent boom has far-reaching consequences. Tax revenues are up, vast majorities of Americans support online gambling, but its economic and social impacts threaten the financial stability of individuals—particularly students, young adults, and low-income communities that lack access to financial education.

The Rise of Online Gambling Nationwide

The gambling industry is in the “middle innings” of its development with roughly half of US states having legalized mobile sports betting. Public support for the legal sports betting industry has surged in recent years. 75% of American adults support regulated online sports betting in their state. Nearly all past-year sports bettors (96%) are familiar with at least one responsible gaming resource and 88% believe the legal industry is committed to responsible gaming.

All the while, less than 5% of all gamblers are able to earn a profit.

Gambling has become accessible anytime, anywhere. Influencers talk about their bet of the week. Celebrities join DraftKings commercials to promote free bets. Sportsbooks offer $1,000 free bets, weekly bonuses, and popular parlays with even worse odds. In-game betting allows bettors to place wagers during live events, offering personalized, real-time wagering opportunities. Even major sports networks have started presenting parlay bets before kickoff.

“The ease with which students can access online gambling is disturbing,” explains Frank Murray, Director of Instructional Technology at Belton ISD in Texas. “It’s no longer confined to casinos; it’s on their phones, in their social media feeds, and even integrated into the sports they watch.” In just a few years, online betting has become normalized at an unprecedented rate thanks to this convergence of media – making gambling ubiquitous with modern-day sports.

Negative Impacts of Online Gambling on Individuals

The spread of legalized online sports betting has dramatically increased state revenues, but at what social and economic cost?

Historically, gambling tax revenues from casinos are earmarked for education and the same is being done with a majority of states’ online gambling revenue; however, studies have found that when states earmark lottery funds for education, spending on education does not increase beyond historical trend levels. This suggests that state lotteries do not significantly enhance public education funding, which is alarming given the pervasive and widespread nature of online gambling.

While online gambling legalization boosts state revenues, it also leads to increased problematic gambling behaviors, especially among lower-income populations.

That’s why the net economic benefit is often debated, as some believe that online gambling creates jobs and promotes economic activity, while other studies suggest that casinos may merely redistribute existing spending and wealth. While gambling companies may create jobs, many positions are low-wage and may not lead to substantial economic advancement for employees, producing a net-negative impact when accounting for communities’ gambling losses.

A significant portion of tax revenue from sports betting is allocated to public schools, colleges, and educational programs. Funds are also directed toward problem gambling programs, state budget support, regulatory costs, and local governments. But a study from the Federal Reserve in St. Louis found that when states earmark gambling revenues for education, spending on education has not increased beyond historical trend levels. It simply redistributes line items in the budget.

An analysis of over 700,000 online gamblers revealed that 96% lost money. Platforms also restrict or ban frequent winners, helping their odds. While responsible gambling guidelines recommend spending less than 1% of monthly income on gambling, 43% of gamblers exceeded this 1% threshold. More than 5% spent over 10% of their income, and over 3% spent more than 15%.

The Odds Stacked Against Our Most Vulnerable Students

Numerous studies have highlighted how gambling revenues are disproportionately drawn from low-income communities which typically lack access to affordable, high-quality education opportunities.

The industry profits largely from compulsive bettors, with a small percentage of gamblers accounting for the majority of bets placed; and these new betting options are left entirely unregulated, despite many consumers lacking the financial education to appreciate the odds.

“The challenge of responsible gambling has permeated into high school,” said Paul Brenton, Superintendent of Plainfield Public Schools. “The law requires users to be at least 21, but despite these protections, we keep seeing teens finding ways around the rules. Social media platforms like TikTok even share tips on how to do it. It’s hard to measure exactly how widespread the problem is, but there are clear signs it’s growing.”

A study by the National Bureau of Economic Research found that legalized sports betting has led to states seeing an increase in gambling addictions and an increase in missed payments and defaults. Lower-income individuals in states that have legalized online betting have also been more likely to engage in irresponsible gambling. They are also less likely to contribute towards their investment account contributions, and the risk of bankruptcy in these states has soared to over 30% of outstanding debts.

The problem has entered everyday life. “Gambling terms like “parlay” have started popping up in everyday teen conversations,” Paul lamented. “It’s a cultural shift we’ve never seen before.”

An Opportunity to Invest in Students’ Futures

Online sports betting is here to say. The genie will not go back in the bottle. But we can take action to address the risks of gambling by investing in strong financial literacy programs that help students understand the odds and dangers of gambling.

Individuals with higher financial literacy are less likely to engage in frequent gambling. Those with greater financial knowledge also tend to spend less on gambling activities. Educational programs focusing on financial management also helps reduce gambling-related harms and serve as a preventive measure against gambling addiction.

Interestingly, a recent study found that receiving financial education at a younger age did not categorically reduce gambling frequency, which highlights the reality that simply providing financial education may not be sufficient; the quality and content of such education are crucial.

To legislators’ credit, a majority of gambling taxes have been allocated towards education.

Massachusetts passed a bill legalizing sports betting and estimated $35 million in annual tax revenue. Illinois has allocated roughly 90% of gambling revenues to support K-12 public education. And when New York legalized online sports betting in January 2022, they generated over $63 million in tax revenue in the first 24 days. As of March 2024, this figure has increased to $2 billion.

The money is pouring in, but the change in students’ habits and the way we have normalized online gambling for young adults is disturbing.

Conclusion

While online sports betting has generated significant tax revenue, the pervasive nature of online gambling necessitates a proactive strategy to limit harm to students. Prioritizing economic gains and tax revenue increases alone will not improve the well-being of individuals and communities.

Research has proven that the variable rewards and unpredictable payouts in gambling foster addiction by triggering dopamine surges. Studies have also indicated that young people are particularly susceptible to impulse control issues due to a developing prefrontal cortex.

In addition to promoting responsible gambling, the solution is education. Specifically, financial education, which can help protect young adults from this new frontier by teaching concepts such as expected value, risk-reward, and opportunity cost.

“Most parents don’t realize how often high school students are drawn into the world of online gaming,” Paul explained. “When high schoolers access fantasy sports or gaming apps meant for adults, they’re constantly bombarded with gambling ads … Without supervision, they might not fully understand the risks they’re taking, and it’s easy for them to go too far before their parents even realize the mistakes they’ve made.”

We need to teach students financial literacy to understand how games of chance exploit behavioral psychology to protect them from the inevitable gambling ads they see in everyday life. It’s our responsibility to highlight these financial pitfalls to students and teach them about the slippery slope of casual gambling.

With a strategic reinvestment of gambling revenues into statewide financial literacy programs, legislators can empower students with a brighter financial future. The choice is simple: gamble away our youth’s futures or invest in their financial education to help them navigate this new world.