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Rob Minnick fell into debt for the first time at age 19. Sitting in the back of his classroom during a freshman year math class, the now-25-year-old placed a wager on the New York Yankees during an MLB spring training game that sent him into the red. He assured his parents it wouldn\u2019t happen again.<\/p>\n
\u201cThen it would happen five more times over the next five years,\u201d he told Fortune<\/em>.<\/p>\n Minnick gambled away the unemployment checks he received from his college campus job as he waited out the COVID lockdown from his parents\u2019 house. When the stock market tumbled<\/a> at the beginning of the pandemic, he yanked money from his stock portfolio and sold his Bitcoin and Ethereum, using the money to stoke the flames of a growing gambling addiction.<\/p>\n \u201cMy thought was, I need to get this money out and make it back right now, and then I\u2019ll buy double what I just had, and then I\u2019ll hold it,\u201d he said.<\/p>\n Minnick will admit his myopia now, but his financial habits surrounding his gambling disorder are far from singular. A new wave of studies has found an increasing number of Americans are dumping stocks and draining savings in order to fuel sports betting habits\u2014and finding themselves in financial turmoil as a result.<\/p>\n Since the U.S. Supreme Court overturned<\/a> the Professional and Amateur Sports Protection Act in 2018\u2014effectively legalizing sports betting\u2014 U.S. sports betting revenue has exploded from $441 million in revenue in 2018 to almost $5.7 billion in 2024, according to Sportsbook Review<\/a>.\u00a0<\/p>\n The industry has reportedly minted billion-dollar deals<\/a> between leagues and online platforms like DraftKings<\/a> and FanDuel. And ahead of last year\u2019s 2023 NFL season, 73 million Americans planned on placing bets. That\u2019s a big pay day for the sports book and sports industry, yet it\u2019s a hole burnt in the pocket of many gamblers.<\/p>\n \u201cThis is a money-losing proposition for most of these individuals,\u201d Scott Baker, an associate professor of finance at Northwestern University\u2019s Kellogg<\/a> School of Management, told Fortune<\/em>. \u201cOn average, this is representing a drain to people\u2019s finances.\u201d<\/p>\n Baker authored a study<\/a>, which has yet to undergo peer review, that found that household bets increased $1,100 per year in states that legalized online sports betting. Meanwhile, the study also found a nearly 14% decrease in net investments in households after the introduction of legal online sports betting.\u00a0<\/p>\n These gamblers are not just funneling money from other parts of an entertainment budget to sustain their betting habits, Baker said. Instead, they\u2019re also using funds to attend sports games or watching sports in restaurants or bars, creating a snowball effect of money spent on sports betting and its accompanying entertainment activities.<\/p>\n \u201cWe\u2019re seeing that this gambling plus increases in consumption are both detracting from some of the longer run equity investments\u2014or positive, easy, risky investments that people have been making\u2014and tend to put more pressure and strain on their budgets in general,\u201d Baker said.<\/p>\n A colleague in the field, Brett Hollenbeck, a marketing professor at the UCLA Anderson School of Management, can back up Baker\u2019s findings. His working paper<\/a> found that credit scores fell an average of 0.3% in states that had legalized sports betting four years after the activity became legal. <\/p>\n Using consumer credit data in the 38 states that have legalized sports betting in some form, the study also found increased rates of bankruptcy, debt collections, debt consolidation loans, and auto loan delinquencies following legalization.<\/p>\n \u201cWhat\u2019s really unique about this is not just that sports gambling is a big, important industry,\u201d Hollenbeck told Fortune<\/em>. \u201cBut it gives us a window into how gambling causes people\u2019s behavior to change.\u201d<\/p>\n These behavioral changes are alarming to experts, who are concerned that the proliferation of sports betting is increasing the prevalence of gambling disorders.\u00a0<\/p>\n \u201cI\u2019ve seen people end up losing their houses, losing everything\u2014not just because of sports wagering, just because of where gambling disorder will take them,\u201d Michelle Malkin, a criminal justice and criminology professor at East Carolina University, told Fortune<\/em>.<\/p>\n Because legalized sports betting is a relatively recent development, it is difficult to know the extent of its consequences for gambling addiction, she said. But early studies are starting to paint a picture. In Connecticut, which legalized online sports betting in 2021, 71% of state legal gambling revenue comes from problem or at-risk gamblers\u2014who make up just 7% of residents, a Gemini Research study<\/a> conducted by University of Massachusetts professor Rachel Volberg found.<\/p>\n Malkin believes problem gambling will become a bigger issue so long as sports betting remains under-regulated<\/a>. \u201cWe can\u2019t be winning everything off the backs of the people who are suffering most,\u201d she said.\u00a0<\/p>\n But for states that have legalized sports betting and are able to heavily tax winnings, the legal online gambling platforms have been a boon. In July alone, the Connecticut Lottery Corporation, the state\u2019s official lottery, made $497,000 in gross revenue<\/a> from over $4.7 million in patron winnings from sports retail wagers. A spokesperson from CT Lottery told Fortune<\/em> the revenue is used in the state\u2019s general fund, which invests in public health, libraries, and public safety. But advocates for greater gambling regulation warn this is only one piece of the puzzle.