New research from Brigham Young University finds the legalization of sports betting has lead to US households to save less money. (Credit: BYU Photo)
Sports Betting Is Booming. So Is Its Toll on Household Savings.
In A Nutshell
- After states legalized online sports betting, frequent bettors cut their investment deposits by 56 percent, with every dollar bet linked to about 20 cents less going into investment accounts.
- The effects were concentrated among frequent bettors and households with little savings, who also saw bigger increases in credit card debt and loan payments.
- Legalized betting also drove more spending on restaurants, alcohol and cable, suggesting a broader lifestyle shift rather than a simple swap of one form of entertainment for another.
- A comparison using Taylor Swift’s Eras Tour ticket release found no similar drop in investing, suggesting something specific to sports betting, not just new spending, is behind the pattern.
Millions of Americans have a sports betting app on their phone, and many use it only occasionally. For a growing number of frequent bettors, though, that app is doing something more troubling, and households with little savings are feeling it the most.
A new study of financial transactions from more than 183,000 U.S. households, published in the Journal of Financial Economics, tracked real bank and credit card records rather than relying on surveys. It found that after states legalized online sports betting, frequent bettors cut their investment deposits by 56 percent. For every dollar deposited into a betting app, investment deposits fell by about 20 cents. That is not pocket change lost to a fun night watching football. It looks like money that might otherwise have gone into long-term investments was redirected toward betting.
Legal sports betting has exploded nationwide since the Supreme Court struck down a federal ban in 2018. Consumers now place more than 160 billion dollars in bets a year, and the industry books more than 16 billion dollars in annual revenue. States have welcomed the tax windfall, but this research raises a pointed question: what happens to household finances once betting becomes as easy as opening an app?
Sports Betting Study Relied on Real Bank Records From 183,000 Households
Economists at the University of Wisconsin, University of Nebraska-Lincoln, Brigham Young University and the University of Kansas obtained transaction-level data covering more than 4 million household-quarters, drawn from a pool of over 60 million American users whose bank and credit card activity was aggregated by a data firm. They focused on 183,821 households with the most complete records, tracking deposits to sportsbooks such as DraftKings and FanDuel alongside brokerage transfers, credit card balances and loan payments.
Because states legalized betting at different times, the researchers could compare the same households before and after betting became legal where they lived, rather than just comparing bettors to non-bettors. They also checked whether simply living near a state with legal betting was enough to produce the same pattern. It wasn’t. That result strengthens the case that access to legal online betting, rather than a broader regional trend, drove the changes.
Frequent Bettors Deposit Eight Times Their Starting Amount Within Three Years
About 7.4 percent of households in the sample placed an online sports bet during the study period. Most bet only occasionally, but a small subset kept coming back. The study defines “frequent bettors” as those who deposited money in more than half of the months after their first bet. This group deposited an average of 1,138 dollars per quarter, more than 5 percent of their income, compared with just 93 dollars among occasional bettors.
Frequent bettors also looked different before they ever placed a bet: they earn less, invest less and carry higher credit card balances than other bettors or non-bettors, and are more than twice as likely to have invested in cryptocurrency or overdrawn a bank account. Once legal betting arrived, spending on it grew steadily. Roughly 70 percent of first-time bettors deposited money at least two more times, and twelve quarters after that first bet, the average bettor was depositing about eight times the original amount.
Sports Betting Appears to Crowd Out Brokerage and Long-Term Investing
Legalization did not crowd out other forms of gambling or general spending. Instead, it reduced savings, as risky bets displaced money that would otherwise have gone toward brokerage accounts, including traditional brokerages and automated investing services often used for long-term goals.
Legalizing sports betting reduced net brokerage deposits by about 81 dollars per household per quarter, roughly 20 percent relative to the average. That effect nearly triples among frequent bettors, whose deposits fell by 221 dollars per quarter, more than half of their typical amount. Households with above-median savings showed little change in investing, while low-savings households cut deposits substantially. The trade-off also shifted with expected stock market returns, suggesting that some households treated betting and investing as competing places to put their money, almost like two versions of the same gamble.
Increased betting also showed up in higher credit card debt and loan payments, most pronounced among frequent bettors and low-savings households, along with more spending on restaurants, alcohol and cable, a lifestyle shift rather than a swap of one entertainment dollar for another.
To confirm this wasn’t a generic reaction to any new spending opportunity, researchers used the release of Taylor Swift’s Eras Tour tickets as a comparison. Ticket sales caused a large jump in entertainment spending in the same states, but with no detectable effect on investment or borrowing, even among low-savings households, pointing to something specific about sports betting rather than new spending itself.
Sports Betting Legalization Trades Tax Revenue for Household Financial Stability
States have treated legal sports betting as free money: a new source of tax revenue with few strings attached. This research shows the strings are there, just attached to the households least able to absorb them.
Disclaimer: This article summarizes findings from a single peer-reviewed study and is intended for general informational purposes. It does not constitute financial advice. Individual circumstances vary, and readers with questions about their own finances or gambling habits should consult a qualified financial professional or a gambling support service.
Paper Notes
Limitations
The dataset, while large, comes from a financial data aggregation platform rather than a random sample of the U.S. population, and it excludes low-income unbanked consumers who don’t hold traditional bank or credit accounts. The researchers also don’t observe demographic details like race, gender or age, so the study can’t say how these effects vary across those groups. Because the data can only capture up to four snapshots of credit card balances for a subset of households, some of the debt findings rely on loan payment data as an imperfect substitute for direct balance information. The authors note that rising loan payments could theoretically reflect prepayment rather than financial strain, though they view that explanation as unlikely given separate evidence of rising bankruptcies and falling credit scores tied to sports betting legalization.
Funding and Disclosures
The authors reported no known competing financial interests or personal relationships that could have influenced this research. The paper thanks the editor and an anonymous referee, along with numerous academic colleagues, for feedback during conferences at Brigham Young University, the Wasatch Finance Conference, the MIT GSFP Consumer Finance Conference, the Financial Research Association Conference, and the Western Finance Association Conference.
Publication Details
The paper, titled “Gambling away stability: Sports betting’s impact on vulnerable households,” was authored by Scott R. Baker (University of Wisconsin), Justin Balthrop (University of Nebraska-Lincoln), Mark J. Johnson and Jason Kotter (Brigham Young University), and Kevin Pisciotta (University of Kansas). It was published in the Journal of Financial Economics, Volume 183 (2026), article 104330. The article was received October 23, 2024, revised June 13, 2025, and accepted June 21, 2026. DOI: 10.1016/j.jfineco.2026.104330.
