A new report from the New York Federal Reserve reveals a troubling link between the surge in legal sports betting and deteriorating financial health among Americans. As online wagering becomes increasingly accessible, credit delinquency rates are rising, particularly for new bettors, signaling a growing economic concern across the nation.
Credit Delinquencies Spike for New Bettors
The New York Federal Reserve report found that credit delinquency rates, defined as payments at least 90 days past due, rose approximately 0.3% overall in the more than 30 U.S. states where sports betting is legal. This increase occurred despite legal sports bettors comprising only 3% of the population. However, focusing solely on this 3% who began sports betting after legalization, credit delinquencies spiked by more than 10%. This financial strain is primarily driven by missed payments on credit cards and auto loans.
The boom in the multi-billion dollar industry follows a 2018 Supreme Court decision that opened the door for states to legalize the practice, with mobile apps making betting more accessible than ever. For March Madness alone, the American Gaming Association projected Americans would legally wager $3.3 billion this year, a more than 50% increase over the past three years. The Federal Reserve study also noted a significant increase in bettors’ quarterly spending, which more than doubled from under $500 in December 2019 to over $1,000 by June 2021. This surge was fueled in large part by new mobile applications dedicated to bringing the betting table directly to consumers and aggressive marketing campaigns from online gambling companies.
Broader Financial Degradation and Bankruptcy Risks
Further corroborating these trends, Brett Hollenbeck, an associate professor of marketing at the UCLA Anderson School of Management, co-authored a study published last year that produced similarly concerning findings. His research indicated that the average credit score in states with legalized sports betting dipped 0.8 points. Hollenbeck stated, ‘We found that when gambling was legalized in a state, after some period of time, there was a fairly significant degradation of consumer financial health. We saw worse credit scores, more delinquencies.’
While the New York Federal Reserve report did not find significant changes in bankruptcy filings overall, Hollenbeck’s 2025 study found a more direct link with online access. In states allowing online betting, the study reported a 10% increase in the likelihood of bankruptcy and an 8% increase in debt collection amounts, outcomes typically appearing about two years post-legalization. The study concluded, ‘We find a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies. Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt.’
Addiction and Vulnerable Populations
Experts warn that beyond the financial costs, the explosive growth of online sports betting carries significant risks of gambling addiction. Christopher Welsh, an addiction psychiatrist at the University of Maryland School of Medicine and a director of research at the Maryland Center of Excellence on Problem Gambling, noted the shift in gambling patterns, stating, ‘It’s not like the other forms of gambling… We’re still getting calls about casino gambling, but it’s almost all online sports betting now.’
A 2024 Wall Street Journal report highlighted the concentration of profits within the industry, finding that 70% of the profits from one online gambling company came from less than 1% of its users. Welsh explained that while most users won’t develop problematic behavior, those predisposed to addiction can make costly financial decisions. Young people are particularly susceptible, often lured by celebrity-backed advertisements promising low risks and high rewards. The Fed study found the sharpest drop in credit delinquency rates among individuals under 40 years old. Welsh recounted alarming instances, stating, ‘We’re getting more calls from even parents of college kids, or even high school. They have no idea anything is going on, and then they’re getting a call from a bookie who’s saying ‘Your child owes me $50,000. What are you gonna do about it?” He added that individuals often ‘resorting to getting money from other sources’ to sustain their betting habits, making it easy to fall into and behind on debt.
Industry Response and State Incentives
The gaming industry acknowledges the addictive nature of gambling, with the American Gaming Association (AGA) initiating a ‘responsible gaming’ awareness program. However, the AGA opposes federal regulation aimed at protecting consumers, arguing it would undermine state authority. The association has also noted that, despite the growth in betting activity, a study it commissioned showed overall sports betting advertising spending and volume has declined in recent years. This creates a complex situation for states, which have a financial incentive to legalize gambling through tax revenues but face a potential conflict of interest due to the harm caused to their residents.
The confluence of increased accessibility through mobile platforms, aggressive marketing, and the inherent risks of gambling addiction is demonstrably impacting the financial stability of a segment of the American population. As studies from the New York Federal Reserve and UCLA reveal a clear link between legalized sports betting and rising debt, delinquencies, and bankruptcies, the economic consequences of this booming industry warrant continued scrutiny.
