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By Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension, [email protected]

One of the most far-reaching events of 2018 with implications for the personal finances of millions of people was the legalization of sports betting nationwide. Sports betting is the process of placing bets on the outcome and/or features (e.g., how many shots a basketball player takes in a game) of sports events such as football and baseball games. In May 2018, a Supreme Court ruling allowed states to legalize sports betting. By November, eight states had legalized sports betting and others were drafting legislation to authorize it.

This is not to say that sports betting did not exist previously. Prior to 2018, a handful of states (DE, MT, NV, OR) had sports lotteries because they were grandfathered under a federal law. In addition, many underground sports betting venues exist at home and abroad. Perhaps the most famous U.S. sports betting scandal was the 1919 World Series, where a professional gambler paid eight Chicago White Sox players to “fix” the game.

Legalized sports betting winnings, like those from state lotteries or casinos, are taxable income. Losses up to the amount of winnings are deductible if taxpayers itemize deductions. However, many taxpayers now have a larger standard deduction than itemized deductions following passage of the Tax Cuts and Jobs Act. Only about 10% of taxpayers can itemize now so most gamblers will no longer benefit from gambling expense write-offs.

Football player watching the ball, CC0

What does this have to do with financial education and counseling? A lot. As many practitioners know firsthand, gambling strains finances and relationships. According to the National Council on Problem Gambling (NCPG), about 2 million Americans are problem gamblers and average gamblers may have debts up to $90,000. Simply put, sports betting provides gamblers with more opportunities to lose money. Those who avoided illegal sports betting venues in the past now have a legal opportunity to place bets, often on mobile phones. Residents of states without legalized sports betting can simply drive to a state that allows it and place bets online. Americans lost $107 billion in regulated bets in 2017 and more through unregulated “black market” betting.

What do financial practitioners need to know about sports betting? Four things: 1. What it is and how it takes place (see above), 2. Warning signs of a problem gambling addiction, 3. Recommended strategies to reduce financial damage resulting from gambling, and 4. Local resources to assist problem gamblers.

According to, “red flags” that someone has a gambling problem include:

  • Talking constantly about gambling opportunities
  • Taking time off from work to gamble
  • Trying to hide gambling habits from family and friends
  • Asking for loans to cover gambling losses
  • Lying about money lost or time spent gambling
  • Betting larger amounts of money to overcome previous gambling losses
  • Selling possessions or stealing money or property to finance a gambling habit
  • Attempting to hide a gambling habit by shifting money around various accounts

Recommended strategies for families to reduce financial damage resulting from a problem gambler from the Canadian Centre for Addiction and Mental Health include: throwing away credit card applications that come in the mail, canceling overdrafts on bank accounts, setting up separate bank accounts, removing family members’ names from shared accounts, not sharing passwords and PINs, and not leaving credit cards lying around.

Other recommended strategies include putting valuables in a safe deposit box, asking financial institutions to cut off access to additional credit, warning friends and family not to lend the gambler any money, and arranging for the gambler’s pay to be direct deposited into a family member’s account and giving the gambler a weekly “allowance.” In addition, credit counseling and/or a support group for problem gamblers may be useful.

For additional information, review the 53-page NEFE publication Problem Gamblers and Their Finances.

Please make plans to join us October 22 as Dr. Lori Rugle presents Gambling Disorders: Special Considerations for Service Members. 1.5 continuing education credits are available to AFC and CPFC-credentialed participants. Free. RSVP: