Credit card delinquencies among millennials and Gen Z have soared because of sports betting—even in states where it’s illegal, new Fed study finds

Credit delinquency rates are on the rise in states that have legalized sports betting, and it’s impacting Gen Z and millennials the most.

A new working paper from the Federal Reserve Bank of New York found after sports betting was legalized in the U.S., delinquencies among the total population increased 0.3%. While that figure may appear small, when the Fed researchers analyzed the population of just those who participated in sports betting, delinquency rates rose by 10%. 

The New York Fed used an analysis of consumer credit data and defined delinquency rates as being 90 days past due on any credit purchase, such as auto loans or mortgage payments.

“Our findings suggest that sports betting can have dramatic implications for household financial stability,” the authors wrote.

In 2018, the Supreme Court struck down the Professional and Amateur Sports Protection Act effective banning sports betting, opening the door for 40 states to legalize the practice in some form. Since then, participation in sports betting, particularly online, has exploded. Commercial gaming revenue hit a record $78.7 Billion in 2025, according to the American Gaming Association, a 9.2% year-over-year increase. Americans have wagered more than $520 billion on sports since the practice was legalized, and quarterly deposits have risen to $1,250 in 2025, compared to $500 five years ago, the Fed researchers found.

Millennials and Gen Z are particularly vulnerable to negative financial consequences as a result of sports betting. While 22% of Americans have an account with at least one online sportsbook, according to a 2025 Siena College Research Institute Survey, nearly half of men ages 18 to 49 have an account. People under 40 made up the largest share of individuals with credit delinquency, which rose to 26% after legalization, the Fed study found using “back-of-the-napkin” math.

The widespread financial consequences of sports betting

The New York Fed report adds to a growing base of literature showing the financial harms associated with sports betting. A working paper published by the National Bureau of Economic Research in 2024 found household bests increased $1,100 per year in states with legal online sports betting, which was also associated with a 14% decrease in net investments, such as stocks.

A 2025 study analyzing University of California Consumer Credit Panel found average credit scores in states with legal online sports betting were slashed by about 2.7 points and increased the likelihood of bankruptcy by 10%.

“The various outcomes of delinquencies and credit scores [are] just kind of indicating that it seems to be leading to some harm among consumers,” Poet Larson, the study co-author and postdoctoral fellow at the Digital Data Design Institute at the Harvard Business School, told Fortune.

Larson speculates that sports betting has become so popular. Young people, to whom online sportsbooks are marketed toward and who have less accumulated weather than older generations, could be particularly at risk, he said.

These financial effects extend beyond states where sports betting is legal. The Fed study found significant spatial spillover effects, meaning delinquency rose in states where sports betting was illegal, but which bordered legal states. Spillover delinquency rose 0.2% compared to the 0.3% baseline, a result of individuals crossing borders in order to use online sports betting platforms in states where it is legal.

The future of legal sports betting

States that have not yet legalized sports betting may still see similar trends in financial insecurity for reasons beyond spillover effects. The rise in popularity of prediction markets, such as Kalshi—which are legal and regulated by the Commodity Futures Trading Commission (CFTC) as “designated contract markets”—have effectively created a national sports betting market.

A  Citizens JMP report published this month found that in users’ first three months on a prediction market platform, they lost more money proportionate to the amount wagered than on online sportsbooks like DraftKings or FanDuel.

Still, prediction markets are relatively untapped in the U.S., with just 3% of Americans and 8% of men ages 18 to 24 reporting using a platform in the past six months, according to a Ipsos survey of more than 2,3000 adults published this month. Larson suggested the impact of these emerging platforms on financial security with depend on how popular they become.

“Because you have so many people sports gambling, you can start to see appreciable financial harms,” Larson said. “For prediction markets…if it’s small, then we might see financial harm, but it may be kind of difficult to detect.”

This story was originally featured on Fortune.com