Written by: Mike Senecal
Edited by: Lillian Guevara-Castro
Reviewed by: Adam West
- The most recent evidence of Americans’ embrace of sports betting is the record estimate of $1.39 billion wagered on this year’s Super Bowl.
- It comes as consumers increasingly engage in all forms of betting after a 2018 Supreme Court decision removing most barriers to gambling.
- But there’s a catch: Research shows that the negative consequences of sports betting disproportionately impact subprime consumers and may be contributing to the ongoing rise in credit card debt and delinquencies.
Another Super Bowl has come and gone. Congratulations if you’re an Eagles fan, and better luck next time to the Chiefs (not that they need it).
Did you win or lose? And by that, I don’t mean to ask whether your team had a good day on the field. Instead, I’m joining the online betting revolution to ask how much money you won or lost.
I’m not kidding.
Americans have embraced sports betting since the Supreme Court legalized it in 2018. And now it’s in 38 states and the District of Columbia. Bettors wagered a record $142.6 billion in 2024 (up from only $6.6 billion in 2018), and the industry generated a record $13.3 billion in gross revenue.
The growth in online sports betting since 2018 has led to lower credit scores, higher bankruptcy rates, and an overall heightened drain on household finances, according to industry research.
The question for subprime professionals is whether — or how much — this revolution in the online sports betting marketplace is affecting some of the disheartening numbers we’re seeing around total credit card debt and delinquencies.
Unfortunately, research shows that the growth in online sports betting is increasingly manifesting some of the negative consequences of financial stress, including lower credit scores, higher bankruptcy rates, and an overall heightened drain on household finances — markers that affect subprime lending consumers disproportionately.
Those insights tell us that subprime’s fortunes may very well rise and fall according to consumer preferences for online sports gambling. Thus, the research, which originates from an industry group, academic institutions, and the TransUnion credit bureau, constitutes essential consumer intelligence regarding the challenges of subprime lending consumers in a dynamic marketplace.
An Explosion in Online Gambling
To the many who experienced Super Bowl Sunday February 9, you were part of what may have been the largest single-day consumer event in U.S. history. At least that’s what the National Retail Federation seemed to imply in the pre-game Super Bowl Spending Survey it conducted, in which it estimated that spending on food, drinks, apparel, decorations, and other items hit $18.6 billion, a new record.
As valuable as the National Retail Federation survey is, the great team over there is overlooking retail betting, which engages individual consumers directly like any retail business. We’re setting records there, too, according to the American Gaming Association, which estimated that Americans wagered a record $1.39 billion “legally” on Super Bowl LIX.
There’s also a marketing revolution going on. Gambling that once was illegal, though widely accepted (such as March Madness office pools), is now part of the eCommerce mainstream.
Even during games, celebrity endorsers entice television and online viewers with invitations to download apps that make betting the house as easy as a few taps.
In fact, the daily fantasy sports and online U.S. sportsbook FanDuel aired a commercial during the second quarter of this year’s Super Bowl. I speak from experience when I say it turns out to be quite easy to download an app to wager your financial future while watching a football game.
It’s a far cry from the status quo before the Supreme Court’s 2018 decision. The Court struck down the Professional and Amateur Sports Protection Act of 1992, which had essentially banned sports betting except in places like Nevada, which has grandfathered arrangements, and had left the traditional gaming industry — casinos, lotteries, horse racing, and online poker — to the states.
That’s the industry most of us grew up with and think of when we think of gambling. And it’s an industry that is healthier than ever. But the kind of legalized sports betting through apps and advertising we’re talking about here is new.
Subprime Borrowers in the Crosshairs
That sets up subprime borrowers as a kind of test case in an enticing new marketplace where gamification isn’t just an engagement strategy but the entire point. The negative evidence is strong and starts in 2018 — the year the Supreme Court incited the revolution — in a review of more than 140 academic studies on sports wagering and gambling addiction by the National Council on Problem Gambling.
The report’s executive summary (located here in the bubble labeled “Sports Wagering: A Special Review) noted that gambling problems among sports bettors were at rates “at least twice as high” as among gamblers in general. With youth at higher risk than average and “aggressive promotions” beginning to make their presence felt, the study’s authors concluded that sports betting had “significant potential to create or worsen gambling problems.”
Now those problems are here — academic papers published in 2024 concur with the National Council. In “The Effects of Sports Betting Legalization on Irresponsible Gambling,” a team found an association between problem gambling (defined as monthly gambling expenditures exceeding 1% of income), which increased by 400% in the data under study, and online sports betting, which rose by 633%.
In “Gambling Away Stability,” another team found that the astronomical rise of online sports betting after 2018 caused people to reduce their savings rather than adopt positive financial behaviors.
“These effects concentrate among financially constrained households, as credit card debt increases, available credit decreases, and overdraft frequency rises,” the report read.
Finally, “The Financial Consequences of Legalized Sports Gambling” found the average credit score of a sample of 7 million consumers decreased by 0.3% in states that had legalized online sports gambling. In contrast, average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies substantially increased.
From the perspective of a credit bureau, TransUnion’s US Betting Report for Q3 2024 assessed some of the fallout from counterproductive behaviors associated with sports betting. The report found that more than 40% of online bettors who spent more than $500 per month on gambling said they “wouldn’t be able to meet all their financial obligations in full,” and nearly 55% said they’d been “contacted by a collections agent within the past year.”
What can we do? The team associated with the first academic paper discussed above recommended “targeted policy interventions, such as opt-in, income-based gambling limits, to mitigate potential adverse effects of legalization while preserving the benefits of a sustainable gambling market.”
It’s incumbent on subprime professionals to understand the significance this still-new draw of online sports betting has on consumers’ attention and its potential impacts on subprime’s future.
For me, that means observing the action around next year’s Super Bowl with heightened interest in who’s winning and who’s losing.
