Editor’s Note: The chart notes for the first chart have been updated to correct errors in how we labeled the trend line colors. (March 25, 2026)
Since 2018, more than thirty states have legalized mobile sports betting, leading to more than a half trillion dollars in wagers. In our recent Staff Report, we examine how legalized sports betting affects household financial health by comparing betting activity and consumer credit outcomes between states that legalized to those that have not. We find that legalization increases spending at online sportsbooks roughly tenfold, but betting does not stop at state boundaries. Nearby areas where betting is not legal still experience roughly 15 percent the increase of counties where it is legal. At the same time, consumer financial health suffers. Our analysis finds rising delinquencies in participating states, with spillover effects across state lines. What is more, even though the share of people taking up sports betting after legalization is small (roughly 3 percent of the population), overall credit delinquency rises by about 0.3 percentage points. Our findings suggest that sports betting can have dramatic implications for household financial stability.
Legalization Leads to High Spending that Continues to Rise
Using anonymized transaction-level consumer spending data, we aggregate online sportsbook deposits at a county-quarter level to compare counties in legal states to those in not-legal states before and after legalization. The chart below plots two measures of average online sportsbook deposits within legal states over time. The blue line (measured by the left axis), presents average deposits per adult. We see that spending grew dramatically after mid-2020, exhibits seasonal patterns consistent with the National Football League season, and continues to grow through the end of 2025.
The red line (measured on the right axis) shows the total deposits divided by the number of individuals with at least one online sportsbook deposit each quarter. In contrast to average deposits in the population, average deposits per bettor have leveled since 2022. We conclude that long-run growth in total betting is driven less by rising deposits among existing bettors and more by broader participation and continued market expansion.
Average Deposits at Sportsbooks Rise Steeply After Mid-2020
Betting Across Borders
An interesting wrinkle to sports betting access is that potential bettors do not have to be residents of a legal state to place a wager. Since they only need to be physically present in a legal state at the time they make a bet, those living near legal states have relatively easy access to legal sports betting. To account for spillovers across borders in our analysis, we split our sample into three mutually exclusive groups in each quarter: a direct treatment group of counties within a legal state, a spillover group of counties near a legal state but in still-illegal states (within fifteen miles), and a control group of counties farther away from any legal states (at least sixty miles from a legal state). We then compare the evolution of online betting in each quarter relative to the first quarter of legal access (own legalization for the legal counties or nearby legalization for the spillover counties).
The chart below plots the estimated effect of legalization on average deposits at sportsbooks separately for the direct effect and the spillover effect in each quarter relative to the first quarter of legal access. We find a large increase in spending within state lines (blue line) with a similarly sharp but smaller increase in nearby spillover counties (gold line). On average, online betting deposits per adult increase by roughly $30 per quarter in the first few quarters after legalization and grow to around $40 after three years. Most striking is the magnitude of spillovers: for nearby counties that are not legal, the impact is roughly 15 percent the size of the direct effect, representing significant spending coming from across state lines.
Sportsbook Deposits Grow Dramatically After Legalization in Legal Counties and in Nearby Illegal Counties
Implications for Consumer Credit
Next, we examine credit delinquencies using the New York Fed Consumer Credit Panel (CCP), a nationally representative 5 percent sample of anonymized Equifax credit reports, with the same geographic approach as above. The chart below shows the impact of legalization on the share of the county population with any account ninety or more days past due, with the blue line showing the direct effect and the gold line showing the spillover effect. Following legalization, delinquency rose steadily in legal counties and surpassed half a percentage point three years after legalization, representing a noticeable deterioration in repayment performance from a baseline of 10.7 percent. Spillover counties follow a similar pattern with a smaller magnitude increase in delinquencies, suggesting that, as with betting activity, the financial consequences extend across state lines. In our Staff Report, we show that the overall increase in delinquency is driven by borrowers under the age of 40. Following legalization, the share of under-40 borrowers who are delinquent rises by 1.02 percentage points for credit cards and 0.55 percentage point for auto loans.
Our consumer credit analysis explores the overall impact of sports betting on the full population without differentiating between those that gamble and those that do not. However, the spending analysis shows that only around 3 percent of the population newly takes up sports betting after legalization. If we instead focus on only the 3 percent of people who newly take up sports betting after legalization, the implied increase in delinquency rate conditional on take-up is 10 percentage points, roughly a doubling from the baseline rate.
Credit Delinquencies Increase Steadily After Sports Betting Legalization
Implications for Not-Yet-Legal States
In our Staff Report, we find that following the legalization of sports betting in a state, credit delinquencies increase, driven by those under 40 years old. In addition, betting activity, and the resulting consumer credit distress, do not stop at state boundaries. Some who live in not-yet-legal states near legal states travel across state lines to wager and delinquencies rise in these not-legal areas as well. In legal states, tax revenue from sports betting can help offset some of the negative impacts of legalized sports betting (states collected nearly $3 billion in such tax revenue in 2024 alone), but states that are not legal themselves bear negative consequences of sports betting without the tax revenue to offset these costs. As we show in the Staff Report, the negative consequences without compensating tax revenue may create incentives for states to legalize, particularly those with population centers near legal states.
Jacob Goss is a former research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group and a current graduate student at the University of Wisconsin—Madison.
Daniel Mangrum is a research economist in the Federal Reserve Bank of New York’s Research and Statistics Group.
