America's online gambling addiction is driving young people to bankruptcy court

• Online sports betting is leading some young Americans into massive amounts of debt.
• Consumer bankruptcy attorneys say they've seen a surge of young clients with gambling-related debt.
• "They're betting hundreds of dollars per hour, and not really knowing it," one attorney said.

The online sports betting boom is pushing some Gen Z and young millennial gamblers into bankruptcy.

Consumer bankruptcy attorneys told Business Insider that over the past year or so, they've seen a surge of young clients — mostly men in their 20s and 30s — running into financial trouble largely due to online gambling.

In many cases, those clients have racked up tens of thousands of dollars in credit card debt by placing bets on online sportsbooks, the lawyers said.

"The gambling is really the one that has in the last year, year and a half, really taken off," Ed Boltz, a bankruptcy attorney in North Carolina, said. "We've started to see people with $20,000, $30,000, $40,000 of fairly rapid credit card debt that they've incurred."

It's the downstream effect of a bigger shift: After a Supreme Court ruling opened the door to legalization at the state level nearly a decade ago, online sports betting spread rapidly across the US. This has helped make gambling more mainstream for younger Americans at a time when many are already under financial strain from rising living and education costs.

A recent Northwestern Mutual survey found that Gen Z and millennials account for the largest share of Americans turning to "high-risk speculative assets" such as crypto, sports betting, and prediction markets, as many say they feel financially behind.

About 32% of Gen Zers and 24% of millennials polled said they participate in, or are considering participating in, sports betting and prediction markets in 2026, according to the survey.

Florida bankruptcy attorney Chad Van Horn said he's seeing a similar trend as Boltz, with about 15% of his clients carrying gambling-related debt, which he said tends to pile up quicker than more traditional types of debt.

"The debt builds incredibly fast because people aren't gambling with cash; they're gambling with borrowed money," Van Horn said, adding that balances can go from zero to $25,000 in a matter of months. "It's almost a straight line to max out."

Gambling driving financial decline

Personal bankruptcy filings in the United States have been rising since their COVID-era low in 2022, and research suggests online sports betting is playing a growing role in worsening Americans' financial health.

Since 2018, when the Supreme Court struck down a federal law banning sports betting in the US, nearly 40 states have legalized it in some form, while just over 30 allow bets to be placed online or on mobile apps.

That expansion has led to more than half a trillion dollars in wagers, a recent staff report from the Federal Reserve Bank of New York said.

The Federal Reserve study found that states that have legalized mobile sports betting have seen credit delinquency rates spike, particularly among borrowers under 40.

"Our findings suggest that sports betting can have dramatic implications for household financial stability," the researchers wrote.

Another study, initially released in 2024 and revised earlier this year, found that the likelihood of a personal bankruptcy filing climbs by roughly 25% when states expand from in-person-only sports betting to online wagering.

It also found increases in the likelihood of credit card and auto loan delinquencies — about 25% and 27%, respectively — along with about a 9% increase in debts sent to collections.

"While states benefit from sports gambling in the form of additional tax revenue, there is growing concern that easing access to sports gambling may come at the expense of some consumers whose financial health deteriorates," the study by three researchers from UCLA, the University of Southern California, and Harvard said.

One of the researchers, Poet Larson, told Business Insider that the findings suggest that online sports betting is negatively impacting consumers who were in "financially precarious situations" before legalization.

"They're the ones that are seeing kind of some of the larger rates of financial insecurity, like bankruptcies and delinquencies," Larson said.

'Constant, on-demand' betting

Online betting apps are designed to make spending fast and frictionless, in some cases allowing users to fund bets with credit cards — a dynamic that can lead to debt piling up quickly, the consumer bankruptcy attorneys said.

"This doesn't look like traditional gambling anymore. It's constant, on-demand, and packaged to feel like investing," Van Horn said, explaining that his clients with gambling debts "aren't just losing money, they're chasing it in a way that compounds quickly, often on credit cards."

Van Horn pointed to one client in his mid-20s who developed a daily sports betting habit, ultimately building up $25,000 in credit card debt before filing for Chapter 7 bankruptcy protection.

Another client in his early 30s ended up filing for Chapter 13 after amassing about $50,000 in debt — most of it from online gambling, Van Horn said. The man fell behind on rent payments after using that money to keep betting and faced eviction.

Van Horn said microbetting, the practice of placing small wagers repeatedly throughout a sporting event, is increasingly common among his clients with gambling-related debt.

"They're betting hundreds of dollars per hour, and not really knowing it, because they're putting $10 here, $20 there, and the apps make it so easy," the attorney said.

Prediction markets like Kalshi, which is federally regulated, and Polymarket, which largely operates outside the US regulatory framework, also let users wager on sports outcomes and other real-world events.

"We're starting to see gambling rebranded as event trading or investing on outcomes, and that framing makes it feel safer and more legitimate," Van Horn said. "But the financial consequences can be identical to gambling."

Finding workarounds

In Florida, where Van Horn is based, Hard Rock Bet is the only legal mobile sportsbook and allows credit card deposits there and in certain other states. Popular apps like FanDuel and DraftKings, which are authorized in most states with legal mobile betting, "still come up regularly" with Van Horn's clients, despite not being allowed in Florida, he said.

"In practice, people are finding ways to access those platforms, whether it's through travel, existing accounts, or other workarounds," the attorney said.

Though DraftKings and FanDuel recently stopped accepting credit card deposits, the bankruptcy attorneys say their clients have found other ways to fund their bets.

"They always find ways to get that cash, whether it's a cash advance, if the site does not accept a credit card, or otherwise," Van Horn said.

Boltz, the North Carolina bankruptcy attorney, added that gambling often fuels broader financial distress.

"There are ways to turn credit cards into cash," said Boltz. "Or it may just simply be that instead, they use their credit cards for everything else, and their paycheck and their debit cards for the gambling, so then you start putting all of your other expenses on your credit cards."

The credit cards, Boltz said, "mount even if you're not directly using those for gambling."

Credit card debt is among the most common types of debt that can be wiped out in bankruptcy, and the attorneys told Business Insider they haven't seen much pushback in the bankruptcy courts over balances stemming from online gambling.

For now, creditors have not challenged the discharge of these kinds of debts, according to both Van Horn and Boltz, who said they expect to see more such bankruptcy cases tied to online betting.

"It has been astonishing, the speed in which people can fall into this," Boltz said.

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