Sports Betting Linked to Rising Credit Card and Auto Loan Delinquencies

A new Fed study finds that the expansion of legal betting is driving declines in household financial stability, particularly among younger consumers.

The rapid expansion of legalized sports betting in the U.S. is producing a trail of financial distress in consumer credit data. According to the Federal Reserve Bank of New York, states that legalized sports wagering have experienced a distinct rise in delinquency rates and a decrease in average credit scores.

The study, authored by researchers Jacob Goss and Daniel Mangrum, uses the staggered rollout of state-sanctioned gambling over the last eight years to isolate its impact on household finances. The findings suggest that while only a small fraction of the population — approximately 3% — takes up active sports betting after legalization, the financial fallout for those individuals is significant enough to shift aggregate credit statistics.

For the core demographic of sports bettors — those under age 40 — the impact is particularly acute. The share of borrowers in this age group who were at least 90 days late on a credit card payment rose 7.9% following legalization. Auto loan delinquencies for the same group increased by 5.6%.

“Our findings suggest that sports betting can have dramatic implications for household financial stability,” the authors wrote.

The researchers noted that the effect is not contained by state lines. In a phenomenon described as “spillover,” counties in states where betting remains illegal but which are adjacent to legal jurisdictions saw sportsbook deposits rise to about 15% of the level seen in legal states. Consequently, these nonlegal areas also experienced a rise in credit delinquencies without the benefit of state tax revenue to offset the social costs.

While the overall delinquency rate in legal counties rose by a modest 0.3 percentage points, the researchers found that for the 3% of individuals who actually participate in betting, the implied delinquency rate effectively doubles from a baseline of 10.7% to more than 20%.

The study arrives as the total amount wagered on sports in the U.S. surpassed $520 billion since the 2018 Supreme Court decision that struck down a federal law banning sports betting. The rise of prediction market platforms and the integration of betting features into finance apps have further lowered the barrier to entry for casual speculators.

Financial institutions appear to be responding to these shifts. The report indicates that some lenders have begun restricting credit access in areas with high betting activity as they observe a deterioration in repayment performance. This aligns with broader trends in the revolving debt market, where cure rates — the frequency with which delinquent accounts are brought current — have dropped significantly over the last two years.

ACA’s Take

The New York Fed’s findings echo concerns recently highlighted by ACA International regarding the gambling debt spiral affecting younger consumers. In a September 2025 article, ACA reported that 25% of sports bettors admitted to missing bill payments to fund wagers.

This trend is a contributing factor to the broader financial strain highlighted by an earlier Fed report, which found that credit card and student loan delinquencies have pushed aggregate delinquency rates to their highest levels in a decade.