A recent staff report by the New York Fed is highlighting the impact of gambling on consumer credit health, with concerns it is leading to financial instability in the average American household.
Using anonymized transaction-level consumer spending data, it found: “Following legalization, delinquency rose steadily in legal counties and surpassed half a percentage point three years after legalization, representing a noticeable deterioration in repayment performance from a baseline of 10.7 percent.”
National average credit score declines, report claims
The showpiece college basketball tournament, March Madness, is taking place at the moment and it is one of the USA’s most bet-upon events, with the American Gaming Association (AGA) estimating sports fans will bet about $3.3 billion across the entirety of the event. That represents roughly 70% of all NCAA basketball betting and a 54% jump across the previous three years.
However, while the sports betting sector goes from strength to strength, the New York Fed believes individuals are suffering from a lack of spending controls and responsible gaming practices. The report said: “Following the legalization of sports betting in a state, credit delinquencies increase, driven by those under 40 years old. The share of under-40 borrowers who are delinquent rises by 1.02 percentage points for credit cards and 0.55 percentage point for auto loans.”
The study coincides with the national average credit edging lower, according to a new report from FICO, which produces one of the most widely used measures of consumer creditworthiness. The average score now stands at 714, down two points from a year ago. The decline was driven in part by the return of student loan delinquency reporting, along with a rise in missed mortgage payments, the company said.
The study did acknowledge some of the benefits to legalizing sports betting, but rebuff claims from some inside the sector who say taxes on betting revenue help fund programs aimed at addressing addiction and promoting responsible gambling
It reads: “In legal states, tax revenue from sports betting can help offset some of the negative impacts of legalized sports betting (states collected nearly $3 billion in such tax revenue in 2024 alone), but states that are not legal themselves bear negative consequences of sports betting without the tax revenue to offset these costs. The negative consequences without compensating tax revenue may create incentives for states to legalize, particularly those with population centers near legal states.”
A separate report, conducted jointly by the UCLA Anderson School of Management, Harvard University and University of Southern California’s Marshall School of Business, found legal betting increases the odds of bankruptcy by as much as 30%.
Gambling less likely to be seen as morally wrong by US citizens, survey suggests
Despite the apparent economic impact of gambling, Americans are less likely than people in many other countries to view the practice as a moral issue, according to a 2025 Pew Research Center survey of 25 nations.
It that 29% of U.S. adults say gambling is morally wrong, far lower than in countries such as Indonesia (89%), India (83%), Italy (71%) and Brazil (61%). In contrast, half of Americans say gambling is neither moral nor immoral, a higher share than in any other country surveyed, while 20% consider it morally acceptable.
Even so, opposition has ticked up slightly over time, from 24% of Americans calling gambling immoral in 2013.
Views also vary across demographic and religious groups. Asian, Hispanic and Black Americans are more likely than White Americans to say gambling is morally wrong, as are lower-income individuals compared with higher-income households. Christians and those who pray daily are also more likely to object on moral grounds. Men and women are equally likely to see gambling as immoral, though men are somewhat more likely to say it is acceptable.
Advent of prediction markets could lead to faster legalization, SBA argues
Meanwhile, at a summit in New York at the beginning of the month, industry officials say the growing presence of prediction markets is strengthening the case for expanding legalized gambling, as policymakers confront new forms of sports-related wagering operating outside traditional state frameworks.
Executives say that these platforms, which offer contracts tied to sporting outcomes, resemble unregulated betting and highlight activity already taking place without consumer protections or state tax benefits. That dynamic has become a familiar argument in legalization efforts, now updated to include federally regulated exchanges alongside offshore operators.
Sports Betting Alliance (SBA) chairman Jeremy Kudon said the expansion of prediction markets could prompt lawmakers to act more quickly, shifting from efforts to restrict such platforms toward legalizing and regulating gambling within their own states. He described the trend as a “positive catalyst” that may accelerate legislative momentum.
Other industry leaders, including BetMGM CEO Adam Greenblatt, have echoed that view, pointing to increasing pressure on states to capture tax revenue and establish oversight. While legal questions around prediction markets remain unresolved, their rapid growth is adding urgency to debates over broader gambling legalization.
Taken together, the findings and industry commentary highlight a widening divide between the rapid expansion of legalized gambling and its broader social and economic effects.
While operators and advocates continue to point to tax revenue and regulatory oversight as key benefits, policymakers are increasingly weighing those gains against concerns around consumer debt, financial stability and long-term public health impacts.
