Victor Matheson, Professor of Economics at the College of the Holy Cross, joins us to examine how sports betting has rapidly become a major part of American culture and commerce. He discusses the expansion of legal mobile wagering, why sports betting can be especially appealing to younger audiences, and the financial risks tied to problem gambling—including debt, credit issues and bankruptcy.

Transcript:

Jeffrey Snyder, Broadcast Retirement Network

Well, Dr. Matheson, it’s so great to see you. Thanks for joining us on the program this morning.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Well, thanks for having me.

Jeffrey Snyder, Broadcast Retirement Network

You know, you can’t help but turn on the NFL, major sports networks. You can’t help turning on really any, using your phone, and you don’t see a sports gambling or prediction ad or something around sports gambling. I guess my first question to you is, it’s pretty pervasive in our society today.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Right, and this actually all stems back to a Supreme Court decision in 2018. Prior to 2018, there was a national law called the Professional and Amateur Sports Protection Act, which banned sports betting anywhere in the United States except for Nevada, right, so except for Las Vegas. And then we allowed a couple small states like Delaware and Montana and Oregon to allow a little bit of sports gambling through their lotteries.

But in 2018, New Jersey sued. They were trying to revive their casinos that had been failing there in Atlantic City for a while. And they said, hey, we wanna bring, we wanna legalize sports gambling.

And the Supreme Court said, yeah, actually the federal law is illegal because it treats different states differently. It treated Nevada differently than New Jersey. And so that didn’t legalize sports betting, but it allowed states to legalize sports betting if they so chose, and most states have so chosen.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, and I mean, it’s now America’s, I thought baseball was America’s favorite pastime. I don’t know if that’s from Major League Baseball, but now gambling seems to be America’s favorite pastime. I wanna get your reaction to that because I personally don’t gamble.

I’ve never really gambled, not into that kind of thing, but it’s pretty popular across all age ranges.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Yeah, so it’s pretty big. If you look at the data from 2025, so obviously we don’t have 2026 all in yet, but in 2025, there was about $180 billion of wagers made legally through states that have legalized sports betting. And at this point, about 40 states have legalized sports betting, although a couple of big ones, Texas and California have not, but about 40 states allow that.

And of those, most of them, more than 30 allow sports betting via mobile apps. So it’s not just sports betting in a physical sports book or in a casino, it’s actually sports betting you can do on your phone. So that’s about $180 billion of legal bets made.

There’s another roughly $70 billion, 60 billion maybe made in sports betting through what are called prediction markets, which are a slightly different thing and they are something of questionable legality. It’s going in front of the Supreme Court shortly. But again, that’s about $200 billion.

In a state like mine, Massachusetts, the average adult on average spread out across everyone is making about $1,000 in sports bets a year. That being said, you’re winning some of those and you’re losing some of those. So in terms of the amount of money that comes out of people’s pocket, it’s only about $15 billion, but that would still make it roughly the same size as the NFL.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, so as you said, the average is about $1,000. Do you have a sense for what swath of demographics this cuts through? I mean, people our age are gambling or is it more skewed towards maybe younger people?

And if so, what’s driving the interest? Is it just like an adrenaline rush? Is it just a way to participate?

Anyway, to you.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Sure, so sports bettors are a little bit different than other types of gamblers. They’re a little bit different than casino goers or lottery ticket buyers. First of all, they trend very male.

They trend younger than other sorts of gamblers and they also trend more educated than other types of gamblers. So it’s not that there’s just one type of sports better, but the one that is kind of the key demographic that people look at, also the key demographic that public health officials are most concerned about is young college educated males. Those are the ones that we’re worried about.

Basically my students here at Holy Cross.

Jeffrey Snyder, Broadcast Retirement Network

Okay, and do you have a sense, I would imagine you talk about this in your lectures and maybe informally, or do you have a sense for students there doing it? Are they actively doing it? And are they doing this instead of, excuse me, sorry, doctor, are they doing, I didn’t mean to interrupt you, but are they doing this instead of, for example, maybe saving and investing, which are, maybe this is kind of an anathema to that.

