As our latest guest for our Research Seminar Series, we welcomed Davide Proserpio from USC Marshall School of Business. He shared his recent work on the financial consequences of legalized sport gambling which is frequently covered by national media outlets in US.

In 2018, a landmark ruling by the U.S. Supreme Court resulted in the legalization of sports betting in 38 states. The research presented drew upon a comprehensive dataset from the University of California Consumer Credit Panel, comprising credit rating agency data for nearly 7 million U.S. consumers. Using the staggered introduction of sports betting legalization across states, the study evaluated two distinct policy impacts: the general legalization of sports betting and the specific introduction of online or mobile betting platforms.

The core finding indicates a modest but significant deterioration in consumer financial health following the legalization of sports gambling. Specifically, consumer credit scores declined by an average of approximately 0.3% in states that legalized sports betting. This decline correlated with troubling signs of increasing debt burdens, including higher bankruptcy rates, increased debt collections, greater use of debt consolidation loans, and a rise in auto loan delinquencies. Financial institutions appeared to respond defensively, tightening credit access due to the observed decrease in consumer creditworthiness.

Notably, the negative financial outcomes were substantially greater in states where online or mobile sports betting was available compared to states limiting betting to physical venues. This suggests that enhanced accessibility notably intensifies the detrimental financial consequences associated with sports gambling.

Thank you, Davide, for your visit and for sharing your work and experience with our community!