Kansas Study Shows Online Sports Betting Costs Americans Twice as Much in Retirement

A new study from the University of Kansas reveals that every $1 spent by Americans on online sports betting translates into $2 not invested in retirement savings.

“Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households” reveals the negative effects of gambling

Kevin Pisciotta, an assistant professor of finance at the University of Kansas, cited the correlation between the legalization in online sports wagering and the increase in betting-related activities.

“We find that people’s household financial balance sheets are being significantly shaped by an increase in online sports betting, he said. “Legalization is very effective at getting people to pick up betting.”

Pisciotta’s new paper, “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households” reveals that online sports wagering leads to higher gambling activity.

The research was not focused solely on any particular socioeconomic working class. The study examined spending patterns of approximately 230,000 households across all 50 states.

This analysis compared data from three years before and after the legalization of online sports wagering. The study found that the impact of online sports betting is severe for financially constrained individuals.

“The effects that we find are exacerbated in what we would call financially constrained individuals,” said Justin Balthrop, an assistant professor of finance at the University of Kansas.

Additionally, the paper reveals these two main findings:

• Americans use funds that they would’ve otherwise been putting into savings for sports betting.
• Bettors also use available credit on their credit cards for sports wagering.

University of Kansas study shows online sports betting has led to increased bank overdrafts, higher credit card balances

“Credit card balances go up. Their available credit goes down. And they make less payments on their card,” said Pisciotta. The professor also admitted the last time he bet on a game was during March Madness.

According to the research, the legalization of online sports betting has led to increased bank overdrafts, higher credit card balances, and more interest payments.

The study also highlights that the average household spends between $800 and $1,000 a year on online gambling. This means $1 of betting reduces net investment by $2.13.

Furthermore, this expenditure is not a substitution for other forms of entertainment but an additional cost. As a result, this leads to an immediate reduction in savings and productive investments.

The study shows that online sports betting has not changed overall spending on entertainment. However, the activity has instead created a new financial burden.

“It’s clear that sports betting is ubiquitous,” Balthrop said. “It’s here to stay; it’s very popular. And so, we need to get a handle on what these effects are.”

In addition to Pisciotta and Balthrop, Scott Baker of Northwestern University and Mark Johnson and Jason Kotta of Brigham Young University also contributed to the research.