When The Invisible Hand Gambles

By Anna Keough

Nashville, TN, USA - March 8, 2025: DraftKings Sports and Social is a bar and restaurant in downtown Nashville on 2nd Avenue featuring games, sports, music, and drinks.

There’s no denying it: Taylor Swift is an economic force. Bloomberg Economics estimated that Swift’s Eras Tour added thousands of jobs and $4.3 billion to the U.S. GDP. Through appearances at her NFL boyfriend’s Chiefs games, Swift’s cultural phenomenon quickly converged with gambling. Sports gambling empire BetMGM reported the “Taylor Swift Effect” drove a 51% increase in female bettors, a vivid reminder of the growing interdependence between entertainment, economics, and gambling. As a business school student, I’ve been conditioned to admire innovation and disruption, but the rise of sports gambling has made me question what those words really mean.

Since the Supreme Court lifted the sports betting ban, 39 states and the District of Columbia legalized sports betting. In response, total bets placed jumped from $6.6B in 2018 to a staggering $148.7B in 2024, almost a 22x increase. Firms also began pocketing higher percentages of wagers, with the “hold” rate increasing from 6.7% in 2018 to 9.6% in 2025.

The gambling explosion was not coincidental. Following legalization, betting giants such as BetMGM, FanDuel, and DraftKings aggressively invested in misleading advertising, celebrity endorsements, and lobbying efforts that blur the line between marketing and exploitation. 

A common marketing tactic, “risk-free” bets appear low-risk but actually refund the bettor with non-withdrawable credits upon a loss. This tactic exploits inexperienced bettors, downplaying risks and fostering a cycle of repeated wagering. 

Simultaneously, gambling companies spend millions for high-profile celebrity endorsements. However, a study published in Health Promotion International found that these celebrity endorsements significantly increase the appeal and recall of these ads among 12–17-year-olds.​​ These promotions raise serious questions about whether gambling companies are purposely targeting the next generation.  Industries with high risk of addiction, like tobacco, have strict promotional rules, but sports gambling companies currently face no advertisement regulations.

For their most engaged customers, gambling companies deploy VIP offerings. But, these perks can reinforce risky, problematic behavior. During a hearing at the Minnesota State Senate, attorney Matthew Litt described how his client suffered from a gambling addiction while receiving VIP gambling perks. He represents a family whose loved one lost nearly $1 million of savings while receiving relentless incentives and bonuses. These programs prey on vulnerable people–by design. 

Behind the scenes, gaming companies effectively lobby against impending legislation that could limit their predatory practices. In 2022, DraftKings successfully lobbied against a proposed Arizona regulation that would limit promotions that could be labeled as “free,” unless they actually were. For DraftKings, it seems transparency is optional. 

The social costs of sports gambling are already mounting. Since legalization, Florida, Pennsylvania, and Ohio saw calls to gambling hotlines double. In 2024, the NCAA reported that one in three high-profile athletes received abusive or harassing messages from individuals with betting interest. According to a University of Washington School of Medicine study, bettors also suffer negative mental health side effects, includding significantly increased symptoms of depression, anxiety, stress, and loneliness.

To understand the broader economic impact, researchers are quantifying the toll of sports betting Researchers at UCLA and USC analyzed credit bureau data from over 4 million American consumers and found that legalization led to higher rates of bankruptcies and diminished financial health.​ Similarly, a team of researchers at the Kellogg School of Management analyzed millions of financial transactions and discovered a clear trend: as betting activity increases, household savings and investment decline. In states where sports betting was legalized, they found that for every dollar spent on sports wagers, households invested approximately $2 less in long-term financial assets. Meanwhile, gambling companies reported a record $13.7B in revenue last year.

This shift in household spending undermines individual financial security and future wealth accumulation, while exacerbating wealth inequality and leaving communities vulnerable to financial shocks over the long term. While gambling companies earn record revenues, everyday Americans are accumulating debt, facing mental health challenges, and worsening financial insecurity. In response, lawmakers at every level are taking action. 

Several states, including Ohio, Maryland, Vermont, and Louisiana, recently advanced legislation to restrict prop bets involving college athletes. At the federal level, two major bills aim to establish broader protections. The SAFE Bet Act would create national standards for the industry, such as banning deceptive promotions and capping deposit frequency. In addition, the GRIT Act would direct 50% of the federal sports betting excise tax toward gambling addiction prevention, treatment, and research.

These bills offer a path forward, but only if they are prioritized. Without coordinated action, gambling companies can continue to exploit financial vulnerability and mental health struggles. 

Approaching my graduation from business school, I’ve started to think more critically about the type of leader I want to become. The more I learn, I realize how easily predatory tactics can pass for innovation when we don’t actively question the ethical implications. True leadership involves more than strategic thinking, it’s about accountability and values. Therefore, to prevent industries like gambling from profiting from exploitation, I believe we need leaders who are willing to ask difficult questions and accept uncomfortable truths.

Preparing to enter this field, I know I won’t have all the answers. But I do know that business leadership, at its best, requires more than skill, it requires serving a greater purpose. If gambling is the next frontier of digital entertainment, do we really realize what we are betting on?