Online Gambling Legalization and Household Credit Card Debt

Abstract

Since 2018, the legalization of online gambling in the United States has expanded rapidly, raising concerns about its financial impact on households. This paper examines how legalization affects credit card debt and other financial outcomes using household panel data from the Survey of Income and Program Participation. Using the staggered timing of legalization across states, I estimate a difference-in-differences model. I find that the legalization of online gambling increases credit card debt by 11.9%. The increase is driven by households that already carry credit card debt. I find no effects on income, savings, or stock holdings, which rules out changes in earnings or saving behavior as explanations. The effects are concentrated in vulnerable groups: credit card debt rises by 22.5% for households whose head has no college education, 29.7% for households with a Black head, and 13.4% for households with a young man aged 21–45. In contrast, I find no significant effects for placebo groups that are less likely to participate in online gambling. These findings provide causal evidence that the groups identified in the literature as most likely to gamble online experience the largest increases in credit card debt following legalization.