The negative consequences of sports betting opportunities on human capital formation: Evidence from Spain

Abstract

The proliferation of on-site betting shops has received enormous public attention, becoming one of the most alarming health policy issues in contemporary cities. However, there is little evidence on whether its growing presence nearby vulnerable populations produce social harm beyond its known adverse individual effects. This study provides new evidence on the negative societal effects of betting houses. Our research design takes advantage of a new wave of openings in Madrid (Spain), which created a sudden increase in the supply of on-site gambling. Using a differences-in-differences design, we find that new betting houses decline nearby high schools’ educational performance, especially in public schools in less advantaged areas. This effect is neither trivial nor diminishing with time. This evidence suggests that betting houses increase inequality of educational opportunities. The ubiquity of betting houses around vulnerable populations in multiple regions drives us to think that these findings have relevant policy implications for many countries currently designing policies tackling the increase of problem gambling.