Sports Betting Across Borders: Spatial Spillovers, Credit Distress, and Fiscal Externalities

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Staff Reports

Sports Betting Across Borders: Spatial Spillovers, Credit Distress, and Fiscal Externalities

Number 1184
February 2026 Revised October 2026

JEL classification: H77, H73, H71, H23, G51, L83

Authors: Jacob Goss and Daniel Mangrum

We use the staggered legalization of mobile sports betting across U.S. states to study the consequences of legalizing a taxed vice when consumers can cross state lines to consume it. Since betting apps verify a bettor’s location rather than residence, non-residents can wager in a legal state, causing an asymmetry where tax revenue accrues where the bet is placed while any financial harm follows the bettor home. Using transaction and credit records tied to place of residence, we estimate the effects of legalization both within legal states and into nearby states where betting is not legal. Betting rises in legal states and across the border, fading within an hour’s drive. Credit delinquency rises, concentrated among consumers under 40 and for credit cards and auto loans. Distress crosses the border in greater proportion than betting, consistent with distress-prone bettors selecting into cross-border betting. Ignoring spillovers contaminates control groups and understates direct effects in legal states. We show that states bordering legal markets already bear a disproportionate share of the harm of legalization while collecting none of the revenue, strengthening the incentive to legalize.

Full Article

Author Disclosure Statement(s)

Jacob Goss
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.

Daniel Mangrum
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.

Suggested Citation:
Goss, Jacob, and Daniel Mangrum. 2026. “Sports Betting Across Borders: Spatial Spillovers, Credit Distress, and Fiscal Externalities.” Federal Reserve Bank of New York Staff Reports, no. 1184, revised October 2026. https://doi.org/10.59576/sr.1184

Video: Author Brief

In this video, Research Economist Daniel Mangrum discusses new research finding a marked impact from mobile sports betting on people’s credit health where it is legal—and spillover effects to nearby states where it isn’t.

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