CINCINNATI (WKRC) -Bankruptcies in the Tri-State are increasing for the first time in 15 years. Some are pointing to the legalization of sports gambling as one of the causes.
In the next chapter of our investigation into the U.S. credit crisis, we look at a study that surveyed 38 states which now allow in-person and/or online sports gambling. In those states bankruptcies are up 28% since 2018.
Researchers in southern California this summer released the findings of the study that they say illustrates a causal relationship between the increase in sports gambling and the increase in bankruptcy – but that’s just the beginning.
“How often do you place wagers?” we asked Justin Dillon of Middletown.
“Five times a week,” he replied.
“Almost every day?” we asked.
“Yeah, basically.”
Justin Dillon says sometimes he’s up and sometimes he’s down. A new study out of the University of Southern California would suggest more down than up for most people. It looked at what happened to peoples’ financial health once sports gambling became legal in their states, and found from 2018 to 2023, bankruptcies increased 28%. Debt collections went up as well — 8%. And while the drop wasn’t large, people’s credit scores went down 0.3%. When you isolated states that legalized sports betting online, the decrease was three times larger.
“Giving consumers or people easy access to gambling may actually increase the negative consequences associated with gambling and addiction,” said USC Professor of Marketing Davide Proserpio, who co-authored the study.
We asked Professor Proserpio whether the negative personal financial impacts could have been coincidental.
“How can you say that there is a causal relationship between sports gambling and the negative effects on people’s financial well-being?” we asked.
“Because the time of legalization is different across states,” he replied. “This kind of variation allows us to establish this causal relationship.”
In Ohio, where sports gambling began at the beginning of 2023, personal bankruptcies saw a 9% increase from 2022 to 2023. Indiana, also saw a 9% increase – but it’s had sports gambling since 2019. Kentucky, which legalized sports gambling a few months after Ohio, has seen a 16% increase in personal bankruptcy filings from 2022 to 2023.
“I’ve had a client or two where there was more sports betting than there were transactions for food,” said bankruptcy attorney Andrew Brasse. He says he’s seen a dramatic increase in the past year of clients with sports gambling issues – and he only expects it to increase.
“I think the people who are doing sports betting,” said Brasse, “If they’re in Ohio, haven’t hit the point where they’re building up credit card balances and things like that. I think that’s still to come.”
Justin Dillon was on his way into the Hard Rock Casino in Cincinnati.
We asked him, “Some people would say, ‘Justin, why don’t you take that money, instead of gambling it, invest it!’”
“You’re taking a gamble there!” said Justin. “Invest in what – the stock market? Fake money? No matter what you do it’s a gamble.”
The co-author of the study went on to say most policymakers legalized sports gambling to take advantage of the tax revenue generated by it, which is hundreds of millions in Ohio alone. He says his next study will be exercising the benefits of that tax revenue, against the costs associated with thousands of people losing homes, cars, businesses and families because of gambling addiction.