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Two academic papers put figures on where wager money comes from: net household investment down nearly 14% after legalisation, and credit stress showing up in the lending data.
The Investor · Invest desk
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Take the wager total out of the argument. The number that decides whether this is a lifestyle story or a retail-flows story is the other half of the Kellogg finding: net household investment falls by close to 14% once online sports betting is legal [1]. Betting spend and investment spend are not the same category of money. One clears within the season. The other was supposed to sit there for thirty years.
Scott Baker, the Kellogg finance professor behind the study, argues the diversion runs wider than the handle, because bettors also spend more attending games and watching sports in bars and restaurants, and both the wagering and that surrounding consumption pull against longer-run equity investment [4]. His own summary of the trade is that it is a money-losing proposition for most of these individuals, and on average a drain on their finances [3]. Fortune's case study is the same trade at the level of one household: Rob Minnick, now 27, pulled money out of his stock portfolio and sold his Bitcoin and Ethereum when markets fell early in the pandemic, to keep betting [12].
The credit-side result deserves a closer read than its headline average. A statewide score that moves fractionally while bankruptcies, collections and auto delinquencies rise is concentrated damage rather than mild damage spread thin [5][6]. It also identifies a second funding source. When the brokerage balance is gone, the next deposit arrives via a debt consolidation loan, which means part of the industry's revenue is being financed by lenders who never underwrote a bettor.
The item most likely to be quoted is the thinnest. Betterment also reports that more than half redirected money originally intended for stocks into betting instead [c7b], but Fortune's rendering leaves it unclear whether that majority is of Gen Z respondents or of the full 1,000-person sample [14], and one vendor poll is not the same class of evidence as a consumer credit panel. Direction consistent with the academic work; magnitude unverified. The coverage also gives no dollar baseline for net investment, so the percentage cannot be converted into a figure per household [13].
Scale is why the suitability question is not academic. Reported revenue grew roughly 37.6 times between 2018 and 2025 [11], and about $30 billion was legally wagered in the 2025 NFL season alone [9], seven years after the Supreme Court struck down PASPA [10]. A business that size does not run on discretionary fun money. It runs on recurring deposits, and two studies now say a measurable share of those deposits used to be net investment.
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A study by Scott Baker, set to be published next month in the Journal of Financial Economics, found a nearly 14% decrease in net investments in households after the introduction of legal online sports betting.
The same Baker study found household bets increased $1,100 per year in states that legalized online sports betting.
Scott Baker, an associate professor of finance at Northwestern University's Kellogg School of Management, told Fortune: "This is a money-losing proposition for most of these individuals" and "On average, this is representing a drain to people's finances."
Baker said bettors are not only shifting money within an entertainment budget: they also spend on attending sports games and watching sports in restaurants or bars, and both the gambling and the increased consumption detract from longer-run equity investments and strain household budgets.
A paper by Brett Hollenbeck, a marketing professor at UCLA Anderson School of Management, found credit scores fell an average of 0.3% in states that had legalized sports betting, four years after the activity became legal.
Using consumer credit data in the 38 states that have legalized sports betting in some form, the Hollenbeck study also found increased rates of bankruptcy, debt collections, debt consolidation loans, and auto loan delinquencies following legalization.
Evidence-backed comparisons of source perspectives and observed adoption signals. Read the methodology
Which Builder, Operator, and Investor concerns the observed source mix emphasized—not a truth score.
Evidence, demonstrated adoption, hype gap, incentives, and confidence are assessed independently, each on its own current evidence. How these are measured.
Two academic studies, both reported secondhand
The core substitution finding rests on identified researchers, named institutions, and datasets (household finance data; consumer credit files across 38 states), which is stronger than anecdote. But the Baker paper is described as forthcoming rather than available, neither paper is linked or quoted from directly, and Fortune's own presentation omits the baseline needed to interpret the 14% figure and the denominator for the survey share.
Legal wagering is at national scale
Adoption of the underlying behavior is well documented in the source: legalization in 38 states after the 2018 PASPA reversal, revenue up from $441 million to more than $16.6 billion, and about $30 billion wagered legally in one NFL season. The disputed part is the financial consequence, not whether the activity is widely used.
Framing runs slightly ahead of measured effects
The direction of the story is supported, but the presentation is hotter than the numbers: 'draining stock portfolios' sits atop a roughly 14% decline in net household investment and a 0.3% average credit-score change, the strongest forward-looking statistic comes from a survey published by an investing platform, and the anchor paper is not yet published. Mild overstatement rather than invention.
Interested parties on both sides of the flow
The supplied text names several parties with direct financial stakes: Betterment, a retail investing platform, published the survey showing money leaving stocks for betting; sportsbooks, leagues, media and technology partners profit from the handle; states tax and spend the proceeds, with a Connecticut lottery example of revenue routed to the general fund. Academic sources have publication incentives but no disclosed commercial stake in the source.
Consistent findings, single-publisher sourcing
Two independent research groups pointing the same way, plus a hard adoption series, support moderate confidence in the direction of the effect. Confidence is held down by one publisher, no primary documents, one unpublished paper, and unresolved ambiguity in the reported statistics.
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