When it comes to your finances, sports betting may be one gamble you don’t want to take.
Wagering on sports can lead to poorer debt management and worse credit scores. Bettors are also more likely to increase their spending and shrink their investments, according to a pair of recent studies. The consequences are biggest among financially vulnerable populations.
What’s worse, per a third study, is that the way sports betting is evolving could make it one of the most addictive forms of gambling.
It’s time for policymakers to step in and regulate this budding betting industry six years after it was legalized in the US to help people avoid their worst impulses — before it’s too late.
“As individuals, voters, [and] policymakers, I think our results are concerning,” Justin Balthrop, a co-author of one of the studies and an assistant professor of finance at the University of Kansas, told Yahoo Finance.
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“But it’s very hard to make prescriptions before you have a diagnosis. And what I think our paper is really trying to do is get very precise estimates of exactly what the problems are.”
A sign calls attention to sports betting at Encore Boston Harbor casino Jan. 31, 2023, in Everett, Mass. (AP Photo/Steven Senne) (ASSOCIATED PRESS)
The financial consequences of sports betting
Sports betting began to take hold after the Supreme Court struck down the Professional and Amateur Sports Protection Act in May 2018, allowing states to set their own sports gambling laws.
So far, sports betting is legal through retail and/or online sportsbooks in 38 states and the District of Columbia. Revenue has jumped, growing 30.3% to $7.56 billion year to date through July from the same period last year.
In his study, Balthrop — who refers to himself as “a pretty avid and voluminous sports bettor” — took advantage of the staggered rollout of sports betting across the US after its legalization, giving him and his colleagues time to understand the before and after effects of this betting.
What he found was for every $1 deposited into online sportsbooks, those households reduce their investment allocations by $2. The doubling effect — from $1 to $2 — comes from the additional spending outside of the bets to support their gambling. Think extra streaming services or more sports bar tabs to watch games.
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Additionally, sports betting increases the number of times households overdraw their bank accounts, Balthrop found. These effects were worse for financially constrained households, which also reduced their credit card payments while increasing their balances.
“The core of this effect is taking place in households that may not have budgetary slack,” Balthrop said.
Davide Proserpio and his colleagues found similarly concerning findings in their study. Overall, the average credit score in a state fell by 0.3% after legalizing sports gambling. That figure triples to 1% if the state permitted online sports gambling.
The fact the study took the average credit score of a state’s entire population likely dilutes the real impact on a bettor’s personal credit score, Proserpio, an associate professor of marketing at the University of Southern California, said.
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On top of that, bankruptcies, debt consolidation loans, and debt collections increased in states that legalized sports betting, especially online betting — to the point that Proserpio found that lenders restricted access to credit to protect themselves. Low-income young men were more likely to be affected.
“It’s not just gambling is affecting, on average, consumer financial health,” he said, “it is also affecting a part of the population that is already low income and probably has other types of [financial] problems.”
‘A casino in our pockets’
Balthrop and Proserpio documented the consequences of sports betting, but their studies didn’t examine why this particular form of gambling can be so detrimental.
That’s where Dr. Jamie Torrance, a researcher in psychology at Swansea University in the UK, and his colleagues come in. They examined numerous studies worldwide on gambling in what’s called a scoping review and unearthed patterns to help explain why sports betting has gotten so pernicious. It comes down to three factors: access, quantity of bets, and illusion of control.
Historically, sports betting was a slow, “simplistic form of gambling,” Torrance said. To wager on a game, you had to call up a booker or walk into a betting shop. You could only bet if a team was going to win, lose, or tie. And then you had to wait until the game was over for the outcome of your bet.
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“There’s lots of research that indicates that the longer you have to wait for a gambling outcome, the less addictive and harmful the product usually is,” Torrance said.
Not anymore with sports gambling, which is instantly accessible on our phones and more akin to slot machines.
“We’re basically walking around with a casino in our pockets,” Torrance said.
New York online sports betting to launch on Jan. 8, 2022. (Photo by: STRF/STAR MAX/IPx 2022 1/7/22) (STRF/STAR MAX/IPx)
On popular apps such as DraftKings and FanDuel, bettors can wager at any time of the day, on any sport, on any game. They can bet on more than just who wins the game, too; they can put money on the outcome of the next baseball pitch or field goal kick. The options are nearly endless and the results come back faster.
“That is a big issue,” he said.
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Another major problem is that sports bettors can easily convince themselves they can beat the odds, Torrance said, providing “an illusion of control.”
They fancy themselves as sports experts. They watch all the games and read all the game reports. They may subscribe to sports newsletters with insider info. Heck, maybe they were a half-rate player a decade ago.
“Sports betting has a way of tapping into people’s misestimation of their own expertise,” Balthrop said, agreeing with Torrance.
But — like any other type of gambling — the game is rigged. The house always wins.
A man makes a sports bet at the DraftKings sports book in Atlantic City, N.J., Oct. 8, 2019. (AP Photo/Wayne Parry) (ASSOCIATED PRESS)
‘A trade-off’
Torrance’s research also uncovered how sports betting could evolve — and his two major predictions are unsettling.
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First, he expects sports betting companies to employ augmented reality. For instance, you could point your phone at a live sporting event, and the app would provide real-time odds on different bets.
Second, he anticipates these companies will provide bettors with very specific notifications based on their gambling behavior. A person could receive an alert that the star player’s mother is having surgery this week that could affect the player’s performance. Maybe the recommendation is to bet against the team.
“That kind of stuff encourages what we discussed earlier, which is the illusion of control,” he said.
