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

Author

Listed:
  • Scott R. Baker
  • Justin Balthrop
  • Mark J. Johnson
  • Jason D. Kotter
  • Kevin Pisciotta

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.

Suggested Citation

  • Scott R. Baker & Justin Balthrop & Mark J. Johnson & Jason D. Kotter & Kevin Pisciotta, 2024. "Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households," NBER Working Papers 33108, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33108
    Note: CF
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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