A new report from the Federal Reserve Bank of New York adds further evidence that legal sports betting is causing widespread harm to users’ finances.
Among people who began sports betting due to legalization or easier access in a neighboring state, the share who fell behind on at least one bill or debt increased by 10 percentage points, according to the bank.
This is a significant increase and may have long-term implications for individual and household finances. Despite growing harm, Americans wagered nearly $167 billion on sports in 2025, a new record.
From the study:
“Three years after legalization, median credit scores are one point lower and overall delinquency rates increase by 0.31 percentage points following legalization. Since only about 3.1% of the population takes up betting after legalization, these intent-to-treat estimates would imply that those who are induced to bet due to legalization experience delinquency increases of 10 percentage points, effects that are economically meaningful.”
A 2017 study found that the typical person with problem gambling harms six others. One way is the financial fallout.
Similar Sports Betting Findings
The bank’s report is unsurprising considering what we already knew about the impacts of the legal online betting industry, which took shape following a 2018 Supreme Court ruling.
In July 2025, U.S. News published a survey of sports bettors that found:
- 25% have been unable to pay a bill because of betting.
- 30% have debts they attribute to gambling.
- 15% have taken out a personal loan to fund their wagers.
- 12% have taken out high-interest payday loans for their bets.
A 2024 UCLA/Harvard study looked at the effects of online betting relative to retail:
- 25% increase in bankruptcy rates
- 25% increase in credit card delinquencies
- 27% increase in auto loan delinquencies
- 9% increase in collections on accounts
Concerns about financial harm are also surfacing in the lending industry. In late 2025, Bank of America Securities warned that some private lenders, including student-loan giant Sallie Mae, are under “pressure” due to online sports gambling, which now includes federally regulated prediction markets such as Kalshi.
The NY Fed sports betting study did not account for prediction-market-style sports gambling.
Why is Legal Betting Causing Financial Harm?
The fallout for individual and household finances can be at least partially explained by surveys that show half of online sports bettors chase their losses. This is a core sign of a sports betting problem.
Very few online bettors win money in the long run. Short-term wins can also have a negative effect, with a recent study showing that online bettors dramatically increase their stakes following wins.
The bottom line is that online sports betting products are highly addictive, though some users can engage in moderation.
Will NY Fed Study Impact Policy?
The findings of the New York Fed study reinforce what is already clear: online sports betting is inflicting substantial financial harm on U.S. households. Legalization has had dire consequences.
The online betting industry deploys a “responsible gambling” message and offers safeguards that may reduce harm compared to offshore, unregulated betting platforms. However, these tools are typically ineffective. Legal sports betting has led to many more people betting than would have otherwise, when offshore betting was the primary option.
For prediction markets, the messaging could be even more problematic. These products, which DraftKings and FanDuel also offer, claim to be “trading” or “investing” and not sports gambling.
In response to these harms, numerous states—including Maryland, Colorado, New Jersey, New York, Massachusetts, and Minnesota—have advanced legislation this year to mitigate addiction risk. Will it be enough?
Probably not, unless Congress enacts uniform federal regulations like the SAFE Bet Act and provides federal funding for gambling addiction treatment through legislation such as the POINTS Act. There is also federal legislation to strip prediction markets of sports gambling.
Optimistically, the New York Fed study adds to the growing momentum to address the growing online sports gambling addiction crisis, as PBS framed it in a recent special on the topic.
