The Effect of Legalizing Sports Betting on Smoking and Alcohol Consumption in the US

Abstract

After the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in 2018, the sports betting market rapidly launched across states both in the retail and online space. Data from the Behavioral Risk Factor Surveillance Survey (BRFSS) from 2010-2022 provides evidence that state legalized sports betting reduces smoking consumption and alcohol consumption. We find that legalized sports betting reduces the likelihood of first-time smoking participation by 0.44 percentage points and reduces the likelihood of frequent smoking participation by 0.25 percentage points. These correspond to a 1.0 percent decrease in US first-time smoking participation and a 1.66 percent decrease in US frequent smoking participation. The effect of legalized sports betting is not statistically significant for first-time alcohol binge-drinking, but our model does find that it reduces frequent alcohol drinking by 0.48 percentage points or a 0.93 percent decrease in US frequent alcohol drinking. These reductions imply that sports betting may be a substitute good for both tobacco cigarettes and alcohol. The causal interpretation of these estimates is supported by event-study analysis, heterogenous treatment effect sub-group analysis, and a linear probability model. Across all these studies, we consistently find that state legalized sports betting reduces smoking and alcohol consumption. Our results suggest that the aftereffects between retail sports betting and online sports betting are very similar in aggregate, implying that it may not be necessary to consider these two separately. However, sub-group analysis reveals that some groups may be more sensitive to sports betting than others. Among others, 18- to 24-year-olds and those with less than high school education status experiences changes in both tobacco and alcohol consumption when exposed to legalized sports betting.