What are the risks of online sports betting?
It's all fun and games until there are real financial stakes involved


If you are enough of a fan, you can find a sport to watch at any time of the year. Still, right now is a particularly good time for sports, with football season heating up and hockey just getting started. All of this excitement may tempt you to place some bets on what will happen — but is that actually a good idea?
If you have already put money down on a particular team, you are not alone. Now that online sports betting is "legal in 30 states plus the District of Columbia and Puerto Rico," it is estimated that "total monthly wagers have climbed from an average of $1.1 billion per month in 2019 to $14 billion in January 2024," said NBC News. That's a big increase.
While it may feel like fun in the moment, it is hard to write off sports betting as just a game when there are real financial stakes involved.
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Why is online sports betting potentially risky?
There are some real risks that come with online sports betting. Let's break down three pitfalls studies have identified so far.
Less investing: For one, betting more could mean investing less. "While the major indices continue hitting all-time highs and a record share of Americans now own stocks, a growing number of investors appear to be vacating the market in favor of sports betting," said Money. In fact, a July study led by Scott Baker, an associate professor of finance at Northwestern University, found that "households increased their bets by $1,100 per year while simultaneously decreasing their investments by 14% when states legalized sports betting."
There are no guarantees in investing either, but smart investing over the long-term is key to building wealth and securing a stable financial future. Plus, forgoing investing in favor of gambling now can cost you later — "disruptions to long-term growth investments can be difficult to recover from," said Money.
More debt and worse credit: Another consequence of online sports betting? "Sports betting increases the number of times households overdraw their bank accounts," said Yahoo! Finance, citing a study on the matter, and "these effects were worse for financially constrained households."
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Researchers have also found that legalization "has led to higher credit card balances" and "lower access to credit," said NBC News. Another study found that "compared with states that did not implement sports gambling, states that did so saw credit scores drop by a statistically significant, though modest, amount, while bankruptcies increased 28% and debt transferred to debt collectors climbed 8%."
Impacts on overall wellness: To top it all off, a recent report from a public health commission on gambling concluded that the "rise of online betting has led the commercial gambling industry to balloon worldwide, posing a significant threat to public health," said NBC News. "Beyond financial losses, gambling can lead people to lose their jobs, relationships or health and raise the risks of suicidality and domestic violence," the report said. "Even people who do not qualify as having gambling disorders suffer their harms."
Are there any safe ways to engage in online sports betting?
If you enjoy sports betting — perhaps as a way to stay in touch with friends or participate at the office — there is some good news: It is "possible for some people to enjoy sports betting in moderation, provided that they set healthy limits for themselves," said NerdWallet, citing certified financial planners Frank Paré and Chris Woods. Keep in mind, however, "that some people can find themselves unable to control the risks of their sports betting behavior." You know yourself best.
If you think you fall into the camp of someone who can handle betting, there are a couple of steps to follow as you do so:
Set limits. "Paré says that one way to set guardrails on your sports betting is to limit it to special occasions — for example, making a small wager on the Super Bowl but not on regular-season games," said NerdWallet.
Stick to a budget. "If people are going to do this, I would have them set up a budget, and put this as a line item in the budget. Treat it just as you would your other entertainment outings," Woods said to NerdWallet, warning against betting money you "can't afford to lose."
Consider outside accountability. Beyond your own self-control and budgeting, a financial advisor "can be a good resource for gauging how much you can responsibly budget for entertainment expenses such as sports betting," said NerdWallet.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
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