Legal Gambling Boosts Irresponsible Betting, Suggests New Study

New research focusing on the impact of the online gambling expansion across the United States, highlighted a concerning trend. The study, the first of its kind, was conducted by the University of California San Diego Rady School of Management.

The research comes at a time when close to 40 US states offer sports betting, while seven offer legal online gambling in addition to wagering on sports. Researchers used extensive data that consisted of CDC suicide records, national gambler helpline calls, reported tax data and digital payment records. The data from a group of nearly 720,000 online gamblers was analyzed.

Concerningly, the study uncovered that more than 8% of the people who engaged in online gambling across the country spent between 10% and 15% of their monthly pay on the activity. Precise figures outline that 5.3% of the test group spent more than 10% of their income on gambling activities, while another 3.2% spent more than 15%.

In contrast, responsible gambling guidelines in neighboring Canada recommend gamblers limit their spending for such activities to less than 1% of their monthly income. Per the analysis, across the US, some 43% of the gamblers exceeded spending 1% of their monthly income on gambling activities.

Online Gambling Expansion Leads to Irresponsible Spending, Losses

Equally concerning was that the legalization of online gambling results in irresponsible spending among consumers with lower income, according to Kenneth C. Wilbur, co-author of the study and professor of marketing at the Rady School.

While spending on gambling among lower-income consumers may be irresponsible, this is not the case with higher-income gamblers. “We define gambling irresponsibly as spending a high proportion of their income —for example, 10% — on gambling,” explained Wilbur.

“Our data show that online gambling legalization leads to more irresponsible gambling spending among lower-income consumers than among higher-income gamblers.”

Kenneth C. Wilbur, co-author of the study and professor of marketing and analytics at the Rady School

Sounding the alarm, Wilbur said that an overwhelming majority of the test group reported losses due to online gambling. In precise figures, some 96% of the gamblers lost money to online gambling activities while only 4% made money.

Moreover, Wilbur said: “Online gambling platforms often ban or throttle frequent winners’ accounts. There is no right to gamble.”

The release of the new research comes at a time when betting activities are expected to increase in light of the 2024 Olympics in Paris. Moreover, since the last Olympic games, 16 states have launched legal sports betting, which means that more Americans have access to the activity currently.

While the researchers acknowledged the positive impact of legal online gambling as it reduces the illegal sector and generates tax revenue, its detrimental effect cannot be overlooked.

Ultimately, the expansion of legal online gambling can result in “higher rates of problematic gambling behavior,” the researchers warned, adding that an uptick in gambling helplines across the US was recorded.