Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households

Scott Baker, Justin Balthrop, Mark J. Johnson, Jason Kotter and Kevin Pisciotta

No 33108, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the causal effect of online sports betting on households' investment, spending, and debt management decisions using household transaction data and a staggered difference-in-differences framework. Following legalization, sports betting spreads quickly, with both the number of participants and frequency of bets increasing over time. This increase does not displace other gambling or consumption but significantly reduces savings, as risky bets crowd out positive expected value investments. These effects concentrate among financially constrained households, as credit card debt increases, available credit decreases, and overdraft frequency rises. Our findings highlight the potential adverse effects of online sports betting on vulnerable households.

JEL-codes: D14 G11 G18 G51 (search for similar items in EconPapers)
Date: 2024-11
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Note: CF
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