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.
Authors
Scott R. Baker, Justin Balthrop, Mark J. Johnson, Jason D. Kotter, Kevin Pisciotta
Related Organizations
- Acknowledgements & Disclosure
- We thank Darren Aiello, Aaron Brown, Evan Calford, Karl Diether, Matthew Gustafson, Junchao Liao, Erik Mayer, Ryan Pratt, Tyler Shumway, and seminar and conference participants at Brigham Young University and the 2024 Wasatch Finance Conference for helpful feedback. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33108
- Pages
- 80
- Published in
- United States of America
Table of Contents
- Introduction 3
- History of Online Sports Betting 9
- Data 11
- Transaction Level Data 11
- Identifying Sports Betting and Other Transactions 12
- Characteristics of Bettors 14
- Staggered State-Level Legalization of Sports Betting 16
- Results 20
- Legalization increases betting 20
- Betting reduces investment 22
- Effects of betting on constrained households' balance sheets 29
- Impact of sports betting on other risk-taking 30
- Effects on consumption patterns 31
- Conclusion 32
