Americans Spend More Money Betting On Sports Than Investing In Stocks
Americans seem to care more about the Chicago Bulls than FiDi’s Charging Bull as a new study has revealed that they spend more money betting on sports than investing in stocks.
According to a recently published paper, since sports betting has become more accessible–with most states legalizing betting on your phone over the past few years–every dollar spent on a sports bet accounts for a $2 drop in a household’s net investments.
In 2018, the United States Supreme Court overturned a federal ban on sports betting. As states began legalizing both in-person and online sports betting, the market swiftly grew. In 2023 alone the American sports betting industry hit a record breaking $10.92 billion in revenue according to the American Gaming Association’s annual report.
On the flip side, as betting goes up investing goes down. Data found that in the two to three years following the legalization of sports betting, net investments dropped 14%.
And according to the data there’s a certain demographic that’s more prone to shifting their money from stocks to betting: those in monetary distress. Financially constrained households have been found to be the ones most often diverting their funds to sports bets. Relative to this, sports betting then increases the number of times that households overdraw their accounts in the future.
The study writes:
Given that sports betting has a negative expected value, this finding underscores the potential for sports betting legalization to exacerbate financial vulnerability and hardship.
Moreover, consumption in complementary entertainment-related activities also increases for those that participate in sports betting, such as lottery play. Unfortunately, it also leads to higher credit card balances and less available credit.
In the end, while sports betting offers new options for states to generate revenue, it also introduces significant financial risks to those who participate.
Because of this, researchers note that it’s “imperative for policymakers to consider the broader financial implications of sports betting legalization.” They suggest targeted interventions, stricter regulation of gambling advertisements, and support for safer investment opportunities.
The full paper can be found here.
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