Playing the Powerball lottery, pulling the handle of a slot machine, or betting on a horse race—these are all forms of gambling that offer the promise of quick cash. While each form of gambling carries risk, new research suggests that online sports betting is uniquely impactful on household financial stability, particularly for those who are already financially vulnerable.
A recent study led by Kevin Pisciotta, an assistant professor of finance at the University of Kansas, reveals that the rise of online sports betting is reshaping the financial landscape of American households. The working paper, titled “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households”, examines how this form of wagering leads to increased betting, higher credit card balances, reduced credit availability, and decreased net investments—particularly in households with financial constraints.
According to Pisciotta, online sports betting differs from other forms of legalized gambling in significant ways. While people generally understand that slot machines and lottery tickets are based on luck, sports betting offers a sense of involvement and control. This perception, combined with the social and environmental aspects of watching games in real-time, creates a unique allure.
“One possible reason is that you think you have some role in the outcome. Most people understand a slot machine is random. With sports betting, you feel a little bit invested and might have some advantage—even though, on average, you don’t,” Pisciotta explained. This sense of perceived control makes sports betting more engaging for some, increasing the likelihood of repeated betting.
Adding to the appeal is the social aspect of sports betting. Watching a game with friends, perhaps at a bar or a viewing party, while placing live bets through a mobile app, creates a heightened level of excitement and community involvement. These social factors are rarely present in other forms of gambling like lotteries or slot machines, making sports betting a different experience altogether.
The research, co-authored by Pisciotta along with Justin Balthrop of KU, Scott Baker of Northwestern University, and Mark Johnson and Jason Kotter of Brigham Young University, uncovers two major findings:
“Credit card balances go up. Their available credit goes down. And they make less frequent payments on their card,” Pisciotta said. This indicates a troubling trend, particularly for households that may already be struggling financially.
The surge in online sports betting can be traced back to a 2018 Supreme Court ruling that overturned a federal ban on sports betting. This decision allowed states outside of Nevada to legalize both in-person and online sports wagering. Since then, states across the country have rapidly passed legislation, leading to an explosion in sports betting activity.
By 2023, the industry had generated over $120 billion in total bets and $11 billion in revenues. While this has created a lucrative market, it has also introduced financial challenges for individuals and households engaging in frequent betting.
Pisciotta’s research team used a proprietary dataset of consumer transactions from a U.S. data aggregation and analytics platform to study these trends. The dataset includes over 60 million American users and tracks billions of financial transactions from 2010 to 2023. This vast trove of data allowed the researchers to observe how individuals transfer funds from their savings and investment accounts to betting platforms like DraftKings over time.
One of the more concerning aspects of Pisciotta’s findings is the addictive nature of sports betting. The research reveals that users who tend to lose money in the beginning are more likely to continue betting over time, despite their losses. This contradicts the assumption that most people will lose interest in betting once they realize they are not consistently winning.
“We find the opposite,” Pisciotta explained. “There’s not only an expansion among new users, but the users who tend to be losers are betting more and more over time.” This indicates a potentially dangerous cycle where bettors, particularly those facing financial constraints, continue to place bets in hopes of recovering losses, only to find themselves deeper in debt.
Pisciotta’s findings have not gone unnoticed by the gambling industry, though he notes that direct pushback from industry representatives has been minimal. However, some in the industry argue that sports betting should not be singled out, as people spend their money on many forms of entertainment that others might frown upon—such as video games, streaming services, or expensive coffee.
Pisciotta counters this argument by highlighting the significant financial strain sports betting places on households. “Can you provide evidence that individuals run up large credit card balances to buy Frappuccinos? Unlikely,” he said, emphasizing the stark difference in spending behavior between casual entertainment purchases and sustained betting losses.
Pisciotta stresses that the goal of the research is not to shut down online sports betting, but to provide policymakers and the public with a clearer understanding of its effects. “Our goal here is to provide clear estimates of what is happening as a result of online sports betting legalization,” he said. “And the results are not exactly great for those doing the betting.”
While the industry has grown rapidly, Pisciotta questions whether its current trajectory is sustainable. “If the sports betting industry strings out their customers until they exhaust every possible dollar, I don’t know if that’s a way for this industry to have staying power,” he said. The study hopes to inform discussions on how to better regulate the sports betting environment to protect vulnerable households from long-term financial harm.
Online sports betting has become a widespread form of entertainment in the U.S., thanks in part to the legalization efforts following the 2018 Supreme Court ruling. However, the rapid rise in sports betting, particularly online, has introduced new financial risks for many households—especially those already struggling with financial constraints.
The research led by Kevin Pisciotta paints a concerning picture of how sports betting affects household financial stability, driving up credit card debt, reducing savings, and intensifying gambling addiction for some users. While the industry continues to grow, the findings raise important questions about how to protect vulnerable individuals and households from the negative financial impacts of online sports betting.
As policymakers and industry stakeholders consider the future of sports betting, Pisciotta’s study provides a critical perspective on the need for more responsible gambling practices and protections for consumers.
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