The pitch was consumer protection: legalize sports betting, bring it out of the shadows, regulate it properly. Seven years and $520 billion in wagers later, the data tells a different story.

A working paper from the Federal Reserve Bank of New York finds that credit delinquencies — defined as payments 90 or more days past due — rose 10% among people who took up sports betting after their state legalized it. That group represents roughly 3% of the population in those states. Overall delinquency rates in legalization states climbed 0.3 percentage points, outpacing states that kept betting illegal.

The sharpest damage is concentrated among people under 40. The Fed study found delinquency rates for that cohort rose to 26% after legalization, using what researchers called “back-of-the-napkin” estimates. Nearly half of men aged 18 to 49 hold at least one online sportsbook account, according to a 2025 Siena College survey.

Then there is the spillover. Counties in states where sports betting remains illegal but border legalization states saw delinquency rates rise 0.2 percentage points — people crossing state lines to wager, and bringing the debt home with them.

Average quarterly deposits on betting platforms roughly doubled from roughly $500 in late 2019 to $1,250 in 2025, the Fed found. A separate study published last year by researchers at UCLA and Harvard found that online betting access was associated with a 10% increase in bankruptcy likelihood and an average credit score decline of 2.7 points.

The industry has acknowledged gambling addiction risks. The American Gaming Association launched a “responsible gaming” initiative, though it continues to oppose federal consumer-protection legislation, arguing it would undermine state authority.

Commercial gaming revenue hit a record $78.7 billion in 2025, according to the AGA. The money is moving. So is the debt.

Sources