Victor Matheson, Professor of Economics at the College of the Holy Cross

So there’s some concerns about this. The studies that are coming out now, and again, it hasn’t been legal in every state for very long so we don’t have a lot of good data on this because we’ve only been studying this for under 10 years, but we are getting some data that states that have legalized sports betting have higher incidences of bankruptcy, higher incidents of divorce, higher incidents of problem, credit card delinquency, lower average credit ratings. So these aren’t hugely so because the reality is that 95 plus percent of gamblers are social gamblers.

These are sports gamblers who are social gamblers who are doing this because it’s fun, it adds a little excitement, nothing wrong with spending $10. You can spend more than that, obviously going to the movies in any given day easily. So the problem is that somewhere between one to 5% of sports bettors are sufficiently devoted to the proposition and the industry that they would be classified by many metrics as being problem gamblers or suffering from gambling addiction of some sort.

And those are the folks we’re particularly worried about and almost certainly the folks who are driving those negative bankruptcy, negative job prospects, negative credit ratings sort of things.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, and I would argue that $10 probably doesn’t cover the movie, it probably covers the Raisinets at goodbye at the movie. That was my favorite food at the theater. But in any event, in all seriousness, I mean, it’s that swath of people that maybe they’re not social gamblers, as you said, there may be kind of, it’s kind of an addictive thing.

I would imagine that states like the Commonwealth of Massachusetts and others are looking at ways to maybe try, what can they do to fix this? I mean, it’s really hard to legislate human behavior from what I’ve seen, but I mean, what can they do in terms of regulating this activity to kind of squeeze out some of this negative behavior, so to speak?

Victor Matheson, Professor of Economics at the College of the Holy Cross

So a couple of things that we have seen done. First of all, we have made the states in conjunction with the gambling companies and the leagues have prohibited particular types of betting that they might be harmed, that we might think is harmful to the leagues. So we’ve seen some examples of gambling corruption where players themselves have been engaging in betting that’s detrimental to the sport.

One guy, John T Porter, playing for the Pistons was betting on himself to play badly. Now, mind you, he was able to do that, first of all, because he found people willing to bankroll this, but also because he didn’t have a lot to lose. He was a player that was not on a big contract.

And so the idea of making 10, $20,000 on the side as a better is something that was attractive to him, right? This would not be attractive to LeBron James or any of the other Patrick Mahomes, right? So the NBA, along with the betting companies, said, you know, we’re gonna ban proposition bets, bets on player stats, for players who don’t have a full-time NBA contract.

We also saw players for the Cleveland Guardians in Major League Baseball intentionally throwing balls on particular pitches, again, because of gambling corruption. And so the Major League Baseball and the companies worked together to say, look, we’re going to limit the amount of bet that can be made on a single pitch to $10. That’s not enough to be able to bribe anyone to throw a ball rather than a strike at the Major League level for the potential winnings of $10, right?

So we’ve gotten rid of some of that. We don’t allow betting to be made on college sports here in Massachusetts or individual bets on college athletes. Oh, we do, I should say, we don’t allow bets on college sports for Massachusetts teams.

You can still bet on Ohio State or Michigan. You can’t bet on University of Massachusetts or Holy Cross in Massachusetts. And you can’t bet on any college players’ individual stats.

So again, trying to limit some of those things. So these are some things we can do to protect the sport, protecting the bettors. For example, in England, where betting’s been legal forever, this year, for the first time, betting companies are not allowed to advertise on the front of jerseys of English Premier League teams.

As recently as two years ago, over half of all jersey sponsorships, primary jersey sponsorships, were betting companies. And that’s no longer the case. Trying to, again, kind of limit the advertising, like we see here in the United States with cigarettes, right?

We know this is a harmful product. And so what things do we do? We limit the access to minors.

We limit advertising. We’re likely to be moving at least some of those directions in the United States.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, and I kind of like those directions personally, I mean, for what it’s worth. But let me ask you about, pardon me, financial education. I mean, does it make sense?

And you probably do this with your students. I’m sure the university does this with students in general. Where does the education fit in this?

Because I think the more education someone has, I mean, you just got to realize that it’s really hard to win these types of bets, right? I mean, you’re dealing with trying to predict how someone’s going to behave, right? They’re going to shoot the ball.

They’re going to be accurate. And it’s predictive on the past, which is not always predictive of the future.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Yeah, so this is actually what’s so insidious about sports betting, right? With education, you can convince people like, look, you probably shouldn’t play lottery tickets and you probably shouldn’t play the slot machine because look, basically the lottery is just a tax on people who are bad at math, right? We know that the house always wins on this and you could get lucky.

