Sports Betting Across Borders: Spatial Spillovers, Credit Distress, and Fiscal Externalities

Jacob Goss () and Daniel Mangrum
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Jacob Goss: https://econ.wisc.edu/staff/goss-jacob/

No 1184, Staff Reports from Federal Reserve Bank of New York

Abstract: We use the staggered legalization of mobile sports betting across U.S. states to study the consequences of legalizing a taxed vice when consumers can cross state lines to consume it. Since betting apps verify a bettor’s location rather than residence, non-residents can wager in a legal state, causing an asymmetry where tax revenue accrues where the bet is placed while any financial harm follows the bettor home. Using transaction and credit records tied to place of residence, we estimate the effects of legalization both within legal states and into nearby states where betting is not legal. Betting rises in legal states and across the border, fading within an hour’s drive. Credit delinquency rises, concentrated among consumers under 40 and for credit cards and auto loans. Distress crosses the border in greater proportion than betting, consistent with distress-prone bettors selecting into cross-border betting. Ignoring spillovers contaminates control groups and understates direct effects in legal states. We show that states bordering legal markets already bear a disproportionate share of the harm of legalization while collecting none of the revenue, strengthening the incentive to legalize.

Keywords: sports betting; consumer credit; household debt; spatial spillovers; state taxation (search for similar items in EconPapers)
JEL-codes: G51 H23 H71 H73 H77 L83 (search for similar items in EconPapers)
Pages: 71
Date: 2026-02-01
New Economics Papers: this item is included in nep-spo and nep-uep
Note: Revised October 2026.
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Citations: View citations in EconPapers (1)

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DOI: 10.59576/sr.1184

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