Tracing How Problem Betting Became Central to the Sportsbook Business

More than half of American men age 18 to 49 bet on sports. Eleven states, including the two most populous, prohibit online sports betting, but it doesn’t really matter: Prediction-market companies have effectively brought gambling to all 50 states. Anyone who watches televised sports can attest to the ubiquity of advertising from the sportsbook apps — DraftKings, FanDuel and so many others.

The people behind the apps say their products are for entertainment. It’s true that millions of people use them only occasionally, and only to have a bit of fun. But these people are of modest value to the companies. The least active two-thirds of licensed sportsbook gamblers account for just 2.7% of estimated revenue, according to a Bloomberg Businessweek analysis of almost 140,000 bettors across 29 states in 2024 and ’25.

The more lucrative bettors are the small but growing cohort of gamblers exhibiting likely problem behavior. A classic symptom would be topping off their sportsbook account hundreds of times a year. Without these people, digital sportsbooks could lose about 60% of their revenue. That’s unlikely to happen: Of the people who place deposits into sportsbooks monthly, 1 in 5 will eventually do so daily, our analysis found.

Studies from countries where legal online sports gambling has a longer history show where this is headed: less money saved for retirement, more people growing up lonely and isolated, higher unemployment, increased mortality rates.

It starts, in many cases, with a single deposit into a sportsbook account. Here is what happened in Massachusetts, which legalized sports betting three and half years ago.

Online sports betting goes live in Massachusetts just in time for March Madness. College basketball fans place some of the first wagers. Seemingly every TV and sports podcast commercial break features an ad for DraftKings Inc. or FanDuel Inc. A common promotion: Deposit $10, bet $5, receive $200 in bonus bets.

Bloomberg Second Measure, which analyzes consumer spending, has a database of more than 20 million anonymized credit and debit card users. More than 100,000 of these people make at least 90% of their in-person transactions in Massachusetts, suggesting they either live in the state or spend considerable time there. Of these people, Businessweek identified 2,441 individuals who initiated their first transaction with a sports betting platform within a week following legalization and for whom there was sufficient data, extending for three-plus years, to more closely analyze their experience. To protect their anonymity, we didn’t have access to their demographic data, but numerous studies have found that approximately three-quarters of sports gamblers are men.

We tracked the spending of these 2,441 people by examining their deposits into sportsbook accounts, almost all of which in the Second Measure data were made via debit cards. Other ways to fund deposits, such as ACH, PayPal and Venmo, aren’t captured by Second Measure.

About 60% of our first-time gamblers have gone on to deposit once a month or less. They might place a small wager on the Super Bowl or, for our Massachusetts residents, a random New England Patriots game. They probably enjoy doing it, and they’re likely to do it with friends, family or co-workers.

Almost 20% average one deposit a week over the course of a year. Experts regard that as within the bounds of healthy behavior.

A smaller group, roughly 15%, make more than one deposit a week. It could be costing them an emergency fund, a nest egg, some savings in a retirement account. Others take on credit card debt, borrow at high interest rates or lean on family for cash to pay bills while their paychecks go to gambling apps. They’re unlikely to characterize their behavior as problematic; their family and friends may disagree.

And finally, a still smaller group can be expected to eventually place bets at least once a day on average. In our group, that cohort comprises 149 people — about 6% of the total. With a third of the state’s 5.5 million people 21 and older actively betting on sports, according to a study done for the Massachusetts Gaming Commission, we would expect about 103,000 people to deposit that frequently, or enough to fill Fenway Park almost three times.

Day 7: March 16, 2023 Setting Patterns

Day 7: March 16, 2023

Setting Patterns

After a week of legalized sports betting in Massachusetts, 137 of our first-time bettors have made a deposit in a sportsbook at least seven times, an average of one per day. The Second Measure data show only money put into sportsbooks, not what people withdraw in winnings. There’s no visibility into which bets people are making within the apps.