We know the house always wins on slot machines, but you could get lucky. But the more you play lottery tickets and the more you play the slot machines, the more money you’re going to lose. What’s insidious about sports betting is because you’re making choices that there’s information about, there’s always the temptation to think, look, if I was only a little bit smarter, a little bit better, I could have won last week.

You know, you’ll bet on 20 games. You’ll get 10 of them right and 10 of them wrong. You’ll still lose money because the house is taking their cut there.

But you’re saying, oh, I would have gotten that last bet right, but I just made this one mistake. I won’t make this mistake next week. And then you do it again.

The problem is, of course, that these markets are extremely efficient and the sports betting companies are extremely good at setting the lines so that you can’t win or you can’t win with enough frequency to overcome the house edge that’s built into every bet. So it’s something that this is why young college-educated males are kind of this tyrant demographic. They tend to be people who are overconfident in their own abilities, but have a lot of skills that said, look, I should be smarter than everyone else and I should be able to win.

The reality is that of every $100 you bet, on average, the house takes about $10 of that. And you could do well for a while, but you’re not gonna do well forever. And of course, there’s also this built-in advertising, right?

Because every time someone does well on a weekend, they tell all their friends, hey, I just hit this five-part parlay, made a thousand bucks on the weekend. And of course, they tell everyone about that. Of course, they don’t tell everyone about the 10 weeks in a row before that, that they missed that and lost $150.

They’re still down on the year, but everyone hears about the wins, but they don’t hear about the losses. And so that’s a reinforcing mechanism that makes people think, yeah, it’s possible it could happen for me. The reality is, again, the gaming companies, excluding production markets, the gaming companies themselves, the sports betting companies, made about $15 billion in revenue last year.

There’s one place and one place only they made that money from, and that’s out of the pockets of losing gamblers.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, and it’s in their self-interest to beat for the house to win. Real quick, before I let you go, I got about two minutes, pervasiveness of artificial intelligence, because I know you were just talking about some of the gamblers thinking that they’re smarter, they’re the smartest people in the world. I gotta think AI plays a role both in that thinking, but also in what the house is doing to kind of counter the better winning, right, passively.

Victor Matheson, Professor of Economics at the College of the Holy Cross

So that’s the problem, is that you are trying to beat smart people. And of course, smart people are getting even smarter nowadays because they have the power of massive super competing behind them, right? So yeah, I mean, the best gamblers historically have been able to potentially make a living as a sports better by being better than the companies, but that’s much harder to do in a world where everyone has access to this, including the sports bettors.

Any anomalies that arise are likely to be shut down quickly by the sports betting companies. And the last thing sports betting companies will actively engage in what’s known as limiting. And limiting means that if they’ve seen a pattern of someone winning consistently week after week after week after week, eventually they say, okay, we’re limiting the amount that you can bet this week to $100 because you are too good.

And so you can still bet, but you can’t bet more than $10 at a time or $20 at a time, the sort of money that’s again, makes it not worth it at some point to be doing all the work to actually do that. So again, because the gambling companies are in charge of who gets to bet, anyone who proves themselves to be too good will fairly quickly be removed from the opportunities. I will also say that gambling companies are using artificial intelligence to target individuals that they think they can convince to bet more, right?

And so this is exactly the sort of thing that feeds into potential gambling addiction, use artificial intelligence to try to identify which gamblers could be nudged into additional betting with what type of additional incentive in order to try to extract as much money. Because remember, when the gambling companies at the bottom of those commercials say, please gamble responsibly, they don’t actually mean that, right? They want people to gamble as much as possible.

And of course they’re happy when you’re out of money. And if the gambling companies got rid of all of the irresponsible gamblers, that would be a massive hit to their bottom line since about 95% of betting comes from just 10% of bettors.

Jeffrey Snyder, Broadcast Retirement Network

Yeah, it’s, I guess, self-fulfilling in some ways. Dr. Mathis, and we’re gonna have to leave it there. Hey, thanks for joining us.

And we look forward to having you back on the program again very soon, sir.

Victor Matheson, Professor of Economics at the College of the Holy Cross

Absolutely, my pleasure.