After a 2018 decision by the US Supreme Court, 38 states have legalized sports gambling. We study how this policy has impacted consumers’ financial health using state-by-state deregulation of legalized sports gambling and a large and comprehensive dataset of consumer financial outcomes. Our main finding is that overall, consumers’ financial health worsens as the average credit score in states that legalize sports gambling decreases by about 0.3%. Decreasing credit scores are associated with changes in excess credit indicators. We are experiencing a significant increase in the rates of bankruptcy, debt collection, debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to reduced creditworthiness of consumers by restricting access to credit. These results are stronger in states that allow online sports gambling compared to states that restrict access to in-person betting and are greater for young men in low-income areas. Together, these results show that easy access to sports gambling harms consumers’ financial health by increasing their level of debt.
That appears in a new paper by Brett Hollenbeck, Poet Larsen, and Davide Proserpio.
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