A new report from the Progressive Policy Institute (PPI) suggests that regulated online sports betting (OSB) isn’t fueling higher bankruptcy rates or declining credit scores in states where it’s legal.
Analyzing data from 2019 to 2024, PPI found no evidence of a financial crisis tied to OSB in early-adopter states such as New Jersey, West Virginia, Pennsylvania, Colorado, Illinois, Arizona, and Michigan. These states legalized online sports betting between 2018 and 2021 following the Supreme Court’s repeal of PASPA in 2018.
Bankruptcy Rates Declining in Betting States
Consumer bankruptcies dropped by 40% in early-adopter states over the five-year span, outpacing the 34% national decline and the 36% decline across all states with legalized mobile betting. For instance, New Jersey and West Virginia saw bankruptcy rates fall 49% and 44%, respectively, while Alabama — which has not legalized OSB — reported only a 28% drop.
Credit Scores Rising in Line with National Trend
Credit quality also improved. Average credit scores in early-adopter states rose 1.8% between 2019 and 2024, matching the national increase. The average U.S. credit score climbed from 703 in 2019 to 715 in 2024.
Contradicting Previous Research
The findings challenge a 2023 study from UCLA and USC, which linked OSB to declining credit scores, higher bankruptcy filings, and more debt-related delinquencies. PPI acknowledges that both studies cover a period marked by major economic disruptions, including the COVID-19 pandemic and the 2022–23 inflation and interest rate surge.
During the pandemic, sports betting intensity increased as other entertainment options were limited. However, PPI notes that activity has since moderated. According to National Council on Problem Gambling data, weekly sports betting participation rose from 3.7% in 2018 to 6.2% in 2021 before easing to 5% in 2024.
Betting Share of Spending Remains Flat
PPI further points out that gambling overall has remained a stable share of U.S. consumer spending throughout the 21st century. That trend supports the institute’s conclusion that sports betting expansion hasn’t triggered a wave of bankruptcies or widespread damage to consumer credit.
Still, the study acknowledges that some individuals may experience financial stress tied to wagering, with reports indicating certain bettors have liquidated investment accounts to fund their betting habits.
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