This is why all three researchers embarked on these studies, to provide crucial data on gambling to inform lawmakers who — to be honest — may be swayed more by the tax revenue sports betting provides. But citizens who get themselves into too much debt or don’t save for retirement become a “social cost burden” down the road, Balthrop said.
“There is a trade-off here,” Proserpio agreed.
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Australia offers a blueprint, recently implementing ways to slow the betting process to combat those ruinous consequences. But time is ticking in the US as the sports betting industry evolves and grows.
Lawmakers in Missouri and Oklahoma have introduced bills to legalize the industry, while two Democratic congressmen this month introduced a bill that would allow the federal government to regulate advertising, bet-making, and artificial intelligence in the industry.
“I’d like to think that you guys over the pond have more time to reduce harm, but in reality, I don’t think that’s going to be the case,” Torrance said. “I think, in fact, it’s going to mirror the UK where we have lots of gambling harm.”
In other words, don’t bet on it.
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on X @JannaHerron.
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The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
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On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
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Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
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$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
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Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.
Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.
“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.
What You Need To Know
High school athletes with Division I prospects are learning to manage NIL money before they even reach college
Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources
Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era
Preston said the experience has already been eye-opening.
“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.
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For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.
“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.
Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.
“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.
The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.
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“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.
For these athletes, having the right support system makes all the difference.
“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.
Collins-Howard said the program has given him a broader perspective beyond just the game.
“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.
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“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.
NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.
With the introduction of the Employee Ownership Development Act , Illinois is poised to create the largest dedicated public investment vehicle for employee ownership in the country.
State Rep. Will Guzzardi’s bill, HB4955, would authorize the Illinois Treasury to deploy a portion of the state’s non-pension investment portfolio into employee ownership-focused investment funds.
That would represent a substantial investment of institutional capital in building wealth for Illinois workers and seed a capital market for employee ownership in the process. And because the fund is carved out of the state investment pool, it doesn’t require a single dollar of appropriations from the legislature.
Silver tsunami
The timing of the Employee Ownership Development Fund could not be more urgent. More than half of Illinois business owners are over 55 years old and are set to retire in the coming decade. When these owners sell their firms, financial buyers and competitors are often the default exit – if owners don’t simply close the business for lack of a buyer.
Each of these traditional paths risks consolidation, job loss and offshoring of investment and production. These are major disruptions to the communities that have long sustained these businesses. Without a concerted strategy, business succession is an economic development risk hiding in plain sight, and one that threatens local employment, supply chain resilience, and the tax base of communities across the country.
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Employee ownership offers another path. Decades of empirical research show that employee-owned firms grow faster, weather economic downturns better (with fewer layoffs and lower rates of closure), and provide better pay and retirement benefits.
The average employee owner with an employee stock ownership plan, or ESOP, has nearly 2.5 times the retirement wealth of non-ESOP participants. That comes at no cost to the employee and is generally in addition to a diversified 401(k) retirement account.
Because businesses are selling to local employees, employee ownership transitions keep businesses rooted in their communities. This approach can support a place-based retention strategy for state economic policymakers.
Capital gap
Despite the remarkable benefits of employee ownership and bipartisan support from policymakers, a lack of private capital has impeded the growth of employee ownership: In the past decade, new ESOP formation has averaged just 269 firms per year.
Most ESOP transactions ask the seller to be the bank, relying heavily on sellers to finance a significant portion of the sale themselves, often waiting five to 10 years to fully realize their proceeds. Compared to financial and strategic buyers who offer sellers their liquidity upfront, employee ownership sales are structurally uncompetitive in the M&A market.
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A small but growing ecosystem of specialized fund managers has begun to fill this gap. They deploy subordinated debt and equity-like capital to provide sellers the liquidity they need, while supporting newly employee-owned businesses with expertise and growth capital (see for example, “Apis & Heritage helps thousands of B and B Maintenance workers become owners”).
This approach is a recipe for scale, but the market remains nascent and undercapitalized relative to the generational pipeline of businesses approaching succession. To mature, the market needs anchor institutional investors willing to commit capital at scale.
State treasurers and other public investment officers could be those institutional investors. Collectively managing trillions of dollars in state assets, they have the portfolio scale, time horizons and fiduciary obligation to earn market returns while advancing state economic development.
Illinois’ blueprint
Just as federal credit programs helped catalyze the home mortgage and venture capital industries in the 20th century, state treasurers and comptrollers now have the opportunity to help build the employee ownership capital market in the 21st.
Illinois shows us how. The state’s Employee Ownership Development Act is modeled on proven investment strategies previously authorized by the legislature and pioneered by State Treasurer Michael Frerichs. The Illinois Growth and Innovation Fund and the FIRST Fund each ring-fence 5% of the state investment portfolio for investments in private markets and infrastructure, respectively, deployed through professional fund managers. Both have generated competitive returns while catalyzing billions of dollars in private co-investment in Illinois.
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The Employee Ownership Development Fund would apply that same architecture to employee ownership. The Treasurer would invest indirectly by capitalizing private investment funds deploying a range of credit and equity. The funds, in turn, would invest a multiple of the state’s commitment in employee ownership transactions.
The employee ownership field has matured to a point that is ready for institutional capital. The evidence base is robust. The fund management ecosystem is growing. And the business succession pipeline is larger than it will be for generations.
Yet the field still lacks the publicly enabled financing interventions that have historically built new markets in this country. State treasurers, city comptrollers and other public investment officers have the tools and resources at their disposal to provide that catalytic, market-rate investment to enable the employee ownership market to scale.
Julien Rosenbloom is a senior associate at the Lafayette Square Institute.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
