TLDR
- A study of over 700,000 North American online gamblers found that 96% lose money.
- Lower-income gamblers tend to take greater risks and spend more irresponsibly than higher-income gamblers.
- 43% of gamblers studied spent above the recommended 1% of their salary on betting.
- Online casino games led to more irresponsible behavior than online sports betting.
- Legalization of online gambling increases state revenue but also leads to higher rates of problematic gambling behavior.
A comprehensive study by UC San Diego’s Rady School of Management has shed light on the impact of legalized online gambling, revealing concerning trends, particularly among lower-income bettors.
The research, which analyzed data from over 700,000 North American online gamblers over five years, found that the vast majority of players end up losing money, with lower-income individuals more likely to engage in risky betting behavior.
The study, released on July 23, 2024, comes at a time when online gambling markets are expanding rapidly across the United States. Since the 2018 U.S. Supreme Court decision allowing states to legalize sports betting, 30 states now permit online sports betting, with seven also allowing online casino gaming.
In the first quarter of this year, online gaming reached a record 29.3% of total commercial gaming revenue.
One of the most striking findings of the study is that 96% of the gamblers analyzed appeared to lose money to online gambling platforms.
Only 4% managed to make money from online betting. Kenneth Wilbur, professor of marketing and analytics at the Rady School and co-author of the study, explained, “That is by design. Online gambling platforms often ban or throttle frequent winners’ accounts. There is no right to gamble.”
The research also revealed a concerning trend among lower-income gamblers.
“Our data show that online gambling legalization leads to more irresponsible gambling spending among lower-income consumers than among higher-income gamblers,”
Wilbur stated. The study defined gambling irresponsibly as spending a high proportion of income – for example, 10% – on gambling.
For a subset of about 250,000 gamblers, researchers were able to analyze gambling as a percentage of income through direct deposit data. The results were alarming: 43% of gamblers studied exceeded the recommended 1% of income in gambling months. Even more concerning, 5.3% spent more than 10% of their income on gambling, and 3.2% spent over 15% of their monthly pay.
The study also found that online casino games led to more irresponsible behavior than online sports betting. This distinction is crucial as states consider expanding their legalized gambling offerings.
While the research highlighted the risks associated with online gambling, it also acknowledged some positive aspects of legalization. States can generate increased revenue from legal gambling, which can be funneled into problem gambling initiatives. Legalization can also help limit illegal wagering and make it easier for individuals to seek help for gambling problems.
However, the authors emphasized that increased accessibility and participation can lead to higher rates of problematic gambling behavior. The study noted a rise in calls to gambling helplines as more states legalized online betting, particularly in New York. Interestingly, the researchers did not observe a corresponding increase in suicide rates, though they cautioned that current methods for tracking gambling-related suicides have limitations.
As more states consider expanding legalized gambling, the authors aim to provide this data to state legislatures to inform their decisions. The findings underscore the need for robust consumer protections and responsible gambling measures, especially for lower-income individuals who may be more vulnerable to the risks associated with online betting.
