Researchers say legalized sports betting tied to small but measurable declines in consumer financial health, larger where mobile betting allowed

Three researchers testified to the Minnesota Senate Finance Committee on May 20 that the spread of legal sports betting is associated with measurable negative effects on household financial health, and that the effects are larger in states that allow online or mobile wagering.

Professor Brett Hollenbeck of UCLA told the committee he and co‑authors used a 2016–2023 sample drawn from the University of California Consumer Credit Panel and found “evidence that legal sports betting decreases consumer financial health across a range of different indicators with the much larger impacts coming from the ability to place bets online or through mobile apps” (citation: transcript). Hollenbeck said the average credit‑score decline across the full population in treated states was small (about one percent, roughly seven points) but that the effect was roughly three times larger in states allowing online betting than in states with only in‑person wagering.

Professor Scott Baker of Northwestern, who used anonymized bank and credit‑card transaction data, said his team observed persistent deposit behavior among bettors and declines in long‑term financial investment. “Every dollar of betting that we observe for individuals leads to about a dollar decline in net investment,” Baker said, summarizing his team’s analysis of several hundred thousand U.S. households (citation: transcript).

Both researchers presented multiple outcome measures. Hollenbeck reported an estimated 27% relative increase in bankruptcies in states that allowed online betting (from a low baseline) and an increase in debt referred to collection agencies; he estimated the effect could translate to roughly 30,000 additional annual bankruptcies across treated states and about $8 billion extra sent to collections. Baker reported increased overdrafts, credit‑card balances, and a falloff in contributions to investment accounts among people observed depositing to sportsbooks, and said the financial effects were larger for financially constrained households.

Both witnesses emphasized limits of their data. Hollenbeck noted his credit‑bureau sample does not identify which individuals actually placed bets and therefore reports average effects across the full state population; Baker’s transaction data directly observed deposits to betting sites but cannot see activity within an operator’s platform. Hollenbeck summarized: “These average effects are usually quite small, as we would expect given that we’re measuring across the full population and not for individuals who are gambling necessarily” (citation: transcript).

Committee members pressed for clarity on interpretation. Chair and members asked whether the reported effects were statewide averages or targeted to bettors; Hollenbeck reiterated the population‑average framing and Baker confirmed the larger effects were concentrated among those who actually bet. The researchers agreed the larger, consistent harms were associated with mobile/online access.

Why this matters: Minnesota is debating a bill to legalize and regulate sports betting. The testimony suggests regulators and lawmakers should consider differential risks posed by mobile betting and the potential need for consumer protections and funding for treatment and prevention if legalization proceeds.

The committee heard this material as part of a broader hearing that also included testimony from addiction specialists, treatment providers and people in recovery who described real‑world harms not fully captured in administrative data.

Votes at a glance: no formal votes were taken during the hearing.