Small Business Solutions

A new study from the University of Kansas reveals that every dollar spent on online sports betting translates into two dollars not invested in retirement savings.The research, conducted by finance professors at the University of Kansas, examined spending patterns of 230,000 households across all 50 states, comparing data from three years before and after the legalization of online sports betting. The study found that the impact of online sports betting is particularly severe for financially constrained individuals.”The effects that we find are exacerbated in what we would call financially constrained individuals,” said Justin Balthrop, an assistant professor of finance at the University of Kansas.For the 50% of people who struggle to save, the legalization of online sports betting has led to increased bank overdrafts, higher credit card balances and more interest payments.The study also highlights that the average household spends between $800 and $1,000 a year on online gambling.This expenditure is not a substitution for other forms of entertainment but an additional cost, leading to a direct reduction in savings and productive investments.Kevin Pisciotta, also an assistant professor of finance at the University of Kansas, emphasized the effectiveness of legalization in increasing betting activities.”Legalization is very effective at getting people to pick up betting,” he said.He added that people often view the legalization of online sports betting as an endorsement, prompting individuals who previously avoided gambling to start participating.Despite its popularity, the study suggests that online sports betting has not changed overall spending on entertainment but has instead created a new financial burden.”It’s clear that sports betting is ubiquitous,” Balthrop said. “It’s here to stay. It’s very popular. And so we need to get a handle on what these effects are.”He hopes the study will contribute to the ongoing dialogue about the implications of online sports betting.