The Effects of Sports Betting Legalization on Consumer Behavior, State Finances, and Public Health
Publication Date
6-25-2025
Abstract
The legalization of sports betting has increased gambling participation significantly across the U.S., raising important questions about its costs and benefits for states and consumers. We use a large panel of individual-level financial data to analyze the impact of sports betting legalization on regulated gambling activity, state revenues, and broader economic effects. Examining 11 treatment states with differing patterns of legalization across online and offline gambling channels, we find that online sports gambling spending increased by 369% following legalization (from $0.99 to $4.63 per individual-month), while the rate of irresponsible gambling – defined as monthly gambling expenditures exceeding 1% of income – rose by 372% (from 0.2% to 0.9% of individuals). These increases represent genuine growth in regulated gambling activity, and there is little evidence of substitution from offline casino spending. The spending increase is relatively uniform across income levels, but irresponsible gambling shows significant income-based heterogeneity, with lower-income individuals experiencing disproportionately larger increases. Existing gamblers drive substantially more of the increase in problematic behavior than new gamblers, despite representing a smaller share of the population. Legalization also generated spillover effects, including a 20% increase in mass-market alcohol consumption and a 75% increase in calls to gambling helplines. State tax revenues were lifted by $0.78 per capita monthly across treatment states due to legalization.
Document Type
Article
Keywords
Digitization, Gambling, Generalized Synthetic Control, Online Casino Gaming, Online Sports Betting, Quasi-Experiments
Disciplines
Marketing
DOI
10.2139/ssrn.4856684
Source
SMU Cox: Marketing (Topic)
Language
English
