Credit Delinquency Sharply Rises In States With Online Betting

Credit delinquency is rising measurably faster in states that legalize online or mobile sports betting, with the impact concentrated among younger borrowers and active bettors.

Key quantitative findings

• Overall 90‑day‑plus delinquency rates rose about 0.3–0.31 percentage points from a baseline near 10.7% in counties that legalized mobile sports betting.

• Only about 3–3.1% of residents in those counties actually started betting, but delinquency among bettors increased by roughly 10% across age groups.

• Among people under 40, delinquency increases are much larger: credit card 90‑day delinquency up about 7.9%, auto loan delinquency up about 5.6%, and estimated delinquency among young bettors up roughly 26%.

• Credit scores fall more in states that allow online/mobile betting than in states that restrict wagering to physical locations, indicating that ease of access worsens outcomes.

Timing, geography, and spillovers

• Increases in delinquencies start to appear roughly one year after legalization and continue to rise over at least three years, with no clear sign of leveling off yet.

• Spillover effects show up in nearby “illegal” counties: within about 15 miles of a legal state, delinquency rises to roughly 58% of the increase seen in legal counties, despite betting volumes only around 15% as large.

• Research using the New York Fed’s Consumer Credit Panel and spending data suggests these effects are robust across credit products (cards, autos, and to a lesser extent other loans).

Mechanisms and related financial stress

• Studies from the New York Fed, NBER‑affiliated researchers, and university panels link legalization to: higher sportsbook deposits, reduced net investments (around a 14% decline in some work), lower average credit scores, and increased bankruptcy likelihood (on the order of 10% or more in some samples).

• Household exposure is highly skewed: a small, mostly younger, male subset of consumers accounts for a disproportionate share of wagers and most of the observed deterioration in credit metrics.

Policy and supervisory implications

• The findings collectively support treating online sports betting as a non‑trivial, measurable driver of consumer credit risk in affected geographies, especially for sub‑40 card and auto portfolios.

• Supervisors and compliance teams can reasonably incorporate sports‑betting legalization and proximity‑to‑legal markets as environmental risk factors when assessing portfolio performance, UDAP/UDAAP exposure around marketing of credit to bettors, and the need for targeted hardship or gambling‑related loss‑mitigation programs.