Published on: November 21, 2025, 02:30h.
Updated on: November 21, 2025, 02:30h.
- The rise of prediction markets and the sports betting surge may pose risks for certain lenders
- Bank of America highlights potential stress for sub-prime and student loan lenders
- Young males from low-income neighborhoods identified as especially at risk
The swift growth of sports betting across the United States, coupled with widespread access to prediction markets, could negatively impact bettors’ financial wellness while also affecting the stock prices of lenders that primarily serve lower-income clients.
According to the insights from analysts at Bank of America Securities, the prevalence of mobile sports betting and the growing popularity of gamified prediction market platforms could lead some bettors to incur more debt. With increasing liabilities, the likelihood of missed payments and delinquencies rises, adversely affecting credit scores. This scenario is unfavorable for borrowers and could impact the stock performance of financial services firms lending to at-risk bettors.
Bank of America pointed out specific creditors such as Bread Financial Holdings (NYSE: BFH), OneMain Holdings (NYSE: OMF), and Upstart Holdings (NASDAQ: UPST), which focus on low-income borrowers likely to be adversely affected by a potential uptick in delinquencies and defaults linked to sports betting and prediction markets. Interestingly, all three stocks experienced an increase today.
While some research challenges the idea that the growth of regulated sports betting leads to higher rates of bankruptcy and worse credit scores, other studies indicate that consumers in states where online sports gambling is legal tend to have lower credit ratings and file for bankruptcy more often than those in states where it’s prohibited.
Increased Vulnerability Among Young Men, According to BofA
Bank of America reiterated a familiar observation: young men are especially susceptible to the allure of expanded sports betting options.
“The financial repercussions of sports betting are particularly significant for young men, especially in economically disadvantaged areas,” stated the analysts.
The analysts further emphasized that the promotional strategies employed by gaming companies, combined with the pervasive influence of social media and the limited financial literacy among bettors, create a precarious financial situation. This toxic mix not only endangers the bettors but also poses risks for financial institutions extending them credit.
“Companies like Bread Financial, Upstart, and OneMain are already dealing with above-average delinquency rates, and analysts are observing whether mobile betting could exacerbate those figures. This could lead to stricter lending standards or adjustments in loan pricing as lenders navigate increased risk,” reported Finimize.
Potential Risks for Student Loan Lenders
Bank of America also noted that student loan lenders such as Navient Corp. (NASDAQ: NAVI) and Sallie Mae (NASDAQ: SLM) could face challenges if there is a rise in betting-related delinquencies and defaults.
In relation to these two stocks, which have also seen gains today, Bank of America’s analysis focuses on the heightened financial stress experienced by current college students and recent graduates, in which gambling plays a contributing role.
As of the close of the second quarter, 10.2% of student loans in the US were overdue by 90 days or more, according to the New York Federal Reserve. However, it remains unclear how much impact prediction markets and sports betting have on these missed payments.