A new study has unveiled worrying statistics about the rise of irresponsible gambling rates as the country grapples with the growing interest in sports betting.
A total of 38 states have legalized some form of sports wagering since the Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, with the United States now experiencing what many have labelled a ‘sports betting boom.’
Researchers from the University of Maryland’s Robert H. Smith School of Business, and SMU Cox School of Business and UC San Diego Rady School of Management, have shown that “states’ rush to legalize online sports betting is reshaping consumer behavior, state finances and public health.”
A panel of anonymized financial-transaction data was evaluated, with the authors tracking the outcomes for more than 700,000 gamblers across 11 legalized states.
The findings show that legalization increases gambling spending by 369% and irresponsible gambling rates by a massive 372%.
The states benefit fiscally with $0.78 per capita monthly in new tax revenue. The rise in gambling, however, has spillovers including a 20% increase in alcohol consumption and 75% more calls to gambling helplines.
Online sports betting boom could help physical casinos, according to the data
The impacts aren’t found to be equal either, with lower-income individuals experiencing disproportionately higher rates of problematic gambling according to the study.
“Legalization delivers real fiscal benefits, but it also expands the pool of people betting beyond their means,” says UMD Smith Associate Professor of Marketing Daniel McCarthy, who co-authored the work with SMU’s Wayne J. Taylor and UCSD’s Kenneth C. Wilbur.
“Policymakers should weigh the extra tax dollars against the social costs and consider safeguards like income-based wager limits.”
Even while the focus appears to be on sports betting right now, the research found that physical casinos are not harmed. The data shows legalized online betting may not hurt and could help casino spending in many bases which could be reassuring for states like Nevada who have a large casino business in the area.
While interest is booming, and talks of future policy changes to propose consumer-protection standards are happening, McCarty gives their say: “Cutting back the tax deductibility of sports-betting losses might look like a way to discourage gambling, but in practice it targets professional and high-volume bettors more than casual fans.
“Many of those sharp bettors will simply migrate to offshore or illegal markets where regulators lose sight of the activity and consumers receive less protection. So, the wager volume doesn’t disappear—it just shifts, and the net effect on consumer welfare and state revenue is far from clear.”
Featured Image: AI-generated via Ideogram
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