Study of 183,821 US households links legalized online sports betting to lower savings
University of Nebraska–Lincoln analysis of transaction data from 26 states found that online betting spreads quickly after legalization and reduces savings rather than other spending.
A study by Justin Balthrop, assistant professor of finance at the University of Nebraska–Lincoln College of Business, examined how household finances changed after online sports betting was legalized in 26 US states, EurekAlert reports. The paper, "Gambling Away Stability: Sports Betting's Impact on Vulnerable Households," appeared in the Journal of Financial Economics in September 2026. The analysis used financial transactions from 183,821 US households eurekalert.org
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Savings fall, other spending does not
The authors tracked investing, spending and debt management before and after legalization. According to Balthrop, once online betting becomes legal it spreads quickly, both in the number of participants and in the frequency of bets. He said this increase does not displace other gambling or consumption, but significantly reduces savings.
Balthrop said the money often comes from retirement accounts and savings. "It is not synonymous with entertainment funds in practice," he said. Frequent bettors tended to have lower incomes, smaller investments and higher credit card debt than infrequent bettors and non-bettors.
Who is most exposed
Households with limited savings experienced the greatest financial consequences, according to the study. Vulnerability is not limited to low incomes: the authors describe households as budgetarily constrained when little money remains after expenses, and Balthrop said high earners who spend close to all of their income can be equally susceptible eurekalert.org
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Balthrop spent nearly two decades in quantitative investment management before entering academia, and he is also an experienced sports bettor. He said fans who follow their teams closely may believe their knowledge gives them an advantage, although understanding a sport does not mean they can consistently beat the betting markets.
Balthrop said the effects extend to families and communities. He said he does not want to abolish sports betting but that guardrails are needed, and he expects the social cost to show up 20 to 30 years from now. He hopes the findings will inform policymakers who weigh tax revenue from legalized betting against its long-term costs.
