University of Nebraska Study Links Online Sports Betting to Financial Harm Beyond Discretionary Spend

A new study from the University of Nebraska finds that online sports bettors are risking not just entertainment dollars but their long-term financial stability.

Justin Balthrop, an assistant professor of finance at the school’s Lincoln campus, says researchers determined that when an individual signs up for an online sports betting account, their participation can reduce savings and retirement accounts.

“Online sports betting does more than compete for consumers’ entertainment dollars,” said Balthrop. “It can lead to spending money they planned to invest, particularly among those already facing financial constraints.”

The findings come from the study, “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households.” The research analyzed financial transactions from 183,821 U.S. households to see how their finances changed after online sports betting was legalized in over two dozen states.

Balthrop’s team determined that sports wagering funds rarely replace other forms of consumer spending or traditional gambling. Instead, bettors often redirect money from savings, investments, and debt obligations, with frequent bettors cutting their savings and debt payments the most.

Mistaking Wagers for Wealth Building

Balthrop believes that incessant advertising from the sports betting industry convinces many consumers that they can consistently beat the house. This perception explains why many bettors are willing to withdraw or redirect savings, and why sports wagering allocations rarely come at the expense of discretionary spending.

“People are taking money out of their retirement and out of their savings,” Balthrop continued. “It is not synonymous with entertainment funds in practice. It’s synonymous with money that you should be saving or putting to some more productive use.”

Balthrop isn’t anti-sports betting. In fact, Balthrop says he’s an “experienced sports bettor” who, before coming to Lincoln, worked for nearly two decades in quantitative investment management.

The Nebraska researchers found that money redirected from savings to sports betting was disproportionately higher among lower-income households. Those with limited savings experienced the greatest financial consequences of legal online sports betting, prompting higher credit card debt and smaller retirement accounts.

Balthrop concluded that people aren’t only losing money today.

“It’s the social cost that’s going to show up 20 to 30 years from now. I don’t want to abolish sports betting, but we need guardrails,” Balthrop concluded.

Nebraska Sports Betting

Nebraska voters rejected online sports wagering during the Nov. 3 election. Although proponents argued online sportsbooks would generate tax revenue to reduce homeowner property taxes, campaigns highlighting potential social and economic costs ultimately won over a majority of voters.  

As a result, Nebraska sports betting remains limited to in-person wagers at the state’s horse racetrack casinos.