A new U.S.-focused academic study suggests that state gambling policies that legalized online casino games generated more tax money than online sports betting but also higher rates of “irresponsible gambling”.
States with legalized online casino games also generated more calls to gambling helplines than sports betting, according to the study.
Low-income residents are also more likely to spend a significant percentage of their income on gambling than those with higher incomes, the academics said.
However, the study did not find increased suicide rates after the approval of online gambling in general, they wrote.
In the U.K., still the world’s biggest regulated online gambling market, whether reliable data exists that would link suicide risks to online gambling has become a controversy.
The increase in what the U.S. researchers called “irresponsible gambling” led to a suggestion to divert at least some of the extra state funding to safer gambling policies and addiction treatment.
Online casino gambling “caused more irresponsible gambling than [online sports betting]-only policies, especially among low-income gamblers”, the researchers wrote. “Therefore, we think that policymakers who are considering [online casino gambling] policies may also wish to consider strengthening consumer safeguards and allocating more resources for problem gambler helplines.”
The study would appear to offer support to those opposing approval of online casino, also called iGaming, on the potential for increased problem gambling rates.
The researchers used their own definition of “irresponsible gambling” — gamblers whose net spending exceeds income thresholds such as 10 percent.
The study found that fewer than 5 percent of potential gamblers withdrew more than they spent, suggesting that more than 95 percent could be net losers.
About half of net operator revenue also came from the highest-spending 3 percent of gamblers, according to the report, which suggests the dependence of gambling companies on “whales”.
The researchers from University of Maryland, Southern Methodist University and University of California San Diego said they used a database of the spending of nearly 718,000 gamblers across all major online gambling sites. It was part of the Marketing Science Institute’s working paper series.
They did not study land-based gambling or illegal gambling, and they do not make recommendations to policymakers other than to try to examine research to determine the impact of gambling policy on gamblers.
About 30 states have approved online sports betting in the U.S., while only seven have approved online casino.
Online casino revenue grew 12-fold between 2019 and 2023, a period in which calls to National Council on Problem Gambling helplines grew 150 percent to nearly 84,000, the researchers said.
The report found that the percent of consumers in the bottom 10 percent of income who spent at least 10 percent of their income on gambling is five times larger than those in the top 10 percent of income.
“Legalization can increase personal freedom and enjoyment; enable regulation and taxation of provision and consumption; potentially reduce government spending on detection, enforcement and punishment of illegal provision and consumption; and make it easier for addicted consumers to access helpful resources,” the academics wrote.
“However, legalization may also expand access; license and normalize consumption, thereby increasing total consumption and potentially harmful consumption; it may therefore increase attendant harms and require more total treatment resources; and it may fail to curb illegal channels.”
The researchers said they analyzed spending data from a financial company they did not name, including data from several million anonymous U.S. consumers to about 5,000 large merchants.