Legalizing online sports betting actually lowers the interest rates that state governments pay on their debt.
April 1, 2026
Original Paper
Betting on the State: Sports Gambling Legalization and Municipal Borrowing Costs
SSRN · 6502360
The Takeaway
While gambling is often viewed as a social drain, this study found that legalization reduces state bond yield spreads by up to 10 basis points. It effectively makes the state look like a safer bet to investors by generating millions in new tax revenue without significantly increasing spending on police or social welfare.
From the abstract
I estimate the effect of online sports betting legalization on U.S. state government borrowing costs in the municipal bond market. Using a stacked difference-indifferences design with secondary market bond-month observations, I find that legalization reduces bond yield spreads by 6 to 10 basis points. This effect is robust across three alternative spread measures, holds when using either never-treated or not-yet-treated states as the control group, and emerges gradually over the quarters followi