Latest Student Loan Forgiveness May Not Free Up Discretionary Spending for Online Gambling

Many gamblers are saddled with student loan debt, but the $1.2 billion student loan forgiveness plan that came into effect on Feb. 21 may not have much impact on discretionary spending at online casinos. That’s because many of the 153,000 borrowers benefitting from the forgiveness are in income-driven repayment (IDR) plans. The connection between gambling activity and student loans comes from TransUnion, which found that some of the biggest gamblers are high-income millennials with significant student loan payments.

However, many of those high-income millennials may have curtailed or stopped gambling after Sep. 1, 2023, when Covid-19 student loan relief ended.

On Feb. 13, TransUnion told Bonus:

TransUnion’s latest research [“Q1 2024 US Gaming Report”] found that high-value bettors (those who deposit $500+ per month) were far more likely to have had student loan payments resume last October.

See below:

‘Among online high-value bettors, 71% had student loans that were previously in forbearance. What’s more, 72% of that group had monthly payments over $800.’

TU does not have any data that could verify whether bettors were using the money they would have paid toward student loans to place bets. However, TransUnion’s research has confirmed that an increased income makes people much more likely to engage in betting activities.

So, online gambling industry watchers who’d noticed betting revenue decrease when pandemic student loan pauses ended on Sept. 1, 2023, may not see it rise again due to this loan forgiveness development.

While correlation may not equal causation, Declan Raines, head of TransUnion’s gaming business, told Bonus for an article Robyn McNeil published on Feb. 1:

When consumers find extra cash, they are far more likely to wager it.

LTV Vs. Current Gambling Revenue

Younger gamblers are, by definition, going to represent a greater lifetime value (LTV) for online gambling operators.

However, they are far from the whole picture.

Because even if high-income millennials stopped gambling after their March 13, 2020, to Sept. 1, 2023, pandemic student loan pause ended, they weren’t the only ones wagering.

Using online casino and poker revenues from October, November, and December 2023 as illustrations, gross gaming revenue (GGR) kept rising.

That said, operators are planning to continue courting the gambling-age members of Gen Z/Alpha and the millennials. According to the Pew Research Center, Gen Z began in 1997, and millennials entered the world from 1981 to 1996.

In 2022, an Indiana Gaming Commission (IGC) study recommended operators take the long view, even though younger gamblers didn’t spend as much as older ones. As they age and earn more, their discretionary spending will increase.

However, the LTV view is valuable, IGC found:

The age difference between iGaming players and traditional casino players is central to the appeal of iGaming by retail casino operators. The traditional casino industry has long searched for an effective means of attracting a younger demographic. The retail industry’s core players — particularly slot players — continue to age, and are not being replaced by younger players. As iGaming offers a broader demographic reach, it would help address that demographic challenge.

Online casino gambling isn’t yet legal in Indiana.

Why SAVE Borrowers May Not Spend

Americans without discretionary cash tend not to spend their money gambling. The group the Biden-Harris Administration announced it was helping on Feb. 21 may have less money than most. That’s because the Saving on a Valuable Education (SAVE) Plan is “the newest income-driven repayment (IDR) plan.”

In other words, these are Americans with less income than other borrowers. US research shows they’re less likely to gamble.

Yet it’s a common belief that they do.

On Jan. 3, 2024, Carroll Conley testified to Maine lawmakers who are considering legalizing online casino gambling that he was opposed to the bill because wagering is a “regressive tax upon the poor.”

Conley, the executive director of the Christian Civic League of Maine, said he thought LD1777 was “playing our fellow citizens for suckers.”

Bonus reported on research the National Council on Problem Gambling (NCPG) released in March 2021:

[In the US] about 26% of those with an annual income of $100,000 or more gamble online in some form. Only 23% of those making less than $25,000 do the same.

In 2022, TransUnion told Bonus high earners consider holding off on discretionary spending when they’re worried about inflation.

That’s also what student loan borrowers told Alicia Wallace of CNN in her article published on Oct. 11, 2023. She reported that while some Americans used the “extra” money to buy groceries, others could deposit more money into their savings accounts.

According to the National Student Loan Data System (NSLDS), more Americans took out student loans during the pandemic. In Q1 2020, 35.3 million borrowers owed $1,251.9 billion. According to the most recent data from Q4 2023, 38.1 million agreed to pay back $1,413.3 billion.

Responsible Gambling Tips

NCPG didn’t even entertain the thought of using money dedicated to pay back student loans for gambling.

A spokeswoman for NCPG told Bonus on Feb. 16:

It’s essential for anyone who chooses to bet to do so responsibly. Two of the tips available on NCPG’s site from provide guidance around setting a budget and only using money that you can afford to lose when gambling:

‘Set Limits: Before gambling, establish both financial and time limits. If you reach either, stop gambling and respect your limits.

‘Use Disposable Income: Only use money that you can afford to lose. Avoid using funds designated for necessities like rent, bills, or savings. Gambling should never interfere with your essential financial responsibilities.

‘Gambling should only be done as a form of entertainment, not as a way to make money. If gambling stops being enjoyable or begins to impact your life negatively, it’s essential to reevaluate your gambling activities and seek help.’

About the Author

Heather Fletcher

Heather Fletcher

Heather Fletcher is Lead Writer at Bonus, concentrating on online casino coverage. She specializes in breaking news, legislative coverage, and gambling marketing strategy overviews. To reach Heather with a news tip, email [email protected].
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