Tuesday, October 20, 2026

Online Sports Gambling Leads to Huge Jump in Bankruptcies, Researchers Find

  • Researchers found population-wide financial effects where online betting became legal.
  • One of the authors discussed his methods and conclusions with ‘FOS.’
Tanya Breen – Asbury Park Press

Want more from Front Office Sports
in your search results?

Add Front Office Sports on Google

Six years ago, the Supreme Court made sports gambling legal, striking down a 1992 federal law that previously banned most states from allowing it. Since then, 38 states have adopted it, leading to an explosion of marketing as professional sports leagues have advertised it to the masses. 

On Thursday, three California academics released a paper titled “The Financial Consequences of Legalized Sports Gambling” by Brett Hollenbeck (UCLA), Davide Proserpio, and Poet Larsen (both USC), which studied the negative public health effects of sports gambling. The paper concludes the legalization of sports gambling has negatively impacted financial health, with credit scores dipping slightly and bankruptcies exploding; the authors found that in states with online gambling, “the likelihood of bankruptcy filing increases by as much as 25-30%” four years after legalization.

To learn more about the study, its origin and findings, Front Office Sports caught up with Larsen for a brief phone conversation. 

Front Office Sports: What are the origins of the study? What made you go into it?

Poet Larsen: I initially started a project last summer with my colleague Davide, the third author of the paper, and we were originally going to look at how sports gambling was potentially complementing lottery sale tickets. We were collecting data, but we didn’t really see much evidence. … All three of us were interested in the sports gambling context, and we had seen a lot of articles about people being worried about sports gambling’s financial harm, and so we thought this data set could be useful to shed some light on these concerns and try to do rigorous analysis to address the questions being brought up. 

FOS: What did you make of what you guys found? Were the findings better or worse from what you were expecting while going through this?

PL: I thought they were, I guess, a bit stronger than I was even expecting. Our data is at the average, looking across all individuals. The concerns about problem gambling are oftentimes considered to be a small proportion of the population. And so for us to be able to pick up fairly strong effects with population data suggests that it’s a pretty strong outcome to be seeing across the board. 

FOS: I know you guys didn’t propose solutions in your paper, but if someone with the ability to enact change saw this, what would you want them to take away? 

PL: Yeah, it comes down to, we’re a little hesitant to say much outside of what our data talks about, but I think the thing that our paper highlights is online accessibility seems to be exacerbating a lot of the results, particularly for credit scores and bankruptcies. 

The states that have online accessibility—that’s where we’re seeing effects. … It depends. We haven’t done any sort of analysis on tax benefits or whatnot with states for revenue, but ultimately all we’re trying to do is just provide a data point for policymakers to help weigh the pluses and minuses for either allowing sports gambling at all or online. 

FOS: One of the things I found interesting in the paper is how heavy sports gambling is in young males. Did you guys look at how young the males are getting into it? Were the cases of guys just turning the legal gambling age running into financial trouble?

PL: So in the paper we just do a split around 45. We do under 45 and above 45. We had also looked at particular segments. The strongest segments at least observationally when we were looking at some of the early results were kind of around late 20s or mid-30s, that kind of range. One challenge we have, one kind of limitation is with college students; there’s not as much financial activity with them. I guess they’d be taking out student loans, but at least in our data set, we don’t observe as much. But we see suggested evidence that the late 20s, mid-30s is the category of people that is driving a lot of the effects. 

FOS: Sports gambling is still a very new thing in a lot of ways. Could we look back at your paper as a warning sign of sorts? 

PL: Yeah, it comes down to the trade-offs for policymakers that they’re willing to make. The conclusion that our paper is reasonably showing with the data is that the introduction of sports gambling—particularly online accessibility—is the thing that’s causing the most amount of financial harm in the average level across consumers and individuals. Whether it’s so terrible for policymakers that they don’t want to introduce sports gambling is kind of up to them. That’s the debate for them to decide. Our paper is trying to provide some frontline early results of what’s going on here. 

This interview has been lightly edited for clarity and brevity.

Download the FOS App

The business of sports, in your pocket.

QR code to download the app

Scan the QR code to get the app now.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

First at FOS

Topgolf, John Daly Strike Deal in Wake of Masters Hooters Closure

Daly, 60, last played in the Masters in 2006.

