People who gamble scored higher on a standard financial literacy test than people who do not, according to a study commissioned by the American Gaming Association (AGA). Prediction market users, however, rated their math skills nearly as high as sports bettors but tested closer to non-gamblers.
The report, “Playing the Numbers: Financial Literacy and Numeracy in Gamblers and Non-Gamblers,” was prepared by Colin López of IN Research & Analytics LLC and Jackson Sears of Matrix Consulting Group of North Carolina.
According to the AGA, the results contradict common assumptions about gamblers and point to risks when prediction markets present gambling as a financial investment.
“This study shows that, contrary to popular belief, gamblers are financially savvy entertainment consumers – especially sports bettors who demonstrate a particularly high level of financial literacy and mathematical capability,” said David Forman, Vice President of Research at the AGA.
A five-question test of money knowledge
Gamblers averaged 3.93 out of 5 on the “Big Five” index, which covers inflation, interest rates, risk diversification, bonds and mortgages. Non-gamblers averaged 3.72, and the gap was statistically significant. Some 41% of gamblers qualified as highly financially literate, compared with 27% of non-gamblers.
The full-sample mean was 3.88, with 36% of respondents in the high range, 34.8% moderate, and 29.2% low.
Sports bettors led the segments at 4.18. Prediction market users followed at 4.05, then casino gamblers at 3.84, iGamers at 3.75, and non-gamblers at 3.72. Both sports bettors and prediction market users scored significantly higher than non-gamblers, casino gamblers, and iGamers, but they did not differ significantly from each other.
Self-assessed math skill versus tested ability
On the 11-question Lipkus Numeracy Scale, which tests actual math ability, non-gamblers averaged 9.28, and gamblers averaged 9.27. On the Subjective Numeracy Scale, a self-rating with a maximum of 6, gamblers averaged 4.61 and non-gamblers 4.36, a significant difference.
- Sports bettors scored 9.56 on objective numeracy, significantly above every other segment, and 4.75 on subjective numeracy.
- Prediction market users scored 9.30 on objective numeracy, close to non-gamblers, and 4.66 on subjective numeracy, comparable to sports bettors.
- iGamers scored 9.14 on objective numeracy and 4.52 on subjective numeracy.
- Casino gamblers scored 9.11 objective and 4.50 subjective.
“The research highlights the risks of ‘prediction markets’ marketing sports betting as investing against ‘peers’ and the dangers of misleading consumers into thinking they just have to be smart to win,” Forman stated.
The AGA warned that consumers led to believe they hold an analytical “trading” advantage may underestimate or misjudge the risks and think they can outsmart what are often sophisticated counterparties.
Casino players lead on responsible play
On the 14-question Positive Play Scale, where 5 is the highest score, casino gamblers scored 4.31. That was significantly above every other gambling segment. Sports bettors scored 4.21, prediction market users 4.18, and iGamers 4.15.
The authors linked the casino result to decades of regulated operation with mandatory signage, pre-commitment tools and staff training.
Financial literacy was linked to these scores. Respondents with low financial literacy averaged 4.12 on the scale, compared with 4.27 for the moderate group and 4.28 for the high group. The correlation was small but significant.
“As we close out another Responsible Gaming Education month, this research also identifies a potential link between responsible gaming and financial literacy, laying the groundwork for future research into this important topic,” said Forman. “It reinforces the principle that gambling must be promoted – and approached – as what it is: a form of entertainment, not a financial strategy.”
A survey distributed through Prolific reached 3,201 US adults, and 3,149 responses remained after data cleaning. Non-gamblers made up the largest group with 986 respondents. The 2,163 gamblers included 574 prediction market users, 557 casino gamblers, 537 sports bettors, and 495 iGamers.
Gamblers and non-gamblers averaged 39.9 and 40.0 years of age. Gamblers reported significantly higher incomes, with most respondents earning $35,000 to $99,999.