University of Nebraska–Lincoln study links online sports betting legalization to lower household savings

Research led by Justin Balthrop, an assistant professor of finance at the University of Nebraska–Lincoln, suggests that the legalization of online sports betting may push households to reduce their savings and investments. The work appeared in the Journal of Financial Economics under the title "Gambling Away Stability: Sports Betting's Impact on Vulnerable Households."

The analysis drew on financial transaction data from almost 184,000 US households. It examined how the introduction of legal online sports betting across 26 states influenced investment decisions, spending patterns and the management of debt.

Among the findings, households with limited savings felt the most significant financial consequences. Frequent sports bettors tended to have lower incomes, fewer investments and higher credit card debt than occasional bettors and people who did not bet on sports at all.

Balthrop stressed that vulnerability is not confined to low earners. People with high incomes can face comparable risks if most of their money is already committed to covering expenses. The study labels such households "budgetarily constrained", meaning that vulnerability depends not only on income but also on how much disposable money remains after financial obligations are met.

The researcher also pointed to a psychological factor specific to sports betting. In his view, the activity can create a false sense of expertise, as devoted fans may assume that detailed knowledge of their favorite teams gives them an edge. Familiarity with a sport, he noted, does not necessarily translate into an ability to consistently beat betting markets. Balthrop has nearly two decades of experience in quantitative investment management and is himself an experienced sports bettor, which he says informs his view of how sports betting differs from other forms of gambling.

Balthrop hopes the results will inform policymakers weighing the tax revenues from legal sports betting against its possible long-term social and economic costs. He said his aim is not to eliminate sports betting but to encourage safeguards that better protect consumers.

Separately, Nebraska remains without online gambling after voters recently rejected proposals to legalize mobile sports betting in the state.