It’s splashed on the outfield fences. Emblazoned at center court in the college basketball game. On the digital billboard behind the goal posts. And, of course, in the celebrity-filled ads packed into every commercial break. Sports betting is everywhere.

Since 2018, when the US Supreme Court effectively said states could legalize sports betting, the size of the legal market has ballooned from nearly nothing to the $120 billion in sports bets Americans made last year.

So yeah, people seem to like betting, or at least companies like Flutter Entertainment — owner of FanDuel — DraftKings, Caesar’s Entertainment and MGM Resorts have cracked the code on getting people to hand over their money.

And state governments, which rushed to enact laws legalizing sportsbooks, now have a juicy, new, growing source of tax revenue.

What’s not to love?

Well, likely a lot, which is becoming increasingly clear as academics dig into the data this national wagering experiment has started to produce.

To wit, a recent paper was published by a group of academics who wanted to know if over the long-term, sports betting — rather than just substituting for other forms of entertainment spending — would start to eat into savings and investment, eroding household financial stability.

To find out, they scoured transaction-level data from over 230,000 households provided by a financial-data firm. The data included information on purchases, after tax investments at brokerages and transfers to online betting sites. Then they looked at what happened as 26 states legalized sports betting between 2018 and 2023, the time span their data covered. They analyzed the numbers to see how financial behavior changed as sports betting came online in a state. They found:

“Betting activity crowds out financial investments, leading to a reduction in net deposits to brokerage accounts, including robo-advisors that are primarily used for long-term savings. This substitution is particularly pronounced among financially constrained households. Additionally, consumption in complementary entertainment-related categories rises, likely reflecting spillovers from increased sports betting. Combined, the increase in betting and associated consumption leads to heightened financial instability as households run-up credit card balances and more frequently overdraw their bank accounts.”

Some of the biggest impacts of sports gambling was the way it seemed to eat into investment in stocks over time, especially for households with little savings.

Upon the introduction of legalized gambling, there was an especially sharp drop relative to the mean of 41% in investment — essentially they were looking at transfers to online brokerage accounts — for households that had lower savings. In other words, before phone-based sports gambling was introduced, households were likely put a bit of cash into an online brokerage each month. After gambling was legalized, that tended to change.

“The money that you would have been putting into your Schwab account or Fidelity or whatever is now going into online sports betting where we know, in aggregate, people are losing it,” said Justin Balthrop, an assistant professor of finance at the University of Kansas and one of the authors of the paper.

The economists wanted to be sure those bettors weren’t just substituting sports bets for gambling-like speculative trades, such as buying zero-day call options or crypto.

But they found that even when they restricted their analysis to so-called robo-advisor brokerage firms that specialize in fairly tame investments in index funds, the outcome was the same.

Just to be clear, the authors could only look at after tax stock market investment, not 401k contributions, which might mean it doesn’t give a full picture of household investment activity. And, of course, it’s just one paper.

But it’s part of a growing literature. For instance, this paper, put out in October, found that as states legalized sports gambling they saw “a substantial increase in bankruptcy rates, debt collections, debt consolidation loans, and auto loan delinquencies.”

Balthrop, who says he’s done a bit of sports gambling himself, stressed that tends to be libertarian in his view. But he thinks the paper could give policymakers some important data they could use to assess the full impact of sports gambling.

“I don’t want to restrict people’s access to things. I think that it is not the central government’s job to solve all problems. But one way that you create a future society that has less dependency on centralized aid is you incentivize people to save and invest productively for their future,” he said.

“But if people stop doing that altogether and instead want to bet on the Super Bowl, well, we’re going to wind up 30 years from now and no one’s going to have any money,” he continued. “I’m being aggressive. But that’s the trend we want to at least identify before it gets out of hand.”