Sports betting weighs on consumers’ credit health

As March Madness nears its peak, sports betting is gaining momentum as well — but new research shows the toll it takes on many households’ financial stability.

Sports fans will bet about $3.3 billion through legal means on this year’s NCAA men’s and women’s basketball tournaments alone, according to an estimate from the American Gaming Association — a 54% jump over the past three years.

However, as more states have legalized mobile sports betting, leading to broader participation, consumer credit health has suffered, a new report by the Federal Reserve Bank of New York found.

In its report, the New York Fed warned of a “noticeable deterioration in repayment performance” in certain parts of the country with legalized sports betting, as well as “spillover effects” to nearby areas where it’s still not legal.

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

More than 30 states have legalized mobile sports betting since the Supreme Court struck down the federal ban in 2018, resulting in more than half a trillion dollars in wagers, according to the New York Fed.

Another 2026 paper, from researchers at UCLA Anderson School of Management, Harvard University and University of Southern California’s Marshall School of Business, found that the odds of bankruptcy filing in states with legal betting increased by as much as 25% to 30%.

“Most Americans have precious little margin for error when it comes to their finances, and while sports gambling can help in that area when you win, the truth is that it is far more likely to end up hurting more than it helps in the long run,” said Matt Schulz, chief credit analyst at LendingTree. 

The AGA did not immediately respond to a request for comment.

The NY Fed findings aren’t the only sign of deteriorating consumer credit health. The national average credit score continues to trend lower, according to a separate report this week from FICO, developer of one of the scores most widely used by lenders.

The average score is now 714, down two points in the last year, driven by the resumption of student loan delinquency reporting and an increase in mortgage delinquencies, according to the report.

FICO scores range between 300 and 850. A good score generally is above 670, a very good score is over 740 and anything above 800 is considered exceptional.

While the so-called K-shaped economy has caused financial strain for some borrowers, others have strengthened their financial standing, FICO also found. Now, more consumers score in the highest and lowest score ranges.

“We’re simultaneously seeing a record share of consumers demonstrating strong, consistent credit behaviors,” Ethan Dornhelm, head of scores analytics at FICO, said in a statement. 

A VantageScore report showed a similar dynamic.

The average VantageScore credit score was 701 in February, essentially unchanged from a year earlier. However, some borrowers are gradually moving into lower credit tiers as financial pressures mount, VantageScore research found, while the most creditworthy borrowers are reducing their credit utilization rate, a key component of higher credit scores.

“Overall consumer credit health remains relatively resilient, as improvements in the credit health of top-tier consumers outweigh the deterioration among lower-tier consumers,” the report said.

“The advice, of course, is to live within your means,” said Ted Rossman, senior industry analyst at Bankrate. “It’s okay to spend money on the occasional indulgence” — even sports betting, he said, “you just need to budget for it.”

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