Gamblers are more financially literate than non-gamblers, study finds

Gamblers may be more financially literate than people who don't gamble, according to new research that challenges a common assumption about betting and financial knowledge.

The study, first reported exclusively by The Closing Line, was commissioned by the American Gaming Association and found gamblers recorded an average financial literacy score of 3.93 out of 5, compared with 3.72 among non-gamblers, a statistically significant difference.

Sports bettors performed particularly strongly, while the research identified a different pattern among prediction market users: high confidence in their numerical abilities without the same level of demonstrated mathematical performance.

Gamblers score higher on financial literacy

Playing the Numbers: Financial Literacy and Numeracy in Gamblers and Non-Gamblers was conducted by Colin López, Ph.D., of IN Research & Analytics, and Jackson Sears, Ph.D., of Matrix Consulting Group.

Financial literacy was measured using a five-question index covering inflation, interest rates, risk diversification, bonds, and mortgages.

Across the study, 1,589 gamblers recorded an average score of 3.93, compared with 3.72 among 986 non-gamblers. The overall general population, comprising 3,149 respondents, averaged 3.88.

"The results indicate that gamblers (3.93) have significantly higher financial literacy when compared to the non-gamblers (3.72) – a finding that runs counter to conventional wisdom," the study said.

There is an important caveat. The study is cross-sectional, meaning it identifies an association between gambling and financial literacy rather than cause and effect. It does not suggest that gambling makes people more financially literate.

Sports bettors stand out on financial and mathematical knowledge

Sports bettors were particularly notable in the results, scoring higher on financial literacy than both non-gamblers and casino gamblers.

They also scored significantly higher than every other segment on objective numeracy, which measures demonstrated mathematical ability.

Sports bettors outperformed non-gamblers, iGamers, and casino gamblers on subjective numeracy, a measure of how comfortable and confident respondents feel when evaluating numerical information.

"Their self-assessment of numerical ability was grounded in demonstrated mathematical skill," the researchers said.

Across gamblers more broadly, researchers found no practical difference from non-gamblers in objective numeracy. However, gamblers reported greater confidence in their abilities, recording a subjective numeracy score of 4.61 compared with 4.36 for non-gamblers.

Prediction market users show a different pattern

Prediction market users presented a different profile.

They performed at roughly the same level as non-gamblers on objective numeracy, placing them around the middle of the groups studied. However, their confidence in dealing with numbers was comparable to sports bettors, who recorded the strongest actual mathematical performance.

The researchers said the gap could have consumer protection implications if prediction market users believe they possess a mathematical or analytical edge that isn't supported by their demonstrated ability.

"A consumer who feels equally confident but performs no differently from the average adult may believe they have identified an analytical or mathematical edge that does not actually exist," the study said.

Dave Forman, Vice President of Research at the American Gaming Association, said the findings highlighted an important distinction between traditional sports bettors and prediction market users.

"'Prediction market' users tend to overestimate their mathematical skillset, often thinking they are better at mathematical reasoning than they actually are, unlike traditional sports bettors who have a more accurate self-assessment," Forman said.

Forman said the findings also highlight potential risks when prediction markets present sports event contracts as an investment or a way for consumers to trade against their peers.

Financial literacy linked to responsible gambling

The study also examined the relationship between financial literacy and "positive play," using measures such as personal responsibility, gambling literacy, honesty and control, and pre-commitment.

Researchers found a correlation between higher financial literacy and higher positive play scores. The study said the relationship supports the potential value of responsible gaming initiatives centered on financial literacy, budgeting, and personal responsibility.

As with the broader findings, the correlation does not establish that greater financial literacy directly causes more responsible gambling behavior.

"It reinforces the principle that gambling must be promoted – and approached – as what it is: a form of entertainment, not a financial strategy," Forman said.