When it comes to your finances, sports betting can be a gamble you don’t want to take.
Betting on sports can lead to bad debt management and a worse credit score. Beche are also more likely to increase their spending and reduce their investments, according to recent research. The effects are greatest among financially vulnerable populations.
What’s worse, according to a third study, is that the way gambling is evolving could make it one of the most addictive forms of gambling.
It’s time for policymakers to step in and regulate this gambling industry that continues to thrive six years after it was legalized in the US to help people avoid its negative influences – before it does. they are very late.
“As individuals, voters, [and] policy makers, I think our results are related,” Justin Balthrop, a co-author of one of the studies and an assistant professor of finance at the University of Kansas, told Yahoo Finance.
“But it’s very difficult to make prescriptions before you’re diagnosed. And what I think our paper is really trying to do is get very accurate predictions of what the problems are.”
Financial consequences of sports betting
Gambling took hold after the Supreme Court struck down the Sports and Recreation Protection Act in May 2018, allowing states to set their own gambling laws. .
Currently, sports betting is legal through brick-and-mortar and/or online sportsbooks in 38 states and the District of Columbia. Revenue is up, growing 30.3% to $7.56 billion year to date through July from the same period last year.
In his study, Balthrop – a self-proclaimed “passionate and energetic sportsman” – took advantage of the incredible influx of sports betting across the US after it was legalized, giving him and staff-‘ It’s time to understand the before and after effects. of this bet.
What he found was for every $1 invested in online sportsbooks, those families reduced their investment shares by $2. The doubling effect – from $1 to $2 – comes from more spending outside of bets to support their gambling. Consider additional streaming services or other sports tabs to watch sports.
In addition, sports betting increases the number of times households use their bank accounts, Balthrop found. The effects were devastating for financially strapped families, who reduced their credit card payments while increasing their payments.
“The core of this effect occurs in households that may not have the least income,” Balthrop said.
David Proserpio and his colleagues found similar findings in their study. Overall, the country’s overall credit score dropped by 0.3% after legalizing gambling. That number triples to 1% if the state legalizes online gambling.
The fact that the study took an aggregate credit score of all residents of the country may understate the true impact on a gambler’s credit score, Proserpio, an associate professor of marketing at the University of Southern California, said.
In addition, bankruptcy, debt consolidation loans, and debt collections increased in countries that legalized sports betting, especially online betting – so much so that Proserpio found that Lenders restrict access to credit to protect themselves. Young men of low status were often affected.
“It’s not just gambling that affects the financial health of consumers,” he said, “it also affects a segment of the population that is already low-income and may have other types of funds. [financial] problems.”
‘Casino in our pockets’
Balthrop and Proserpio documented the effects of gambling on sports, but their studies did not examine why this type of gambling could be so dangerous.
That’s where Dr. Jamie Torrance, a psychology researcher at Swansea University in the UK, and his colleagues enter. They reviewed many studies around the world on gambling in what is called a scoping analysis and excavation to help explain why sports betting has become so dangerous. . It comes down to three factors: access, number of beds, and regulatory manipulation.
Historically, sports betting was “a simple form of gambling,” Torrance said. In order to bet on a game, you had to call a bookie or go into a betting shop. You could only bet if a team would win, lose, or tie. Then you have to wait until the game is over for the result of your bet.
“There is a lot of research that shows that the longer you have to wait for the outcome of a gamble, the less profitable the product is,” said Torrance.
It is no longer a gambling game, which is available instantly on our phones and more like slot machines.
“We’re basically walking around with a casino in our pockets,” Torrance said.
On popular platforms like DraftKings and FanDuel, bettors can bet at any time of the day, on any game, on any game. They can bet on more than just who wins the game, too; they can bet on the outcome of the next baseball game or on the kicker. The options are almost endless and the results come back quickly.
“That’s a big deal,” he said.
Another big problem is that game brokers can easily convince themselves they can beat the odds, Torrance said, giving the “illusion of control.”
They see themselves as sports professionals. They watch all the games and read all the sports reports. They can subscribe to sports newsletters with inside information. Heck, he was probably half a player ten years ago.
“Sports betting has a way of making people lose their sense of self,” Balthrop said, agreeing with Torrance.
But – like any form of gambling – the game is rigged. The house always wins.
‘conflict’
Torrance’s research has also uncovered how sports betting could change – and his two biggest predictions are unsatisfying.
First, he expects sports companies to use augmented reality. For example, you can point your phone at a sporting event, and the app will provide real-time odds on various bets.
Second, he expects these companies to provide bettors with specific notifications based on their gambling behavior. One may get an alert that the star actor’s mother is undergoing a surgery this week which may affect the actor’s performance. Perhaps the recommendation is to bet against the team.
“That kind of thing encourages what we talked about earlier, which is the illusion of control,” he said.
This is why all three researchers started these studies, to provide important information about gambling to inform the legislators who – to be honest – can be most influenced by the tax revenue of gambling games . But residents who go into too much debt or don’t save for retirement become a “social cost burden” down the road, Balthrop said.
“There is business here,” Proserpio agreed.
Australia offers a plan, recently implemented measures to slow the gambling process to combat those damaging effects. But time is running out in America as the sports betting industry continues to evolve and grow.
Lawmakers in Missouri and Oklahoma have introduced bills to legalize the industry, while two Democratic congressmen this month introduced a bill that would allow the federal government to regulate advertising, betting and artificial intelligence in the industry.
“I’d like to think that you guys over the pool have more time to mitigate the risk, but really, I don’t think that’s going to be the case,” Torrance said. “In fact, I think it will be similar to the UK where we have a lot of gambling risks.”
In other words, don’t bet on it.
Janna Herron is a Senior Columnist at Yahoo Finance. Follow him to X @JannaHerron.
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