Millennial bettors with high incomes continue to make up the bulk of high-value customers for the online gambling industry, but the same research also shows that their apparent wealth doesn’t always shield them from financial harm. The study by TransUnion, released today, shows that Millenials are the biggest age demographic for all gambling channels and account for 57% of those spending $500 or more monthly online. However, although those high rollers also have disproportionately high income and robust credit, they frequently report falling behind on bills, loans, and child support.
That poses a challenge for an industry that aims to present itself as responsible and sustainable but earns the bulk of its money from a handful of big spenders who it hopes can afford their losses.
TransUnion laid the contradiction bare in its latest US Betting Report:
Higher spending players are more financially resilient but are more likely to manage their finances poorly.
TransUnion predicts operators will encounter increased public and regulatory scrutiny as the US market matures, following UK and Australia trajectories. The global insights company expects operators’ commitment to responsible play and ability to identify and intervene in problem gambling behaviors to become increasingly important, particularly for online platforms.
Increased Scrutiny on the Horizon
“What we’re anticipating now in the US market is, from a regulatory perspective, a new phase,” Declan Raines, head of TransUnion’s gaming business, told Bonus.
The growth we’ve had has reached a point where we’re at a semblance of market maturity in terms of state access. And so now you’re starting to see states and legislators talk more about ways to enhance consumer protection specific to the online channel. I think that’s going to be a hot topic in the US for certainly the short and probably medium term.
A newly released working paper offers a timely example of the increased scrutiny TransUnion says is on the way.
For The Financial Consequences of Legalized Sports Gambling, authors Brett Hollenbeck, Poet Larsen, and Davide Proserpio examined how the last five years of sports betting legalization impacted America’s consumer financial health.
The authors say the findings, published on SSRN in late July, show that legalized sports betting has decreased American financial health.
In response to the heightened interest, operators must ensure their highly paid cash cows are truly irresponsible and not betting their way to bigger problems.
More Gamblers Report Recent Income Boost
With this latest report, TransUnion examined consumers who spend higher monthly sums to identify potentially unsustainable behavior, said Raines.
It’s all about helping operators, he added.
Our overall objective and market position is to help operators enhance their consumer insights and proactively identify risk within a responsible gaming context.
As with previous incarnations of its US Betting Report, TransUnion worked with Dynata, a third-party research provider. Together, they conducted an online survey of 3,000 US adults 18 or over between April 29 and May 8, 2024.
Analysis of the collected data revealed bettors were significantly more likely to have recently had a considerable income boost than non-bettors.
The study found the following likelihoods of having experienced a significant income increase in the past three months:
- Online bettors: 20%
- Land-based: 18%
- Non-bettors: 4%
Moreover, online and land-based bettors were each twice as likely as non-bettors to say their income is keeping up with inflation. Those experiencing above-average financial gain were also more likely to be land-based or online casinos and sportsbook bettors.
Bettors Also More Likely Behind on Bills, Child Support
However, TransUnion noted that the starting point must remain in sight when considering income changes.
While most bettors experienced a positive gain in income, the change could have very well occurred due to being recently unemployed or because of some other hardship.
In its last report, TransUnion found that bettors, particularly those who gamble larger sums, were “much more likely” to undergo a financial transition. That transition could look like “leaving a job voluntarily, being laid off, or starting a new business,” they said.
They explained that financial volatility can manifest in poorer financial management than the non-betting population.
Following previous years, the latest results show this to be a reality for many.
The report defines “high-value” online bettors as those who spend $500+ monthly. It found that 44% of these said they couldn’t fully meet all financial obligations. Of the same group, 49% reported being 90 days or more past due, while collections had contacted 54% in the last year. TransUnion said results for land-based high-rollers were similar, while non-bettors were substantially lower at 24%, 28%, and 17%, respectively.
Further, despite being a small portion of the total betting population, high-value bettors were more likely to pay court-ordered child support. While 1% of the non-gamblers were recently under court order, for top bettors, 13% of land-based and 14% of online players could claim that distinction.
Given the increased likelihood of bettors being in financial transition, TransUnion wrote that operators must understand whether getting behind on bills is a temporary blip or evidence of increased economic distress.
Differentiating between the two is crucial for deploying the appropriate strategy for mitigating potentially problematic play.
Gamblers Enjoy Strong Credit Ratings—For Now
As with income, TransUnion found bettors outperformed their non-betting counterparts in terms of credit quality over the last two years, with 79% of both retail and online bettors reporting average, good, or excellent credit scores. For non-bettors, only 67% had comparable ratings.
Further, despite the added financial volatility, bettors wagering more than $500 monthly were significantly more likely to register as a lower financial risk than non-bettors.
Indeed, considering incomes and credit profiles, half of the $500+ bettors ranked the lowest risk compared to 29% of non-bettors. Meeting the lowest risk classification requires good or excellent credit and middle to high income.
TransUnion noted that operators would love to see strong credit and low risk continue during the adjustment to meeting increased scrutiny.
However, whether those results hold remains to be seen.
While not apples-to-apples due to its focus on sports betting, the working paper indicates that American financial health may be declining overall, particularly in online sports betting states.
But Scores are Falling, Particularly in OSB States
The authors acknowledge that for many, gambling is a “relatively inexpensive and generally harmless form of recreation.” However, for a fraction of folks, gambling can become “associated with a range of serious harms.”
The study’s data originated with the University of California Consumer Credit Panel, which contains detailed financial information from a nationwide credit bureau. From a sample of roughly 7 million US adults, the final dataset contained observations for 4,382,529 individuals between March 2016 and June 2023.
After analyzing the sample, researchers found that all states with legalized sports gambling showed a small but significant decrease in average credit scores. In states that allow online betting, the decrease climbed nearly threefold.
These changes, the authors suggest, indicate that legal sports betting worsens consumer financial health, particularly when online gambling is involved.
Considering problematic debt loads, the data indicated that only auto loan delinquencies increased by a “statistically significant” amount for all sports wagering states. However, the results painted a much darker picture when focusing only on states involved in online sports betting.
In those states, the data showed:
- 28% increase in bankruptcy likelihood
- 8% increase in debt collection amounts
Notably, there was also a seemingly contradictory decrease in credit card delinquencies. However, that accompanied restrictions in credit access (lower credit limits) and a higher ratio of secured to unsecured loans.
The researchers said this shows that financial institutions may be actively lowering their exposure risk in online sports betting states.
Industry Must Confront Risks Head-On
In light of these findings, concerns remain that sports gambling’s ubiquity and online availability are harming consumer financial health.
The authors contend their research:
Provides evidence that this concern is well founded by quantifying the extent to which the recent aggressive expansion of gambling accessibility impacts consumer financial health.
These results seem to be particularly pronounced when states legalize online betting, suggesting that the ease of access to gambling increases the problems associated with it. Moreover, young men, particularly those in low-income counties, are most affected.
The data also showed that these adverse effects start appearing roughly two years after gambling becomes legal. Considering this, seeing where TransUnion’s future betting reports lead will be interesting.
“Understanding the risk profiles of players at sign-up is important,” TransUnion offers.
However, monitoring changes and looking for signs of financial distress over time is critical for operators to ensure compliance with responsible gaming frameworks.
“We want to understand the industry at large,” said Raines.
Who are the people engaging with regulated betting products? What do they look like from a consumer financial health standpoint? Are there any risks bubbling under the surface?
Raines said this conversation has been ongoing in the US for some time. But he predicts it will fully take shape over the coming years.
This is a very challenging issue to solve, to enhance consumer protections within the online channel. But it is ultimately necessary. It is a necessary component of this new phase of market maturity for online betting.
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