<\/p>\n \u201cIt\u2019s a marriage of the sports leagues, teams and players, media, online technology companies, the gambling companies\u2014all under the partnership with the state government,\u201d Harry Levant, clinician and director of gambling policy with the Public Health Advocacy Institute, told Fortune<\/em>.<\/p>\n But it\u2019s not just the legalization of sports betting that has led to its widespread popularity, Levant argued. Rather, it\u2019s the growth of online platforms and apps<\/a> that allow users to place frequent bets and experience the rush of instant gratification that accompanies them.<\/p>\n \u201cWhat has happened since sports betting has been legalized\u2014and now online casinos in seven states\u2014is that the product is delivered as rapidly and as instantaneously as possible,\u201d he said. \u201cYou can bet on the speed of every single pitch in every single baseball game.\u201d<\/p>\n Sports betting apps hook users with aggressive sign-up bonuses<\/a> and incentives to place the first bet and trust that the convenience and ease of their platforms will help them retain users.<\/p>\n \u201cIt gives them just another activity they can do on their phone,\u201d marketing professor Hollenbeck said.<\/p>\n Growing concerns about gambling disorder is top of mind for online sportsbooks and their partners. The NFL announced last week a $6 million, three-year partnership<\/a> extension with the National Council on Problem Gambling to expand visibility of resources and educational materials.\u00a0<\/p>\n The trade group American Gaming Association (AGA) has touted its efforts to increase consumer awareness<\/a> of responsible gaming resources, such as wager and deposit limits. DraftKings offers a stat sheet to users to allow them to track their spending, while FanDuel has partnered with financial literacy nonprofit Operation HOPE. Both are members of the Responsible Online Gaming Association (ROGA).<\/p>\n \u201cCurrently, there is a misinterpretation that responsible gaming programs are intended only for those with a gambling problem, causing these programs and tools to be underutilized or ignored,\u201d Jennifer Shatley, ROGA executive director, told Fortune<\/em>. \u201cIn reality, the target audience for [responsible gaming] programs is the entire customer base as these programs are designed to assist players with keeping gaming within their own personal limits.\u201d<\/p>\n At the same time, the industry is skeptical of early data on what they say is an outsized relationship between the legalization of sports betting and gamblers\u2019 financial behaviors. Not only is legal sports betting in its infancy, but data collected on personal finances following its legalization could be confounded by the pandemic, Shatley said.\u00a0<\/p>\n Joe Maloney, senior vice president of strategic communications at AGA, told Fortune <\/em>previous data<\/a> on gambling\u2014albeit in physical casinos instead of online sites\u2014and financial outcomes like bankruptcy have not shown a significant relationship between the two. Moreover, gamblers understand that sports betting is a form of entertainment and set their financial expectations accordingly, he argued.<\/p>\n \u201cConsumers in today\u2019s legal, regulated market for sports wagering view this activity as a good value for their entertainment dollars, not as an expected, positive value investment,\u201d Maloney said.<\/p>\n Minnick\u2019s own gambling habit was jump-started by the 2018 legalization of sports betting, followed by the proliferation of dozens of apps seemingly tailored just for him. He and his group of college friends mirrored sports\u2019 predominantly male fanbase<\/a>, and it wasn\u2019t lost on him that he was the target for betting apps\u2019 marketing.<\/p>\n \u201cIt\u2019s pretty obvious who it\u2019s trying to appeal to if Vanessa Hudgens is walking you through [a virtual casino], right?\u201d Minnick said, referring to a Disney<\/a> channel actor from the early 2000s who was recently featured in a BetMGM advertisement. \u201cIt\u2019s not a big secret.\u201d<\/p>\n While the open floodgates of sports betting can be a danger to anyone, early, conservative findings from Hollenbeck\u2019s research suggests men\u2014who experience gambling disorders at nearly twice the rate<\/a> of women\u2014and particularly Gen Z men are at higher risk of falling into financial disarray as a result of gambling. This could be because they are more interested in sports gambling and are sent targeted advertising from sports gambling platforms, he said.<\/p>\n The \u201cOracle of Wall Street\u201d Meredith Whitney has even gone so far as to say young men\u2019s love of sports betting will impact the housing market because they have no interest in getting married and moving out of their parents\u2019 homes.<\/p>\n \u201cIt\u2019s all young men [betting on sports],\u201d she said in a December 2023 CNBC interview<\/a>, \u201cAnd I dovetailed that with Pew Research<\/a> which says that 63% of young men are single. And that\u2019s the highest it\u2019s ever been. And 50% of those young men have no interest in dating, not even casually.\u201d<\/p>\n Minnick, who hasn\u2019t placed a bet in a couple years now, is battling against the stacked odds of Gen Z men getting hooked on sports betting. He\u2019s a full-time content creator, working with teletherapy firms and state councils to design marketing for gambling disorder resources for young people.\u00a0<\/p>\n \u201cThe root goal of everything is to try to help other people avoid making the same mistakes that I made,\u201d he said.<\/p>\n He\u2019s ditched the sportsbook apps and has ditched investing altogether, fearing a backslide into risky options trading that might as well be gambling. In place of the ricochet of emotions and funds that once defined his life, Minnick has opted for sturdier financial ground.<\/p>\n \u201cAt this point, the only thing I have is a solo 401k,\u201d he said. \u201cAnd I haven\u2019t even funded it yet.\u201d<\/p>\n<\/div>\nBoom and bust<\/strong><\/h2>\n
What the gaming industry is doing<\/strong><\/h2>\n
Gen Z\u2019s big spenders<\/strong><\/h2>\n