How to cite this post:
Jacob Goss and Daniel Mangrum, “Sports Betting Is Everywhere, Especially on Credit Reports,” Federal Reserve Bank of New York Liberty Street Economics, March 25, 2026, https://doi.org/10.59576/lse.20260325
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Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).
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Facts Only
Over thirty U.S. states have legalized mobile sports betting since 2018.
More than half a trillion dollars in wagers have been placed since legalization.
The Federal Reserve Bank of New York conducted a study comparing betting activity and consumer credit outcomes between legal and non-legal states.
Legalization increases online sportsbook spending roughly tenfold.
Nearby non-legal areas experience about 15% of the betting increase seen in legal states.
Consumer delinquencies rise by approximately 0.3 percentage points in legal states post-legalization.
The increase in delinquencies is primarily driven by borrowers under 40 years old.
Only about 3% of the population newly engages in sports betting after legalization.
For the 3% who take up betting, the delinquency rate increases by about 10 percentage points, roughly doubling from baseline.
Average online sportsbook deposits per adult grew sharply after mid-2020, with seasonal patterns linked to the NFL season.
Average deposits per bettor have leveled off since 2022, indicating growth is driven by broader participation.
Non-legal states near legal states experience negative financial consequences without tax revenue benefits.
Legal states collected nearly $3 billion in sports betting tax revenue in 2024.
The study uses anonymized transaction-level data and the New York Fed Consumer Credit Panel for analysis.
The research was published by Jacob Goss and Daniel Mangrum of the Federal Reserve Bank of New York on March 25, 2026.
Executive Summary
Since 2018, over thirty U.S. states have legalized mobile sports betting, leading to more than half a trillion dollars in wagers. Research from the Federal Reserve Bank of New York examines the financial impact of this legalization by comparing betting activity and consumer credit outcomes between legal and non-legal states. The study finds that legalization increases online sportsbook spending roughly tenfold, with spillover effects in nearby non-legal areas, where betting activity rises to about 15% of the increase seen in legal states. Consumer financial health declines in participating states, with delinquencies rising by about 0.3 percentage points, driven primarily by borrowers under 40. While only 3% of the population newly engages in sports betting post-legalization, the financial strain is significant, with delinquency rates among this group doubling. The analysis also highlights that non-legal states near legal ones experience negative financial consequences without the tax revenue benefits that legal states gain. The findings suggest that sports betting legalization has broad implications for household financial stability, with effects extending beyond state borders.
The study uses anonymized transaction data and credit reports to track trends, showing that average deposits per adult grew sharply after mid-2020, with seasonal patterns aligned with major sports seasons. While spending per bettor has stabilized since 2022, overall growth is driven by increased participation. The research underscores the tension between tax revenue gains for legal states and the financial risks posed to vulnerable populations, particularly younger borrowers. The implications for states considering legalization are complex, as proximity to legal states can create pressure to adopt similar policies to capture tax revenue and mitigate spillover effects.
Full Take
The strongest version of this narrative presents a data-driven case that sports betting legalization has measurable negative effects on household financial health, particularly for younger borrowers, while also generating significant tax revenue for states. The research is thorough, using large-scale transaction and credit data to track trends over time, and it acknowledges spillover effects that complicate policy decisions for neighboring states. The authors deserve credit for quantifying the financial strain on a subset of the population (3% of new bettors) and demonstrating how localized policy changes can have broader regional consequences.
However, the analysis raises questions about the framing of causality. While the correlation between legalization and rising delinquencies is clear, the study does not fully explore alternative explanations—such as pre-existing financial distress in states that legalize betting or broader economic trends affecting younger borrowers. The focus on delinquency rates also risks oversimplifying the financial behaviors of bettors; for example, it does not distinguish between problem gambling and recreational betting, nor does it account for potential offsetting financial benefits for some households. Additionally, the emphasis on spillover effects could be interpreted as an implicit argument for widespread legalization, which may not align with the stated goal of assessing financial health impacts.
The root cause of this narrative appears to be a tension between economic liberalization and consumer protection. The assumption that legalization is inevitable—or that states must adapt to avoid losing tax revenue—reflects a broader paradigm where market expansion is prioritized over social costs. This echoes historical patterns seen with other vice industries, such as alcohol and tobacco, where regulatory capture and revenue incentives often outweigh public health concerns. The implications for human agency are significant: while adults have the freedom to engage in betting, the data suggests that a small but vulnerable subset bears disproportionate financial consequences. The second-order effects—such as normalized gambling behavior and the erosion of financial resilience—could further strain social safety nets.
For readers, key questions emerge: How should policymakers balance tax revenue against financial harm to vulnerable populations? What safeguards could mitigate the negative effects of legalization, such as mandatory financial literacy programs or betting limits? And how might the findings differ if the study accounted for illegal betting markets that persist even after legalization? A deeper dive into the socioeconomic profiles of the 3% of new bettors experiencing delinquency could also clarify whether this is a broad-based issue or concentrated among specific demographics.
Counterstrike scan: If this were part of a coordinated influence campaign, the playbook might involve emphasizing the financial risks of betting to discourage legalization in holdout states, while downplaying the tax revenue benefits. However, the actual content does not match this pattern. The analysis presents both the costs and benefits of legalization, and the authors explicitly note the tax revenue offsetting some negative impacts. The tone is academic and balanced, with no signs of emotional exploitation or distortion. The only potential systemic pattern is the implicit framing of legalization as an inevitability, which could subtly pressure non-legal states to adopt similar policies.
Patterns detected: none
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