Sports betting in Arizona is making all the wrong people rich

Sports betting in Arizona is making all the wrong people rich | Opinion

Posted by Admin January 16, 2025 Gambling

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Sports betting was promised to be a win for Arizona. But the state only gets a fraction of the revenue. And the gambling is draining bank accounts.

The October numbers on Arizona sports betting came out this month, and the Arizona Department of Gaming crowed.

Arizona bettors wagered some $791 million on sports, the agency tweeted out in loud orange numbers. That marks a 22% increase over October 2023, it added in a press release.

Since 2021, when then-Gov. Doug Ducey put his signature to the state law that legalized sports betting, Arizonans have wagered some $20.5 billion on balls and bats and goal posts, according to that October report.

We’re not alone.

Across the country in states where sports betting is legal, Americans wagered $120 billion in just a single year — 2023.

Online sports betting is depleting savings

With so many billions of dollars pushed into wagers, where is it all coming from?

Scott R. Baker, an associate finance professor at Northwestern University, has been asking that question.

More specifically, he and his group of researchers asked, “If consumers are spending more on online sports gambling, on what are they spending less?”

They analyzed data on financial transactions at major banks, credit-card companies and FinTech firms in the 25 states and District of Columbia where sports gambling is legal.

In October, they published their findings and showed that sports betting is “significantly” reducing savings, as “risky bets crowd out positive expected value investments.”

Bettors involved in sports gambling were spending, on average, $1,100 per year on online bets, as reported by KelloggInsight, a publication of the Northwestern Kellogg School of Management.

Gambling hurts those most who can least afford it

And as they spent more on wagers, these bettors’ net investments fell roughly 14%, the researchers found.

For every $1 a household spent on betting, it put $2 less in investment accounts.

That led to:

Increased credit-card debt.
Decreased credit.
More overdraws from bank accounts.

And this:

“The effects were particularly acute among households that were least able to afford it, pushing them even deeper into debt,” KelloggInsight reported.

Sportsbooks, not Arizona’s coffers, are getting rich

While the state enjoys a cut of the action — Arizona got $2.4 million in sports gambling revenue last October — the sportsbooks kept $53.8 million, the Phoenix Business Journal reported.

Given our state’s Good Housekeeping seal on the enterprise, we have an obligation to make sure sports gaming is not doing more harm than good.

Baker and his team of scholars want states that legalize sports betting to understand its effects on society, because as they write, “increased sports betting activity could undermine government efforts to increase long term financial well-being.”

While Arizona state lawmakers count the relatively meager tax revenues that come from sports betting, they may want to count the liabilities, too.

Phil Boas is an editorial columnist with The Arizona Republic. Email him at phil.boas@arizonarepublic.com.