Studies have shown deposit frequency is one of the best measures of a gambler’s habits. An analysis by the sportsbook division of Fanatics Inc., presented at the 2024 MIT Sloan Sports Analytics Conference, found the frequency with which bettors put money into the sportsbook, more so than bet frequency, was the strongest indicator of problem-gambling risk. When gambling software company Playtech Plc analyzed several different machine-learning models built to detect potentially problematic gambling, it found deposit frequency and the percentage of calendar days with a deposit were two of the best predictors.

The industry’s lobbying group, the Sports Betting Alliance (SBA), disputes that a line can be drawn from deposit frequency to problem gambling. “Like many consumer-facing industries, engaged customers can account for an important share of activity. That fact alone does not tell us how the average customer uses these platforms,” SBA president Joe Maloney said in a written statement. “Characterizing millions of Americans who bet casually for entertainment by focusing on a small slice of customers creates a distorted picture.”

“As we have noted repeatedly,” a spokesperson for FanDuel wrote in a statement, “FanDuel is an entertainment product and every customer has a robust and easy-to-use suite of tools that support informed and controlled play — including deposit limits, timeouts and the ability to easily self-exclude with a few clicks.” The spokesperson noted that the average sportsbook customer made a deposit less often than once a week.

A spokesperson for DraftKings wrote, “DraftKings is clear: Sports betting is entertainment, not an investment or source of income and for many is a casual activity.”

Day 14: March 24, 2023 The Gambling Continuum

Day 14: March 24, 2023

The Gambling Continuum

By the end of the second week, 3.5% of the first-week bettors average one deposit per day. Almost a quarter weren’t frequent depositors the preceding week. This is one reason a pattern of problem behavior is difficult to spot in short time frames. Someone might display signs one day or one week but not the next.

The behavior doesn’t necessarily look the same in all cases. “There’s been a push by the industry to frame this as the responsible gamblers and the problem gamblers,” says Naomi Muggleton, a professor at the University of Warwick who co-authored a 2021 study that analyzed financial data for 6.5 million people in the UK over seven years. “What the data show is that actually it’s much more of a continuum.”

There are fewer large deposits ($100 or more) this week than in the preceding one. That’s likely because the sportsbooks often offer new bettors deposit-match promotions that allow them to play with house money. Once they exhaust that initial windfall, they almost always resort to small-denomination deposits thereafter, a practice frequent bettors told Businessweek is common for people chasing losses, telling themselves they just need to bet a little more to make their money back.

Day 21: March 31, 2023 The Hold

Day 21: March 31, 2023

The Hold

Online sportsbooks have made $47 million in Massachusetts in the first three weeks of legalization, according to data from the Massachusetts Gaming Commission. On average, bettors lost $8.50 for every $100 wagered. That 8.5% is known as the sportsbooks’ hold, about the same as for Las Vegas slot machines.

But a gambler can bet the same dollar multiple times if they win, so the hold percentage doesn’t capture how much money people lose compared with what they started with. To estimate how much Massachusetts bettors lost over time, Businessweek used net deposit data — money in versus money out — calculated by the financial-services company MX using consumer-permissioned data on sports betting trends from millions of Americans. Their findings were broadly corroborated by a separate analysis conducted by Scott Baker from the University of Wisconsin at Madison, author of several studies on the impact of sports gambling.

MX looked at legal sportsbook gambling across the US and Canada over the course of a year, from June 2025 to May 2026. Of those who engage with online sportsbooks, 4 out of 5 never took out any money. If these people ever win, they leave it in the app or gamble it away again.

The bettors who do withdraw from the sportsbooks generally fit into two categories. The first are low spenders who are good at walking away. Baker says, “You can see that there is a contingent of people who basically deposit small amounts, get sign-up bonuses or win a couple bets, and then cash out more than they deposited.”

