Sports Betting Legalization Impacts Credit Scores, Boosts Bankruptcies

A new white paper analyzing the impact of legalized sports betting across the United States uncovered a concerning trend. The study, completed by expert researchers with the University of California, Los Angeles (UCLA), Anderson School of Management and the Marshall School of Business – University of Southern California, reveals that easy access to sports betting has a detrimental effect on the financial health of consumers.

The statewide expansion of sports betting started in 2018. At the time, the US Supreme Court deemed PASPA, the Professional and Amateur Sports Protection Act, unconstitutional. PASPA used to restrict sports wagering to a handful of states. After it was struck down, the legalization of wagering on sports was left in the hands of lawmakers from different states.

Since the start of the expansion of sports betting, only a dozen states have yet to legalize the activity. The legal betting sector has been growing rapidly reaching $5.72 billion in gross gaming revenue (GGR) between January and May this year, data released from the American Gaming Association reveals. This figure represents a 24.5% year-over-year increase which reaffirms the sector’s growth trajectory.

However, the country-wide expansion of wagering puts the financial health of the consumers at risk, the newly released study titled “The Financial Consequences of Legalized Sports Gambling” warns. The experts analyzed consumer health data to determine the impact of legal wagering.

Consumers’ Financial Health Deteriorates

Concerningly, the study uncovered that the “overall consumers’ financial health is modestly deteriorating as the average credit score in states that legalized sports gambling decreases by roughly 0.3%.” According to the new white paper, the decline in credit score is related to “changes in indicators of excessive debt.”

The experts uncovered a notable increase in debt consolidation loans, auto loan delinquencies, as well as debt collections and bankruptcy rates. The response of the financial institutions to the reduced credit rates of the consumers is restrictions related to accessing credits.

“Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt,“

reads the Financial Consequences of Legalized Sports Gambling research

The recently released report highlighted that the negative impact on consumer financial health was stronger in states where mobile and online sports betting is available when compared to states where only in-person wagering is permitted. The researchers concluded that the results of the study confirm that there’s a clear connection between the deteriorating financial health and credit rate of consumers and easy access to sports betting.