After the 2018 Supreme Court decision overturning Professional and Amateur Sports Protection Act, which had effectively banned sports betting nationwide, 38 states legalized sports gambling. As a result, between 2019 and 2023, the total amount legally wagered on sports increased tenfold. This study assesses the causal impact of sports gambling legalization on alternative financial service use using a nation-wide 1% sample of individual-level payday loan application data from Clarity from 2014 to 2021. I leverage state-quarter level variation in the legality of sports gambling after the 2018 Supreme Court decision using a two-way fixed effects framework with staggered treatment timing introduced by Callaway and Sant’Anna (2021). The convenience of app-based betting platforms, offering the ability to place bets at any time from any location, raises concerns about the potential for exacerbating gambling problems that increase financial hardships. Research has yet to explore these potential consequences of legalized sports gambling on alternative financial service use. This study provides empirical evidence for policymakers and advocacy groups to consider in the development of regulations to mitigate the negative externalities of gambling legalization on personal and household financial well-being.
