The "Illusion Of Control" With Legalized Sports Betting
Twenty-five years ago, legalized gambling was relatively inaccessible. It was largely relegated to the Nevada desert, Atlantic City and a few racetracks. There have always been opportunities to bet on sports, whether they were illegal organized betting operations or betting among friends. In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act and ushered in the era of states being allowed to set their own sports gambling laws.
Today, sports betting is mainstream. Mobile betting apps like FanDuel and DraftKings are routinely advertised during televised sporting events. While most Americans are in favor of legalized gambling and have personally placed bets, there is a growing concern about the possible societal and personal ramifications of online betting platforms.
A study out of the UK looked at the rapidly increasing popularity of sports betting and found that “it comes down to three factors: access, quantity of bets, and illusion of control.” There is a lot of additional research that indicates that the longer you must wait for a gambling outcome, the less addictive and harmful betting becomes. The advent of mobile betting apps means individuals can wager at any time of the day, on any sport, on any game, and in multiple creative combinations. Wagers can be placed on more than just who wins the game; they can be placed on the outcome of the next baseball pitch or field-goal kick. The options are nearly endless, and the results come back faster.
Sports fans often fall prey to the “illusion of control” by thinking they have an edge because of their perceived knowledge of the leagues, teams and players. They watch the games, read game reports and might even subscribe to sports newsletters with insider info, but most will end up losing. Data on percentage of winning bets is sparse, but by one measure, only 3% of sports gamblers are profitable long term.
A study published recently, titled, “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households,” found that following legalization, there was a “link between an increase in sports betting with a decrease in long-term financial planning,” especially in “financially constrained” and “vulnerable” households. The increased wagering on sports led to poorer debt management and worse credit scores.
On top of that, bankruptcies, debt consolidation loans and debt collections increased in states that legalized sports betting, especially online betting. The study found that “for every dollar spent on sports betting, household net investments go down by slightly over two dollars.”
For most individuals, gambling is a recreational activity. It’s a social experience, a form of entertainment and a chance to bond with friends around common interests like sporting events or a weekend game of cards. National Council on Problem Gambling estimates that 2% to 3% of the population meets the criteria for problem gambling, and an additional 1% meets the criteria for a gambling disorder. For those individuals, it becomes a compulsion and an uncontrollable behavior. For these individuals and their families, the disease could result in catastrophic financial distress.
Problem gambling can be found in every demographic. To protect yourself financially, proactively talk about finances, know your spending and savings patterns, and make sure you and your partner have access to all your financial accounts online. Starting with healthy financial habits makes it easier to detect problem behaviors. Be aware of your or your partner’s behavior. Look for changing spending patterns. More serious gambling problems can lead to overdrafts, late or missed payments, delinquency notices or unusual withdrawals.
If there is a gambling problem, take action to limit the number and size of bets. Limit the amount and frequency of transfers to online gambling accounts. If the problem persists or gets severe, seek help. Talk to your bank, brokerage firm and any other places that you have financial accounts to see what your options are on stopping the withdrawals or trading.
Just remember, like any other type of gambling—the house always wins.
