Study proves online betting reduces household savings

Lester Kiewit speaks to Justin Balthrop, Assistant Professor of Finance at the University of Kansas, and one of the researchers involved in a recent study which showed that the introduction of online sports gambling 'significantly reduces households’ savings allocations'.

Listen below.

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Balthorp explains what else the study found.

"A couple of things happened when online sports betting gets legalised... Most importantly, people respond to that by increasing the amount they bet."

- Justin Balthrop, Assistant Professor of Finance - University of Kansas

What follows from that, says Balthrop, is something researchers were unaware of before the study.

"Investments in more traditional things like stocks and mutual funds decrease pretty materially."

- Justin Balthrop, Assistant Professor of Finance - University of Kansas

Worryingly, says Balthrop, the findings show this is more likely in households where finances are already constrained.

The study also showed an increase in the propensity to play the lottery by people who use online sports betting sites.

"The study also shows an increase in categorical spending on things you might associate as being complementary to sports betting. Things like entertainment, cable subscriptions, things of that nature."

- Justin Balthrop, Assistant Professor of Finance - University of Kansas

"I think every person approaches the lottery with a reasonable understanding of the liklihood of winning... sports gambling has a way of attracting people who either fancy themselves as being experts..."

- Justin Balthrop, Assistant Professor of Finance - University of Kansas

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Scroll up to the audio player to listen to the interview.