How has the legalization of online sports betting affected society?

Zvi Mowshowitz, who has been deeply involved in 'sports gambling,' the practice of betting on the outcomes of sports events such as soccer and baseball, explains that legalizing sports gambling would be a big mistake and would have a much more negative impact on society than one might imagine.

The Online Sports Gambling Experiment Has Failed
https://thezvi.substack.com/p/the-online-sports-gambling-experiment

There are several studies that have studied the impact of sports betting on people's finances. In the United States, the Supreme Court ruled in 2018 that states cannot prohibit sports betting, and since then, 38 states have legalized sports betting. According to data investigating how consumer financial situations have changed in the five years since sports betting was legalized, the number of people betting on sports has increased sharply, and the sports betting market that occurred in 2018 is expected to expand to 1 trillion dollars (about 150 trillion yen) by early 2023.

The graph below shows the amount of money bet on sports betting, the number of legalized states, and the vertical axis on the right.

According to a paper that analyzed a consumer credit data set of 7 million people and investigated how online gambling affects consumers' finances, in states where all types of gambling are legal, the average credit score declined by 0.3% over four years. In particular, in states where only online gambling is legal, the average credit score declined by 1% over four years. In addition, it was revealed that in states where online gambling is permitted, the likelihood of filing for bankruptcy in three to four years increases by 25 to 30%, and the recovery rate of unpaid debts increases by about 8%. In addition, it was pointed out that in states where online gambling is legal, low-income young men in particular have higher bankruptcy rates, more use of unsecured loans, higher rates of credit card delinquency, and are more likely to fall into financial difficulties.

Online gambling worsens gamblers' economic situation, especially among low-income young men - GIGAZINE

Additionally, Mowshowitz highlights a paper that looked at the impact of sports betting on vulnerable households, analysing consumer transaction data from over 230,000 households and comparing measures of financial stability such as credit card balances, credit card debt and overdrafts .

The analysis found that when sports betting is legalized, consumers significantly increase the number of sports bets they place without sacrificing a reduction in gambling or consumption. In other words, gamblers do not bet on sports to replace the gambling they have been doing, but rather they tend to bet on sports in addition to their traditional gambling. It has also been revealed that people bet on sports instead of stock investment, and it has been revealed that a $1 bet on sports betting reduces stock investment by about $2.

'If this is entirely real, it's outrageous,' Mowshowitz said. 'Net household investment has fallen by 14% as a result of the legalization of sports betting. This is a far too large an impact to even consider. 'If sports betting were a normal consumer good that consumers enjoy, it wouldn't have such a large impact. The fact that it hasn't led to a shift in spending allocation, much less a significant reduction in savings and a reduction in traditional gambling, means that consumers are clearly not responding rationally to sports betting and are not properly understanding the choices they are making.'

In addition, legalization of sports betting has been shown to increase domestic violence (DV). Previous studies have shown that a NFL home team's upset loss increases the likelihood of men committing violence against their partners by 10%, and this effect is even greater in states where sports betting is legal. Based on these figures, 10 million people in the United States are victims of domestic violence every year.

It is pointed out that legalizing sports gambling was a 'big mistake' that would have a negative impact on low-income earners and lead to an increase in domestic violence - GIGAZINE

In addition, the participation rate of sports betting among the participants in the survey was 39%. In another survey conducted in 2023, the percentage of people who answered that they had ever bet on sports was 34%.

'The survey data is also a strong indicator that people who bet on sports are not making rational, wise consumer decisions,' Mowshowitz said. 'These survey data are a strong indicator that people who bet on sports are not making rational, wise consumer decisions.'

In addition, Mowshowitz also takes issue with the fact that sports betting products are extremely predatory. In particular, Mowshowitz criticized the odds in sports betting, saying, 'The range of odds is nauseating,' and 'The calculation of odds in sports betting is crazy, far removed from the expected probability of winning and makes no sense.' Mowshowitz also criticized the predatory strategies of sports betting services that offer free bet promotions to users through various approaches such as text, email, and app notifications.

Professional sports bettors are taking advantage of the predatory nature of sports betting by logging into sports betting service accounts every day and pretending to be gambling addicts in order to extract bet promotions, bonus money , and other benefits from the services.

Given this current situation, Mowshowitz argues that 'legalized online sports betting should end.' He argued that by making legal betting an act that requires costs and risks, such as 'going to a specific place' or 'interacting with a human being,' we can reduce the number of people who suffer from gambling. Furthermore, 'At the very least, we need to stop the advertising and dark patterns that make sports betting notorious. The US government should do everything it can. States should recognize that sports betting is not bringing them any profit and resist or cancel this money-making activity.'

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