Online Gambling Policy Effects on Tax Revenue and Irresponsible Gambling

This study focuses on empirical research about gambling legalization and consequences to help inform policymakers. The study measured a balanced panel of 717,724 gamblers over five years, 2019-2023, using a financial panel dataset that tracks their digital gambling spending data across all major online gambling operators.

Quantitative Data

• Calls to National Council on Problem Gambling (NCPG) gambler helplines grew by 150% from 2019 to 2023.
• 96% percent lost money to online gambling (Only 4% made money from online betting).
• Direct deposit datasets of around 250,000 participants revealed that
  • 43% of panel gamblers exceeded 1% of their income in gambling months,
  • 5.3% spent more than 10% of their income on gambling and
  • 3.2% spent more than 15% of their monthly pay
• Online gambling policies increased Online Sports Betting (OSB) by an average of $36-45 per capita (i.e. per person).
  • OSB app downloads grew from 6 million in 2019 to 33 million in 2023.
• Policies that included Online Casino Gambling (OCG) legalization increased monthly revenue at about $8 per person in Connecticut and $16 per person in Michigan.
• Online gambling policies increased monthly gambling participation among potential gamblers by 7-15.
• Legalized online and retail sports betting increased new gamblers by more than 2% on average.

Qualitative Data

• Gambling helpline calls did increase as gambling became legal in the 14 states analyzed; most notably in NY.
  •  Suicide rates did not increase, but there are limitations in measuring gambling-related suicides as state coroners don’t document gambling as a contributing factor in suicide records.
• OCG policies caused more irresponsible gambling than OSB-only policies, especially among low-income gamblers.
• Policy effects on irresponsible gambling are much larger within the lowest income populations.

Risk Factor

• Lower income.

Identified Conclusions

• Online gambling legalization leads to far more problematic gambling among lower-income gamblers.
• As the state’s revenue from gambling goes up, so do the problems and gambling related harm.
• OCG legalization increased monthly revenue, which may partially explain the gambling industry’s continued push to legalize OCG in more states.

Identified Recommendations

• Policymakers who are considering OCG policies may also wish to consider strengthening consumer safeguards and allocating more resources for problem gambler helplines.
• Policymakers within individual states may wish to compare state outcomes to pre-policy expectations or to other states’ outcomes.
• States that experienced more irresponsible gambling than desired could use these results to identify which states experienced less irresponsible gambling, and thereby help to identify edits to their current policy to improve outcomes.
• Better measures are needed for a more complete accounting of gambling policy effects on society and to inform possible future policy refinements.
  • Policymakers are encouraged to directly measure potential health-related gambling harms, such as divorce, bankruptcy, mental health problems, etc.