Online Sports Betting Is Eating Into Savings and Retirement Funds

New research from the University of Nebraska shows that people who place online sports bets are putting at risk not only their entertainment spending but also their long-term financial stability. Justin Balthrop, an assistant professor of finance at the Lincoln campus, says that when a person opens an online sports betting account, that participation can reduce their savings and retirement accounts.

The study examined the financial transactions of 183,821 U.S. households after online sports betting became legal in more than two dozen states. The researchers found that money set aside for betting rarely replaced other consumer spending or traditional gambling. Instead, bettors often moved money from their savings, investments and debt payments. Frequent bettors were the ones who cut their savings and debt payments the most.

Balthrop believes that heavy advertising by betting companies gives consumers the impression that they can win consistently. In his view, this perception explains why people withdraw or redirect their savings. Balthrop notes that this perception is rarely seen with other types of gambling, and that people may come to see themselves as experts.

According to the research, the share of money shifted from savings to sports betting is disproportionately high in lower-income households. Households with limited savings bear the heaviest financial consequences of legal online sports betting, as credit card debt rises while retirement accounts shrink. Balthrop stresses that people are not only losing money today, and that the social cost will appear 20 to 30 years later. He says he does not want to ban sports betting, but he believes the industry needs guardrails.