In poll after poll, Americans say they feel bad about the economy. Yet they are gambling like they have excess money to spend.
Consumer sentiment reached a record low in July 2022, and while it has improved somewhat since then, it is still nowhere near its pre-pandemic level. Yet gambling has surged. Spending on sports betting went up almost 50% since last year, and spending in casinos and on lottery tickets went up nearly 10%.
Americans’ willingness to spend on services like gambling is consistent with strong economic data. Wage growth has outpaced inflation for the past year, and unemployment has remained at a historically low rate for the past two years.
“When it comes to spending on gambling, consumers’ actions are closer to what the economic numbers are saying”, says James Klas, an economist who specializes in gaming and hospitality. “People are grumbling more than what the economic numbers would indicate. Their behavior matches the economic numbers more than it does their complaints.”
Historically, consumer sentiment and gambling have tended to mirror one another, especially during economic downturns. In the 2008 recession, consumer sentiment dipped, as did spending on gambling. In 2020, when the pandemic struck, we saw an even more exaggerated version of this trend, mainly because people were unable to go to casinos because of the lockdown.
That pattern looks different this time, in part because Americans have more opportunities to gamble. In 2018, the Supreme Court struck down a federal ban on sports betting, and since then more and more states have legalized sports betting. Revenue from sports betting reached its highest mark of roughly $11 billion in revenue in 2023, up 44.5% from the year before.
With the advent of online sports betting, gamblers essentially have a casino in their pockets. They can place bets from their phone on any sports game, and they can even place live bets at any point during the game as odds change.
“It’s like a new theme park opened, and everyone is now rushing to the gates,” said Peter Tomasiello, 30, a recreational gambler in Charlotte, North Carolina, which earlier this month became the 38th state to legalize sports betting.
Tomasiello, who works in corporate strategy for an insurance broker, said his local airwaves have been flooded by ads for betting sites offering bonus money to draw in new gamblers.
“They are hoping you use the platform and eventually get hooked,” he said. But in moderation, he said, he sees little problem with gambling.
“You can pay $150 for a round of golf or you can gamble,” he said. “Doing it in moderation, it can be pretty enjoyable. It’s just like any other entertainment.”
Casinos have seen a surge in revenues, as well. Expenditures on gambling in casinos and in lottery tickets went up 9.7% year over year in December 2023. That number is up from the 8.8% yearly change recorded in December 2022.
The recent increase in gambling could also be attributed in part to the changes in how Americans have spent their money since COVID. Initially, they spent money on furniture, electronics, and other home improvements. Now that they already have those things, they can spend their money on services and entertainment like gambling.
“People in general left COVID flush. They have since felt an urge to splurge,” said Andrew Zatlin, Managing Director of the economics firm Southbay Research. “They don’t have to earmark their money for a new couch. They can look at their bank accounts and say ‘I want to go out and play.’”
So if consumers have money to spend, and feel comfortable spending it, why do they view the economy so negatively? Discontent with the economy could be explained in part by the psychological effects of inflation. While inflation has cooled, people remember what prices were before inflation’s peak in 2022, and they don’t like the prices they see now.
“Employers gave a 9% cost of living adjustment when inflation was that high”, says Victor Matheson, an economics professor at Holy Cross. “When the next year the raise is just 2 or 3% because that’s what inflation is, people feel cheated. They feel like Biden and the Federal Reserve cheated them out of the same raise they got before.”
As savings from COVID dry up, the rise in gambling might cool going forward, especially if people remain dour about the economy.
