Nebraska Study Finds Online Sports Betting Can Hurt Household Savings

Key Highlights

Betting on sports can be profitable for some, but a new study links frequent online sports gambling to reduced household savings and future spending power.

Online Sports Betting & Its Impact on Household Savings

The University of Nebraska-Lincoln (UNL) study suggests that the financial impact of sports betting goes beyond losses on individual bets. Published in the Journal of Financial Economics, the “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households” paper also raises questions about how gambling affects people’s ability to build wealth and security over time.

The study involved analysis of transactions from 183,821 U.S. households, with lead author Justin Balthrop examining how household finances were affected in 26 states following online sports betting legalization. Balthrop brought an interesting and balanced perspective to the study; he is an assistant professor of finance at UNL, has a background in quantitative investment management, and is an experienced sports bettor.

The results indicated that online betting spread quickly once legal, with more people participating and placing bets more often. Balthrop found that sports betting generally complemented other forms of gambling activity and entertainment spending, rather than replacing them, negatively impacting household savings.

The timing of the study’s release is also interesting. The campus news outlet Nebraska Today published the story on Nov. 4, one day after Nebraska voters rejected online sports betting ballot initiatives. The political committee Tax Relief Nebraska raised more than $22 million to support the measures, with significant backing from DraftKings and Fanduel.

Financially Vulnerable Households & Betting Risks

The study found that households with little financial breathing room faced the greatest challenges. Frequent sports bettors tended to have lower incomes, smaller investment balances, and more credit card debt than people who bet less often or didn’t bet. These patterns highlight how betting activity and financial pressure can overlap.

However, financial vulnerability wasn’t limited to households earning less money. Balthrop explained that someone with a high income could face similar pressure when most earnings already go toward expenses. What matters is how much money is available after bills and other commitments are covered.

The findings suggest that sports knowledge can shape how bettors view their chances. Fans who follow teams closely may feel that their understanding gives them an edge. But Balthrop cautioned that knowing a sport doesn’t mean someone can regularly outperform betting markets. That’s an important distinction, considering one in five Americans views sports betting as an investment.

For households with tight budgets, reduced savings could create problems long after bets are placed. Money that might have supported retirement plans or future emergencies may instead go toward wagering. 

Long-Term Financial Costs & Calls for Safeguards

Balthrop warned that the effects could reach beyond people placing bets. Families and communities may experience consequences when household finances become less secure. His primary concern is not only what people lose today but also how reduced saving may affect their financial position decades later.

“People are taking money out of their retirement and out of their savings,” Balthrop said in a UNL story on the hidden costs of online sports betting. “It is not synonymous with entertainment funds in practice. It’s synonymous with money that you should be saving or putting to some more productive use.”

Those concerns could influence discussions about online sports betting laws. States may collect tax revenue from legal wagering, but Balthrop argues that policymakers should consider the potential social costs. Looking at both sides could help officials understand the impact of legalization.

Balthrop isn’t calling for sports betting to be abolished. Instead, he believes additional safeguards are needed to address the risks identified in the research. His findings raise a question: whether the growth of legal betting comes at the expense of long-term household financial security.