Bettors in the second group are prone to withdrawing and depositing in rapid succession. There are various reasons for this, current and former gamblers say. Sometimes these people need to withdraw from a balance in the app to pay bills. Other times it’s how they convince themselves they’re gaming responsibly. One gambler, who asked not to be identified because of the social stigma around problem gambling, says if he wins a bet to end up in the black for the day, he’ll withdraw the profit to tell himself he’s not going to end up any worse than he started. So he’ll withdraw money even if he’s going to keep gambling and soon deposit more.

The people who deposit the most lose the most. The 80% of gamblers who deposited the least lost 39¢ for every dollar they put in. The 1% who deposited the most lost at twice that rate, or 78¢ of every dollar, according to MX.

“It’s misleading to draw this conclusion from a snapshot of anonymized data that does not reflect the economics of a sportsbook business,” a spokesperson for FanDuel said in a statement. “Our platform uses state-of-the-art machine learning technology to identify problematic spending patterns and customers receive notifications from FanDuel urging them to stop engaging with the platform if behavior becomes concerning.” DraftKings did not respond to a request for comment on the outsize losses of its heaviest bettors.

Day 60: May 9, 2023 You Got a Problem?

Day 60: May 9, 2023

You Got a Problem?

One out of every three first-week bettors haven’t made a deposit since. One out of four have deposited sparingly: less than once per week on average. Combined, that means about 60% of first-week bettors have barely deposited since.

The Massachusetts Gaming Commission publishes guidelines for responsible betting, based on research developed by the Canadian Centre on Substance Use and Addiction. It suggests bettors limit their activity to four days per month. One out of every five bettors in our cohort have been more active than that; 1 out of 30 have averaged one deposit a day, seven times the state recommendation.

From here we’re going to divide the 2,441 Massachusetts gamblers into two groups: heavy bettors, which we define as those who average at least one deposit per day over a rolling 365-day period, and everyone else. There are 149 people in the former group, or 6.1% of the total, very close to what the literature on problem gambling would predict.

The term “problem gambler” isn’t a clinical one. Some clinicians say it makes the matter of gambling addiction sound like a failure of personal responsibility rather than a medically recognized addiction disorder. Typically, addiction is diagnosed through a series of questions posed by a counselor, and that can’t be done with the anonymized data cohort Businessweek reviewed.

That said, many clinicians would question a person betting daily about their relationship with gambling. In fact, the one-deposit-per-day cutoff is conservative. There are almost surely individuals in the larger group who’d qualify as problem gamblers under other metrics.

In a statement, FanDuel said its parent company, Flutter Entertainment Plc, which operates online gaming companies worldwide, had invested $158 million in responsible gaming technology. FanDuel said it manually reviewed 58,000 accounts over the last year and proactively removed 5,900 users in North America “for responsible gaming reasons.”

A DraftKings spokesperson said in a written statement that the company “operates under rigorous regulatory oversight and has a dedicated responsible engagement team and makes available and actively encourages customers to use a range of tools and resources like deposit limits and cool off periods to help manage their activity.”

The heavy bettors have now lost an estimated $2,268 each. By the third month, it’s possible they are beginning to exhaust their available cash reserves, according to interviews with counselors and gamblers. Young men typically don’t have long-term assets to tap, such as home equity or retirement savings. So they overdraw their checking accounts and borrow wherever they can.

“Some of the earliest signs of someone starting to play in a more risky way and experience harm is when they start playing with other people’s money,” says Alex De Marco, chief executive officer of GamFin, a company that contracts with states to do financial counseling. “A cash advance on a credit card, then starting to borrow against your ‘life money,’ the money you’d usually pay for rent or daily living expenses, then tapping into savings. There’s a progression.”

Although each person’s circumstances vary, gamblers and people in their orbit say there’s a common pattern. Young bettors often have solid credit scores because they’re young. They can take out a cash advance on a credit card, usually at an interest rate close to 30%, and use the money to bet. That money might last days. Or weeks. Or maybe just hours. Once it’s gone, they can sign up for another card from a different bank. If they hit a winner, they can use the proceeds to pay off the debt on the first card so they can take out another cash advance.