Rays Clinch Pennant, Head to Small-Market World Series

The Rays clinched their third American League pennant.
Oct 28, 2024; Pittsburgh, Pennsylvania, USA; Hall of Fame quterback Troy Aikman stands with his Monday Night Football Broadcast announcer Joe Buck before a game between the Pittsburgh Steelers and New York Giants at Acrisure Stadium. Mandatory Credit: Barry Reeger-Imagn Images

Buck, Aikman Avoid the Elephant in the ‘MNF’ Booth

Aikman and Buck focused purely on football in their ‘MNF’ intro.

5 Biggest Storylines of the NBA Season

The 2026–27 NBA season starts Tuesday.
podcast thumbnail mobile
Front Office Sports Today

10/20/26 – Knicks’ $4K Opener, Brewers’ $2,800 World Series, Colts Call Peyton?

0:00

Featured Today

College Flag Football Is Outgrowing Its DIY Era

Women have been building the college game themselves at the club level.
Oct 5, 2026; Pittsburgh, Pennsylvania, USA; Pittsburgh Penguins general manager Kyle Dubas arrives at the arena before the Penguins host the Winnipeg Jets at PPG Paints Arena
October 12, 2026

NHL’s New Wave of GMs Is Built Different

“I am in the prediction business,” Devils GM Sunny Mehta tells FOS.
Action Images/Peter Cziborra
October 9, 2026

Is Leicester City’s $264 Million Price Tag Too Rich for Hungry Investors?

After falling from grace, how much is a former top club worth?
Oct 3, 2026; Starkville, Mississippi, USA; Alabama Crimson Tide head coach Kalen DeBoer waits to run onto the field prior to the game against the Mississippi State Bulldogs at Davis Wade Stadium at Scott Field. Mandatory Credit: Petre Thomas-Imagn Images
October 7, 2026

Who Is Alabama Football in Year 3 Under Kalen DeBoer?

The No. 6 Crimson Tide host No. 2 Georgia on Saturday.
Cubs behind the scenes
October 6, 2026

Hollywood and TikTok: Sports Media’s New ‘Blueprint’

Teams and leagues are pouring money into the quest for fans.
Polymarket logo appears in this illustration taken April 22, 2026.

Polymarket Removes Cornell 7 Market After Blowback

The market was only available on Polymarket’s international platform.
Cincinnati Bengal T.J. Houshmandzadeh places a $20 bet on the Cincinnati Bengals winning the Super Bowl during the FanDuel Sportsbook at Belterra Park Cincinnati Grand Opening at Belterra Park in Cincinnati.
October 7, 2026

Senator Says Sportsbooks VIP Betting Inquiry Will Expand

Sen. Richard Blumenthal tells FOS he’ll look at prediction markets, too.
Kalshi logo appears in this illustration taken April 22, 2026.
October 16, 2026

Who’s in Charge of the Oklahoma Tribe Doing Business With Kalshi?

Two men separately claim to lead a tribe doing business with Kalshi.
Sponsored

Why Brands Are Betting On Major League Soccer

Discover why brands are investing in MLS as the league builds on World Cup momentum to drive fan engagement and sponsorship growth.
Sep 17, 2026; New York City, New York, USA; Philadelphia Phillies shortstop Trea Turner (7) dives safely into third base after advancing on an errant New York Mets pickoff throw to first base during the seventh inning at Citi Field. novig
Exclusive
September 30, 2026

Novig to Quadruple Valuation With New Funding Round

The company is fundraising at a $2 billion valuation.
U.S. President Donald Trump speaks with Commodity Futures Trading Commission (CFTC) Chairman Michael Selig in the Roosevelt Room at the White House in Washington D.C., U.S., August 19, 2026.
Exclusive
September 29, 2026

Trump Admin Preparing Crackdown on Prediction-Market Promos

The CFTC is looking at incentives like “risk-free” bets.
Asset Class
September 22, 2026

The Firms That Power Prediction-Market Trades

“Essentially, our role is to help bridge demand across time and space.”
Apr 1, 2026; Salt Lake City, Utah, USA; Utah Jazz forward Cody Williams (5) brings the ball up the court against the Denver Nuggets during the first quarter at Delta Center.
September 22, 2026

Ryan Smith Doesn’t Want Betting to Take Over Sports

“I think we need a little more moderation in all of it.”