As Missouri residents prepare to vote on legalizing sports betting this November, a recent publication from the University of Kansas (KU) has revealed the increased financial risks it poses compared to other forms of gambling.
In their working paper titled "Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households," KU researchers analyzed billions of transactions from 2010 to September 2023 from 60 million American users. This study was co-authored by Kevin Pisciotta and Justin Balthrop, both assistant professors of finance at KU’s School of Business, along with Scott Baker from Northwestern University and Mark Johnson and Jason Kotter of Brigham Young University.
“We can see transfers of an individual’s amount of money out of a Vanguard account and transfers into DraftKings, for instance,” said Pisciotta, as reported in the publication. “We’re not trying to shut down sports betting. Our goal here is to provide clear estimates of what is happening from the result of online sports betting legalization … and the results are not exactly great for those doing the betting.
“We hope our study might help inform discussions about how to possibly improve the environment and the landscape, but that’s going to take time,” he added.
But why?
The study found two key factors driving the financial strain associated with online sports betting: bettors are drawing on savings and increasing their reliance on credit cards. One reason for this, Pisciotta explains, is the psychological aspect unique to sports betting.
“Most people understand a slot machine is random. With sports betting, you feel a little bit invested and might have some advantage — even though, on average, you don’t,” said Pisciotta.
The November ballot
Missouri’s land-based casinos and professional sports teams have been pushing for Missouri sports betting legalization for years, which would enable them to partner with online and in-person sportsbooks. Since the U.S. Supreme Court made the decision to overturn the Professional and Amateur Sports Protection Act in 2018, individual states have had the freedom to determine their own sports betting laws.
However, bills to allow sports betting in Missouri have repeatedly stalled. As a result, six professional sports teams joined forces to form the Winning for Missouri Education coalition in January, pushing for the legalization of sports betting to generate revenue for the state’s schools and teachers. The Kansas City Chiefs, St. Louis Blues, St. Louis Cardinals, Kansas City Royals, Kansas City Current, and St. Louis City SC are all part of the group, with backing from FanDuel and DraftKings. Kansas sports betting is already legal.
This summer, a Missouri judge approved Amendment 2 for the November ballot after the Secretary of State’s office confirmed that Winning for Missouri Education successfully gathered more than 340,000 valid signatures in support of legalizing regulated sports betting across the state.
Still, the amendment faces opposition from a new group named the Missourians Against the Deceptive Online Gambling Amendment and Caesars, which recently donated $4 million to the campaign against sports betting in the state.