“It’s very straightforward, that’s the thing. All I have to do is apply for a new credit card, I get it, and there we go,” says a self-identified problem gambler in his late 20s, who asked not to be identified because of the stigma. “They give me, I don’t know, a $10,000, $15,000 credit line. You can cash-advance a couple grand easily. And if you have a gambling problem, realistically you can blow through that in a couple hours.”

Other countries have passed laws that attempt to slow down gamblers. In France, bettors must set a weekly deposit limit before placing their first bet with any service, and any request to increase that limit is subject to an automatic 48-hour hold. Spain has a law that limits deposits. The Norwegian betting company Norsk Tipping enforces personal loss limits: Each player sets their own, but the maximum allowed is 20,000 Norwegian krone ($2,126) per month.

Gambling is regulated in these countries on the national level, versus state regulation in the US, and, in cases such as Norway’s, legal betting is done through a state-controlled monopoly. There are ways around these limits, such as offshore betting sites, informal bookies and the use of virtual private networks, but studies suggest the limits can be effective.

FanDuel and the SBA argue that legalized gambling is safer than illegal offshore sportsbooks. “Americans have bet on sports for generations,” said Maloney, SBA’s president. “What changed with legalization is that a substantial share of that activity moved from an illegal market with no consumer protections into a regulated market with guardrails, oversight and resources to address problem gambling for the small percentage of folks who struggle with it.”

Day 181: Sept. 7, 2023 Are You Ready for Some Football?

Day 60: May 9, 2023

You Got a Problem?

Professional football kicks off. September through January are the boom months for sports betting. (It tapers off in February, after the Super Bowl.) On average, sportsbooks handle about 45% more money in wagers on a monthly basis during football season than the rest of the year, according to state betting data, and double the summer lows.

Football season ropes in some new heavy bettors. Before football began, about half the people who end up in that cohort had barely deposited any money into gambling apps. But once it starts, their deposits are so constant that this group ends up averaging at least 365 deposits for the whole year. Football season single-handedly converts nongamblers into gamblers showing possible problem behavior, effectively overnight.

Deposits into the sportsbooks on the first Sunday of the NFL season have roughly doubled from the four prior Sundays. Deposits will increase another 50% in mid-October. By the end of October, the heavy gambling cohort will be averaging two deposits into sportsbooks every NFL Sunday.

This might be around the time parents, friends and loved ones notice changes. The gambler becomes more withdrawn, irritable. They may let personal grooming go. They might start telling stories that don’t make sense about where they’ve been or what they’ve been doing. They might start asking for, or even demanding, money for reasons that aren’t clear. Many parents say they worry their kids are addicted to drugs. It may never dawn on them it could be gambling.

“Looking back, you put them all together and go, ‘Oh, God, we have been so naive.’ But every parent goes through that, because you realize, ‘How did I fall for that?’” says one parent, who requested anonymity to protect their child’s identity. “Because you cannot believe that your flesh and blood would be conning you like that. You realize you’ve been conned by your own kids.”

These behavioral changes are unlikely to be registering with the gamblers themselves. If they do recognize they have a problem, it will likely take them years to get help. One survey of problem gamblers in Canada who were seeking treatment found that the average time from when they recognized they had a gambling problem to when they sought professional help was 4.7 years.

Because legalized online sports gambling is a relatively new phenomenon in the US, few studies have been able to measure its impact beyond high-level, aggregate statistics. But in other countries, academics have been able to run robust, yearslong analyses. The 2021 study out of the UK used individual-level transaction data from 6.5 million customers of Lloyds Banking Group, or 10.6% of the country’s population, over a course of seven years. The study paints a dark picture: The more money people spend gambling online, the worse their financial situation.

