New York Fed Flags Sports Betting as a Growing Risk to US Consumer Credit Health

‘Following the legalization of sports betting in a state, credit delinquencies increase, driven by those under 40 years old,’ economists said.

A person gambles as betting odds for the Super Bowl are displayed on monitors at the Circa Resort and Casino sports book in Las Vegas on Feb. 3, 2023. John Locher/AP Photo

The surge in sports betting across the United States is starting to ripple through consumers’ credit health and bolster delinquencies, economists at the Federal Reserve Bank of New York caution.

Americans legally bet nearly $167 billion on sports last year, generating a record $16.96 billion in revenue for the industry, according to the American Gaming Association.

Now that sports betting is everywhere—even on smartphones—New York Fed economists said in a March 25 paper that the practice is impacting consumer credit outcomes.

This is especially true of the states that have legalized mobile sports betting.

“Following the legalization of sports betting in a state, credit delinquencies increase, driven by those under 40 years old,” researchers wrote.

Since the Supreme Court struck down the federal ban in 2018, about 30 states have legalized mobile sports betting, producing more than half a trillion dollars in wagers.

The regional central bank highlighted a “noticeable deterioration in repayment performance” in places with legalized sports betting. Economists also noted the “spillover effects” to areas where it remains illegal.

“Following legalization, delinquency rose steadily in legal counties and surpassed half a percentage point three years after legalization, representing a noticeable deterioration in repayment performance from a baseline of 10.7 percent,” the report stated.

“Spillover counties follow a similar pattern with a smaller magnitude increase in delinquencies, suggesting that, as with betting activity, the financial consequences extend across state lines.”

Cash-strapped states could potentially be incentivized to legalize, mainly to offset the “negative consequences of sports betting without the tax revenues.”

Research and Regulations

This is not the first time that a study has linked sports betting with credit health.

An August 2024 paper determined that credit scores have fallen by 0.3 percent in states with any type of legalized sports betting. Additionally, the economists noted that “the effect is nearly 3x as large” in states with legalized online sports betting.

“It is early days, of course, and the need for more research is clear. But the results of our study suggest that policymakers should pay close attention to the impact of sports betting, especially online, and especially for the most economically vulnerable young men,” Poet Larsen, an economist at Harvard University, said in a report.

Economists also determined in a July 2024 paper that online sports betting has contributed to household financial distress.

A group of Democratic lawmakers has turned its attention to prediction markets and bets on elections, government actions, war, and sports.

In recent years, prediction websites such as Kalshi and Polymarket have gained popularity, with trading volume hitting $64 billion in 2025.

Sens. Jeff Merkley (D-Ore.) and Rep. Jamie Raskin (D-Md.) said these platforms require oversight to prevent the further erosion of “our democratic institutions and turning them into a casino.”

They introduced new legislation—the STOP Corrupt Bets Act—that would prohibit event contracts and require the Government Accountability Office (GAO) to conduct a study on prediction markets.

An app for Kalshi is shown in Chicago on Feb. 25, 2026. Scott Olson/Getty Images

“The oligarchs and opportunists are using prediction markets like Kalshi and Polymarket to enrich themselves. But democracy isn’t about insider gambling on our common future, it’s about everyone making our common future together,” Raskin said in a March 26 statement.

“Placing bets on public policy and political events informed by insider knowledge and insider manipulation spreads civic cynicism and distrust in our democratic institutions.”

K-Shaped Consumer Credit

Consumer credit health is weakening nationwide—but unevenly. The strain that first emerged in 2023 is now clearly showing up in the data.

New FICO data show the national average credit score has declined over the past year, falling to 714—two points lower than a year ago.

These scores range from 300 to 850. A good score is above 670. A record 48.1 percent of consumers now enjoy a score of 750 or higher.

Officials attributed the downward trajectory in the average score to rising mortgage delinquencies and the resumption of student loan delinquency reporting.

However, like other corners of the U.S. marketplace, a K-shaped pattern is forming in consumer credit, says Ethan Dornhelm, head of scores analytics at FICO.

The oft-described K-shape represents different groups growing at different rates.

“What makes this particularly interesting is that we’re simultaneously seeing a record share of consumers demonstrating strong, consistent credit behaviors,” Dornhelm said in a news release.

“The result is a credit market that’s both more challenging for some and more rewarding for others—a dynamic that requires more nuanced strategies from lenders.”

Market watchers have observed K-shaped trends emerging in many pockets of the economy, from buying automobiles to taking vacations.

Jackson Richman contributed to this report.