It may not be totally surprising that if you turn everyone’s phone into a casino they gamble (and lose) more, but now we have data that proves it.
Driving the news: Two new research papers found that legalized sports betting is associated with lower credit scores, more bankruptcies, and higher debt loads, particularly among young men and low-income households.
- One of the studies found that in areas where online betting is legal, average credit scores dropped by 1% and the likelihood of filing for bankruptcy increased by 25% to 30% after four years of legalization.
- The second study found that legalization drove “sharp increases in sports betting” without reducing other forms of gambling, and was also associated with a drop in stock market investing.
Why it matters: The findings are strong evidence that legalized sports betting is contributing to financial hardship among at least some gamblers.
- The worst effects were concentrated in young, low-income men, both studies found.
Catch up: Canada legalized single-game sports betting in 2021 and allowed the provinces to regulate it, something all of them have done.
- Legalization received overwhelming support in the House of Commons from all parties, with its supporters arguing it would redirect proceeds of gambling from organized crime to the public coffers.
Bottom line: Governments might appreciate the added tax revenue that comes from legal gambling, but these studies show it comes at a cost.