The consequences extend into their personal lives too. They spend less time on hobbies, education and social activities. They travel and exercise less. They’re more likely to spend their nights awake.

Adam Lyons, a recovering gambling addict and co-host of the addiction recovery podcast Modern Meeting, says these are familiar patterns. “Once you get into that mode, money’s not money anymore,” he says. “Money is ammunition. Money is the key to the escape. So however you can get it, you get it.”

Day 279: Dec. 14, 2023 The Parlay Trap

Day 279: Dec. 14, 2023

The Parlay Trap

DraftKings, whose headquarters are in Boston, introduces its Progressive Parlay product. Parlays allow bettors to combine several different bets into a single wager. For example: Kansas City Chiefs quarterback Patrick Mahomes to throw for more than 300 yards against the Patriots, Chiefs tight end Travis Kelce to score a touchdown, and Patriots quarterback Bailey Zappe to throw at least one interception. (This hypothetical parlay, from a game the Sunday after the introduction of the Progressive Parlay, would have lost; the Mahomes and Zappe bets would have hit, but Kelce didn’t score.) The odds of winning parlays are low, sometimes infinitesimal, but they provide the excitement of wagering a small amount to potentially win big. The progressive parlay is a riff on the traditional parlay: Bettors win a smaller portion if some legs hit.

At an investor presentation shortly before releasing progressive parlays, DraftKings CEO Jason Robins hypes the product with a video announcement. “We’re excited about our progressive parlay offering and its potential to generate higher parlay mix and leg count and thus, higher hold percentage, as well as being a great win with customers who will be able to win money on their parlays even if they don’t hit every leg of their bet” he says. The jargon obscures the plain meaning: Each leg is a bet. The more bets stacked on top of one another, the lower the chance of winning. (Parlays with 12 legs aren’t uncommon; the odds of winning a 12-leg parlay are similar to those of winning the lottery.) “Higher hold percentage” is just another way of saying more bets will lose.

The data is clear that parlays aren’t a win for customers. On average, bettors lose 19¢ out of every dollar wagered on parlays, according to a Businessweek analysis of data from four states that report parlay-specific statistics. That’s three times more than bettors lose to sportsbooks on straight bets and about 11¢ per dollar worse than the average slot machine on the Las Vegas Strip.

The progressive parlay flops. Word quickly spreads on gambling forums that the house’s edge can be as high as 25%, compared with about 5% on a standard straight bet. After May 2024, DraftKings never mentions progressive parlays again in an earnings call or filing.

Day 365: March 10, 2024 Annual Review

Day 365: March 10, 2024

Annual Review

It’s been a year since Massachusetts legalized online sports betting. Of those who deposited during the first week of legalization, two-thirds did so on 15 or fewer days over the year. An additional 17% were semiregular bettors, depositing money on 16 to 44 separate days. All these people wagered within the state’s recommended guidelines.

But they account for less than a fifth of the sportsbooks’ estimated revenue during the first year. To make money, sportsbooks depend on people who, at best, skirt the boundaries of responsible gaming.

Our heavy bettor group has now lost an average of $12,237 gambling. The 94% nonheavy gamblers have lost an average of $756.

A landmark multistate study of bettors by researchers at the University of California at Los Angeles and the University of Southern California, published in 2025, found online sports betting correlates with a drop in statewide credit scores, beginning about one year after legalization. On average, people invest $41 less per quarter statewide, according to the study. The researchers also found bankruptcies increase after online betting is legalized.

Law firms specializing in sports gambling bankruptcies are beginning to crop up, taking on increasingly young clients who come to them with tens of thousands of dollars in, mostly, credit card debt. These young men fund their gambling via payday loans, cash advances and credit card debt. “How’d you go bankrupt? Gradually, then all at once. That’s how it is with the gambling element,” says Edward Boltz, a sports gambling bankruptcy lawyer in North Carolina.

