Pennsylvania's gambling habit costs more than just money

(The Center Square) — Continuing its usual trend, gambling revenues in Pennsylvania keep climbing year over year.

Along with dozens of other states that have legalized more forms of betting, however, so has a financial problem for residents.

The tax revenue has become significant, but the Pennsylvania Gaming Control Board also must deal with routinely punishing vice.

In a recent press release , the board said revenue from all forms of gaming and fantasy contests increased 7.22% year over year to $550.8 million.

Due to a relatively high tax rate on gambling, monthly returns to the state have become important: almost $208 million came back to Pennsylvania in July.

Hollywood Casino at Penn National Race Course, Valley Forge Casino Resort and Parx Casino had the highest revenues in the state, while Bally’s Pennsylvania had the biggest growth in year-over-year revenue (141%), followed by Valley Forge (36%).

Slot machines brought in the most revenue, though they were down 4.8% compared to July 2023. Revenues for internet casinos and sports betting were up 31% and 22%, respectively.

As state officials have expanded legalized gambling from horse racing to casinos to sports betting, researchers have paid attention to what else the industry has brought. National trends hint that Pennsylvanians could be less credit-worthy due to gambling habits.

“Between 2018 and 2023, nearly $300 billion has been wagered via newly legalized sports gambling markets, with most bets flowing through online channels,” wrote Brett Hollenbeck, Poet Larsen, and Davide Proserpio of the University of California, Los Angeles and the University of Southern California in a paper on the financial consequences of sports gambling . “We find that for all states that implemented LSG, we observe a small but significant decrease in the average credit score.”

States with online gambling had credit score drops that were “roughly three times larger,” they note, “suggesting that legal sports gambling does worsen consumer financial health, especially so when mobile access is allowed.”

For the 38 states that have legalized sports betting in some form, Hollenbeck, Larsen, and Proserpio found only auto loan delinquencies went up significantly. But for online gambling states, the financial picture was worse: a 28% increase in bankruptcy likelihood and an 8% increase in debt collection amounts, appearing about two years after legalizing online gambling.

Gamblers aren’t the only ones changing their habits, either.

“Interestingly, we find a decrease in credit card delinquencies, and more generally, we find a restriction in access to credit in the form of lower credit limits and a higher ratio of secured to unsecured loans,” Hollenbeck, Larsen, and Proserpio noted. “Each of these indicates that financial institutions may be reducing their risk exposure in states with legal mobile sports gambling.”

The burden isn’t evenly spread; unsurprisingly, gambling has winners and losers.

“While many consumers get real enjoyment from legal gambling, and states benefit in the form of additional tax revenue, there is a corresponding concern that the introduction of sports gambling and the ease at which consumers can now bet online are negatively harming consumer financial health,” they wrote.

There’s a political effect to the expansion of gambling, too. Legislators feel the pressure to introduce more forms of betting in Pennsylvania since they allow casino gambling.

“Be careful of the state becoming financially dependent upon addictive behaviors,” Rep. Paul Schemel, R-Waynesboro, told The Center Square in May during a discussion on marijuana legalization. “The state rationalizes this because, if we don’t do it, we’re missing out on this tax revenue. We’ve become financially dependent on an industry that we know does harm to people.”