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1 1 (September 12, 2024)

handle is hein.crs/goveqpe0001 and id is 1 raw text is: Sports Gambling and Consumer Finance September 12, 2024 Sports gambling is a common form of gambling where bettors wager on the results of athletic events. Before 2018, sports gambling was illegal in most states. In 2018, the Supreme Court held in Murphy vs. National Collegiate Athletic Association (NCAA) that the Professional and Amateur Sports Protection Act (PASPA, P.L. 102-559) was unconstitutional and that states could legalize and regulate sports gambling. Since the ruling, 38 states and the District of Columbia have legalized sports gambling (LSG). This growth in LSG has led to scrutiny over its impact on consumer finances. Two recent working papers provide evidence that LSG has led to adverse consumer finance outcomes. Congress may weigh these concerns with other policy considerations, including taxation revenue from gambling, job growth in sports gambling sectors, and consumer choice. This InFocus focuses on sports gambling opposed to gambling broadly because of this recent legal change and recent legislative action focusing on sports gambling. Legislation introduced in the 118th Congress would make changes to sports gambling advertising (H.R. 967, H.R. 7891, S. 2495) and modifications to the federal excise tax for sports gambling (H.R. 6982/S. 3579, S. 4872). Sports Gambling Background In 1992, PASPA generally banned sports gambling. The law forbade states from legalizing and regulating sports gambling. However, PASPA excluded states with existing sports gambling markets and regulations: Delaware, Oregon, Montana, and most prominently Nevada. Offshore and illegal operators traditionally dominated the U.S. sports gambling marketplace, resulting in limited regulatory oversight. This illegal sports gambling was sometimes linked with organized crime, and there were a few prominent cases of prosecuting illegal sports gambling outfits. New Jersey challenged PASPA as unconstitutional beginning in 2010 in an aim to legalize sports gambling. In 2018, the Supreme Court held in Murphy vs. National Collegiate Athletic Association (NCAA) that PASPA was unconstitutional as it stripped state governments of their authority to legalize gambling. As stated by the majority opinion, Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. For more on this case, see CRS Legal Sidebar LSB10133, The Supreme Court Bets Against Commandeering: Murphy v. NCAA, Sports Gambling, and Federalism, by Jay B. Sykes. Online sports gambling is also legalized in 30 of the 38 states that have LSG. States vary in their sports gambling restrictions. States have different age requirements, and some states permit only tribal-sponsored online sports betting. Other states ban particular types of bets, such as those on in-state professional and college teams or bets on specific players. LSG is generally run by sportsbooks, which set betting odds and take bets on games. These sportsbooks are often associated with traditional casinos and often take bets online and in casinos. This legalization has led to the growth of the LSG industry. According to the American Gambling Association, LSG revenue grew from $0.9 billion to $10.9 billion from 2019 to 2023. LSG states benefited from additional tax revenue associated with LSG, totaling $2.2 billion in 2023. Polling by Sienna College and St. Bonaventure University found that one in five Americans have sports gambling apps on their smartphones and that 39% of men ages 18-49 have sports gambling apps. Among consumers who have previously bet on a sports gambling app and still have an account, roughly 60% place bets at least once a week. impact on Consumer F nance The growth in LSG has led to increased concerns over consumer protections and the impact of LSG on consumer finances. In 1999, research found that 10% of U.S. bankruptcy filings were linked to gambling and that at least 20% of compulsive gamblers filed bankruptcy. Since 2018, there have been increasing calls to gambling addiction hotlines. These calls seem to be largely driven by increases in sports gambling and other online gambling relative to traditional in-person casino games. Some have linked LSG's rise in popularity with the general trend in increased smartphone usage. Two recent papers have attempted to quantify the effects of LSG on consumer finances. In one working paper, researchers from UCLA and USC found that after four years the average credit score in LSG states decreased by 0.3%, while credit scores decreased by 1.0% in states that also allowed online LSG. This suggests that online LSG was driving much of the decline. In general, LSG states also had 8% increases in debt transferred to debt collections, increases in auto delinquency rates, and ultimately a 28% increase in bankruptcy rates. In another working paper, economists from Northwestern, BYU, and the University of Kansas found that LSG led to increases in sports gambling. This trend decreased consumers' savings and investments and most affected financially constrained households. Further, this sports gambling increased gamblers' overdrafts and credit card debt. In general, betting deposits, or the amount gamblers

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