In a first-of-its-kind study from the University of California San Diego Rady School of Management, researchers have identified comprehensive insights into the positive and negative impacts of online gambling legalization on tax revenue and gambling behaviors in the U.S. They find it enhances state revenues, but increases irresponsible gambling, especially among lower-income consumers.
“Of the more than 700,000 gamblers that we studied, 96% percent appeared to lose money to online gambling,” Wilbur said. “Only 4% made money from online betting. That is by design. Online gambling platforms often ban or throttle frequent winners’ accounts. There is no right to gamble.”
Low-income gamblers are most likely to increase irresponsible gambling after state policy changes
For around 250,000 participants, researchers could analyze gambling expenditure as a percentage of income, thanks to direct deposit data. In Canada, responsible gambling guidelines advise gamblers to spend less than 1% of monthly income on gambling. However, the direct deposit dataset revealed that 43% of panel gamblers exceeded 1% of income in gambling months, with 5.3% spending more than 10% of their income on gambling and 3.2% spending more than 15% of their monthly pay.
“Our analysis shows that online gambling legalization leads to far more problematic gambling among lower-income gamblers than among higher-income gamblers,” Wilbur said. “These findings emphasize the high financial risk associated with online gambling.”
Study authors found gambling helpline calls did increase as gambling became legal in the 14 states analyzed, most notably in New York; however, suicides did not increase. The authors note that suicide data from the Center for Disease Control, while informative, has limitations in measuring gambling-related suicides. State coroners generally do not document gambling as a contributing factor in suicide records, likely because they do not observe decedents’ gambling activity.
The authors conclude that legalized gambling has both pros and cons. “On the positive side, states can generate revenue, potentially reduce illegal gambling, and make it easier for individuals to seek help for gambling problems,” they write. “On the downside, increased accessibility and participation can lead to higher rates of problematic gambling behavior.”
Online gambling has become more and more popular within the past few years. This came with the new development of many states legalizing online gambling and sports betting. Now more than ever people who typically have not gambled in the past are hopping on the trend and betting on their favorite sports team. I’ve seen friends and classmates talking about their latest big win or lose. This article addresses a study done by the University of California San Diego Rady School of Management. These new laws are providing more income for the state but it’s also taking a toll on those with low income. However, the success of online gambling leads me to believe it won’t be reversed anytime soon. How can take what we know about online gambling and apply it to financial responsibility? How can we better prepare ourselves and others to take care of our money and not get swept away by this new wave of online gambling?
Clark, Christine. “Legalized Gambling Increases Irresponsible Betting Behavior, Especially among Low-Income Populations.” University of California, 25 July 2024, www.universityofcalifornia.edu/news/legalized-gambling-increases-irresponsible-betting-behavior-especially-among-low-income.
