Study Finds Effect of Legalized Sports Betting on Credit Scores
A new white paper from researchers at UCLA and USC has identified a worrying pattern linked to the legalization of sports betting in the United States.
Credit scores decline in the US following the legalization of sports betting.
LISTEN TO THIS ARTICLE:The analysis shows that the widespread availability of sports betting is harming the financial well-being of consumers.
The state-by-state legalization of sports betting began in 2018 after the US Supreme Court ruled the Professional and Amateur Sports Protection Act (PASPA) unconstitutional. PASPA had limited sports betting to a few states, and its repeal allowed individual states to set their own gambling regulations.
Huge Increase in GGR
Since this legal change, sports betting has been authorized in most states, with only a dozen states yet to legalize it. The sector has seen rapid growth, especially in sports betting markets like New York. The industry achieved $5.72 billion in gross gaming revenue (GGR) from January to May this year, according to the American Gaming Association. This marks a 24.5% increase from the previous year.
However, the broad legalization of sports betting is endangering the financial stability of consumers, according to the study titled “The Financial Consequences of Legalized Sports Gambling.” The researchers assessed consumer health data to evaluate the effects of legal sports betting.
Alarmingly, the study found that “overall consumers’ financial health is modestly deteriorating as the average credit score in states that legalized sports gambling decreases by roughly 0.3%.” The report attributes this decline to “changes in indicators of excessive debt.”
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Increased Consumer Debt
The study identified significant rises in debt consolidation loans, auto loan delinquencies, as well as debt collections and bankruptcy rates. Financial institutions have responded to this trend by tightening credit access for consumers.
Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt.
The report also pointed out that the negative financial impact on consumers is more pronounced in states with mobile and online sports betting compared to those with only in-person betting options. The researchers concluded that the study shows a clear link between easy access to sports betting and declining financial health and credit scores for consumers.
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