When legal sports betting surges, so do Americans' financial problems

toggle caption Charlie Riedel/AP

Online sports betting is more popular than ever, with Americans expected to legally wager billions of dollars on this year's March Madness basketball tournament. But a growing body of evidence reveals that the sports betting boom leads to financial strain for bettors.

A recent report from the New York Federal Reserve found that sports betting is linked to plummeting credit in the more than 30 U.S. states where the activity is legal, as well as in neighboring counties where it was not.

Credit delinquency rates, primarily driven by missed payments on credit cards and auto loans, rose about 0.3% overall in states where sports betting is legal, despite legal sports bettors making up only 3% of the population. But, looking only at the 3% of the population who took up sports betting after their state legalized it, credit delinquencies spiked by more than 10% among gamblers. Credit delinquency means credit payments are at least 90 days past due.

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Sports betting has boomed into a multi-billion dollar industry in the years since a 2018 Supreme Court decision paved the way for states to legalize the practice. And the ability to place bets on your phone, no longer just at casinos, has made it more accessible.

For March Madness alone, the American Gaming Association projected that Americans will legally wager $3.3 billion on this year's tournaments — a more than 50% increase over the past three years.

Since the pandemic, the Federal Reserve study found bettors more than doubled their quarterly spending, going from under $500 in December 2019, to in excess of $1,000 by June 2021.

This was fueled in large part by new mobile apps dedicated to bringing the betting table directly to consumers and aggressive marketing campaigns from online gambling companies.

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