Historically, Boltz’s clients had been middle-aged couples who’d amassed $30,000 to $40,000 in consumer debt, accumulated over years. Today he increasingly sees men in their late 20s and early 30s who have at least $50,000 in credit card debt. Most of his clients have “modest to insignificant assets,” he says, and drive a car they’re still paying off. They’ve accumulated debt far more rapidly than his prior clientele, often after only 12 to 18 months of heavy sports gambling.

Day 538: Aug. 29, 2024 Up All Night

Day 538: Aug. 29, 2024

Up All Night

It’s the first Saturday of another college football season. On any given night, some heavy bettors are active. Usually it’s just a few. But on Saturdays during college football season, that number doubles or even triples. In any given week about 1 in 10 of the heavy bettors make deposits into the early morning hours. Betting instead of sleeping, especially during weeknights, is one of the best indicators of a problem, according to industry experts. Problem gamblers don’t gamble every night. But virtually all problem gamblers will, at some point, gamble into the night.

Among the group that made a deposit into sportsbooks at least once a day on average for an entire year, three-quarters of them made at least five deposits between midnight and 6 a.m. at some point. For the rest of the Massachusetts bettors, only 5% did.

Kalshi Inc. introduces sports event contracts, signaling the start of the prediction-market sports betting boom. This mostly affects people who couldn’t legally bet on sports before. Prediction-market contracts are technically a commodities contract regulated by the federal government and available for anyone 18 or over. In most of the states in which sports betting is legal, it’s limited to those 21 and over.

There’s one type of Massachusetts sports bettor for whom prediction markets would matter: a person who, having acknowledged their gambling problem, has self-excluded from gambling apps. This is an easy way back in.

The heavy bettors have lost an average of $26,557.

Day 731: March 10, 2025 Trouble Spreads

Day 731: March 10, 2025

Trouble Spreads

After two years, divorce rates start to measurably increase in states that legalized online gambling, according to a working paper first published this year. Other studies have found increases in the rates of domestic violence and alcoholism.

So, too, do rates of declining mental health, particularly in young men. About one-third of people with a gambling problem think about suicide, according to a meta-analysis of more than 100 studies. While the study notes it can’t prove a causal relationship between gambling problems and suicidality, about 1 in 8 attempt suicide, the highest rate for any substance abuse or addictive disorder.

The heavy bettors have lost an average of $28,532.

Day 738: March 17, 2025 Betting Versus Investing

Day 738: March 17, 2025

Betting Versus Investing

Robinhood Markets Inc. announces its Prediction Markets Hub, integrating Kalshi into its investing app before March Madness. On the platform where users put away money for retirement, they can also now bet on sports, elections and everything in between. Prediction markets will become Robinhood’s fastest-growing business line ever. The following spring the company will supplement Kalshi with its own in-house prediction-market product.

The heavy bettors have lost an average of $28,795.

Day 1,096: March 10, 2026 Three Long Years

Day 1,096: March 10, 2026

Three Long Years

The toll turns deadly. Heavy bettors are statistically more likely to die from various causes — including suicide — than their nongambling peers, according to the 2021 UK study that analyzed data from 6.5 million people over seven years.

The more they spend, the higher the chance of death.

The heavy bettors have lost an average of $47,812.

After introducing its own prediction-market product, DraftKings is now running an ad campaign timed to the start of football season: DraftKings is available in all 50 states. Even though states including California and Texas still haven’t legalized online sports gambling, prediction markets are federally regulated and available in those states.

Between June 9 and September 9, 35% of the cohort of 2,441 have made a deposit. Of the 149 heavy bettors, 85% are still gambling legally through the sportsbooks. Those who stopped gambling via online betting platforms may still be getting their fix elsewhere. According to interviews with recovery experts, as well as people in the throes of gambling dependency and their families, once the sportsbooks have run their course or secrecy becomes paramount, users often turn to illegal options to continue betting covertly.

The heavy bettors have lost an average of $56,589.80.