Americans legally wagered $167 billion on sports in 2025. That money came from somewhere — and a growing share of sports betting members are pulling it from the same accounts they use to make car payments, cover rent, and build savings.
On March 25, the New York Federal Reserve published research that puts numbers to what transaction data has been whispering for years: legalized sports betting is showing up on credit reports, and not in a good way.
What the NY Fed Found About Sports Betting Members
The Liberty Street Economics analysis by Jacob Goss and Daniel Mangrum tracked credit bureau data across states as they legalized sports betting. The findings are specific enough to matter for anyone managing a loan portfolio.
Overall credit delinquency rose roughly 0.3 percentage points after legalization. That sounds small until you look at who's driving it. Among borrowers under 40, auto loan delinquency increased 0.55 percentage points. Credit card delinquency jumped a full point. Median credit scores dropped about one point statewide — modest in aggregate, concentrated in the borrowers most credit unions are trying to grow with.
The delinquency effect wasn't limited to states that legalized. It bled into neighboring states too, suggesting the apps don't stop at the border even when the law does.
The Savings Drain Is Worse Than the Delinquency Numbers
A separate NBER working paper from researchers at Northwestern and other institutions found that after legalization, household brokerage deposits dropped 14 percent. Every dollar bet on sports reduced net investment by roughly two dollars — the bet itself plus the behavioral shift away from saving.
For credit unions tracking share growth and deposit retention, that's the more uncomfortable finding. Sports betting members may not be missing payments yet, but they're diverting money that would otherwise sit in share accounts, CDs, or retirement funds. The delinquency spike is the visible symptom. The savings erosion is the quieter problem.
Bankruptcy Risk Is Climbing
Researchers at UCLA and USC found that bankruptcy filings increased roughly 25 to 30 percent in states with legal online sports betting, measured three to four years after legalization. The effect was strongest in states with mobile access — which is now 30 of the 38 states where sports betting is legal.
That timeline matters. Many states legalized between 2020 and 2022. The three-to-four-year lag means the bankruptcy wave is hitting now, in 2026, not later.
What One Credit Union Already Did
Michigan Legacy Credit Union blocked all debit and credit card transactions to online gambling sites in March 2021, weeks after Michigan legalized online betting. The reason was blunt: in under two months, 187 members had made over 1,200 gambling transactions totaling $82,715. Members were going negative. The credit union was absorbing the charge-offs.
That was five years ago, in a single small institution, in the first weeks of legalization. The scale today is different. DraftKings alone processed enough credit card volume that Massachusetts regulators fined the company $450,000 before DraftKings banned credit card deposits entirely in August 2025.
What This Means for Credit Unions
Most credit unions are not monitoring gambling-related transaction patterns. There's no regulatory requirement to do so, and the transaction codes aren't always clean. But the data is now hard to ignore.
The NY Fed research, the Northwestern savings data, and the UCLA/USC bankruptcy findings all point in the same direction: sports betting members are showing up in delinquency reports, charge-off queues, and — increasingly — in bankruptcy filings. The members most affected are under 40, which is the exact demographic most credit unions say they need to attract and retain.
The uncomfortable question isn't whether this is happening inside your institution. It's whether you'd know if it were.