Impact of Legalized Online Sports Betting in Various US States on Regulated and Uncontrolled Gambling
In a groundbreaking study analysing data from 1.2 million individuals' transactions with 20 major U.S. online sportsbooks from 2019 to 2023, researchers have shed light on the impact of legal online sports betting on consumer behaviour and problem gambling.
The study, co-authored by Wayne Taylor (Southern Methodist University), Daniel McCarthy (University of Maryland), and Kenneth C. Wilbur (University of California, San Diego), found that the average monthly spend per individual increased by 369% after the launch of online sports betting. However, key research questions remain unanswered, such as the extent to which the increase came from people switching from illegal services to regulated channels, versus new gambling activity, and the interplay between digital targeting, promotion, and advertising algorithms and vulnerable populations or risky behaviours.
One promising finding was a spike in help-seeking, with calls to the national problem gambling helpline increasing 75%. The study also highlighted the disproportionate impact of irresponsible gambling on low-income bettors, with an increase of 0.91 percentage points, compared to 0.49 points for high-income bettors.
The researchers used statistics to create "virtual twin" states for each legalizing state to isolate the effect of online sports betting legalizations. Interestingly, online sports betting did not appear to cannibalize traditional casino spending, as states launching both online and in-person betting saw an increase in casino card spending of $0.20 per person monthly.
In response to these findings, states with legalized online sports betting are adopting a multi-pronged strategy that combines regulatory oversight, technological interventions, financial safeguards, and public health initiatives to reduce problem gambling while balancing market growth.
Key approaches include:
1. **Responsible Gaming Regulations:** States have been adopting detailed responsible gaming rules that include restrictions on advertising, especially where minors are likely part of the audience, reflecting concerns about exposure to vulnerable groups. Common regulatory elements include mandatory player self-exclusion programs, where individuals can voluntarily ban themselves from online or land-based gambling for specific time periods or permanently. Licensees are often required to provide clear responsible gaming information and restrict the extension of credit to players to mitigate excessive gambling risk.
2. **Data-Driven and Automated Interventions:** Progressive states like Colorado, Massachusetts, New Jersey, and North Carolina use algorithmic triggers and real-time data monitoring to identify signs of problem gambling and intervene proactively. These interventions can include flagging risky gambling behaviours and offering personalized support or restrictions before severe harm occurs.
3. **Wager and Time Limits:** Some jurisdictions such as Indiana, Kentucky, North Carolina, and Vermont have implemented wagering and time limits as part of their responsible gaming measures to curb excessive betting and reduce harm. These limits can help contain gambling within affordable and reasonable bounds for consumers.
4. **Financial Affordability Checks:** Inspired by U.K. public health measures, affordability checks—assessing whether a gambler’s betting level aligns with their financial means—are gaining attention in the U.S., with bills like the Safe Bet Act proposing mandatory financial checks for high-stakes bettors. Affordability checks can prevent individuals from betting beyond their capacity, a significant factor in problem gambling.
5. **Self-Exclusion and Digital Blocking Tools:** Online sports betting operators are encouraged to integrate self-exclusion tools enabling users to block access to gambling sites and apps, which has shown effectiveness in reducing impulsive gambling behaviour. Removing or restricting access to gambling funds digitally—like disabling credit cards for gambling purchases or limiting cash availability—helps reduce the opportunity to gamble impulsively.
6. **Dedicated Funding and Research:** States including Indiana, Kentucky, North Carolina, and Vermont allocate special funding for gambling research, treatment, and education to support ongoing efforts and improve intervention strategies. Investing in research helps tailor programs to evolving industry trends like mobile betting.
7. **Public Health and Advocacy Involvement:** Influential organizations such as the National Council on Problem Gambling (NCPG) work alongside regulators and operators in developing standards emphasizing harm reduction and player protection tailored to local markets. Public health advocacy pushes for restrictions on advertising and protections against deceptive industry practices.
As the U.S. online sports betting market continues to evolve, striking a balance between earning revenue and guarding the vulnerable remains essential. The emerging best practices, including integrating automated responsible gaming tools, enforcing affordability checks, expanding self-exclusion programs, and ensuring ongoing funding for treatment and education efforts, offer a promising roadmap for responsible growth in the industry.
[1] Taylor, W., McCarthy, D., & Wilbur, K. C. (2023). The Impact of Legal Online Sports Betting on Consumer Behavior and Problem Gambling. Social Science Research Network. [2] National Council on Problem Gambling. (2023). The Safe Bet Act: A Step Forward in Addressing Problem Gambling. [3] Colorado Division of Gaming. (2022). Responsible Gambling in Colorado. [4] Massachusetts Gaming Commission. (2022). Responsible Gaming.
- The study on the impact of legal online sports betting revealed that the average monthly spend per individual increased significantly after the launch of online sports betting, with key questions about the sources of this increase remaining unanswered.
- One positive outcome from the study was an increase in help-seeking, as calls to the national problem gambling helpline rose by 75%, but it also highlighted a disproportionate impact of problem gambling on low-income bettors.
- States with legalized online sports betting are implementing multi-pronged strategies to address problem gambling, including adopting detailed responsible gaming regulations, using data-driven and automated interventions, setting wager and time limits, implementing financial affordability checks, offering self-exclusion and digital blocking tools, dedicating funds for research, treatment, and education, and collaborating with public health and advocacy organizations.
- Key approaches in these strategies include stringent regulatory oversight, technology-based interventions, financial safeguards, and public health initiatives aimed at reducing problem gambling while promoting growth in the industry.
