Credit Delinquency Sharply Rises in States with Online Betting, Study Says

A new study from the Federal Reserve Bank of New York found that credit delinquency rates increased in every state that legalized mobile sports betting.

Study Finds Link Between Online Sports Betting and Credit Delinquency 

The researchers compared betting activity and consumer credit outcomes in states that introduced mobile sports betting with those that did not. They found that delinquency rates rose by 0.31 percentage points from a baseline of 10.71% in counties where betting was legalized.

Although only about 3.1% of people in those counties began betting after legalization, the estimated delinquency rate among bettors increased by 10% across all age groups. For bettors under 40, the rise was even sharper, as it increased by 26%. In this younger group, credit card delinquency increased by 7.9%, while auto loan delinquency rose by 5.6%.

Adults aged 40 to 64 saw a smaller increase, with delinquency rates rising by 7.4%, significantly less than among younger bettors.

It should also be noted that, according to a recent study by Deseret News and the Hinckley Institute of Politics, more and more Americans are betting on sports. This is a broader trend that could also be partially responsible for the rise in credit delinquency rates in states with online sports betting.

This Also Leads to Financial Harm

The rise of mobile sports betting has led to noticeable financial harm. Delinquency rates began increasing about a year after legalization and continued to climb over the next three years, with no indication of slowing down.

This impact has also extended beyond state borders into places where online sports betting remains illegal. Many residents simply travel to neighboring states where it is permitted, create sportsbook accounts, and place their bets there. In counties located within 15 miles of a legal state, delinquency rates rose to about 58% of the increase seen in legal counties, even though betting activity reached only around 15% of those levels.

Individuals only need to be physically present in a state where betting is legal and do not need to be residents. This means that no laws are technically broken. However, this also means that bettors may lack access to responsible gambling resources such as counseling services, education programs, and addiction hotlines.

Gary Gray, director of the North Carolina Council on Problem Gambling, explained that, unlike alcohol or drug addiction, a gambling problem is not visibly apparent. This makes it easier for individuals to accumulate debt in secret over long periods. Gray noted that some may hide multiple credit cards from a spouse, take out additional mortgages on their home, or even deplete their retirement savings without others realizing it.

Despite concerns about the potential harmful impact that legalizing online sports betting may have, more and more states are considering it. For example, Wisconsin might be next to legalize the practice as Gov. Tony Evers is expected to sign a bill that expands online sports betting in the state.