Abstract

Following recent legalization in 2018, sports betting has rapidly expanded across the United States into a multi-billion-dollar market fueled by aggressive advertising and sign-up promotions that temporarily offer bettors favorable betting conditions. Despite this growth, little research has looked into potential factors leading to how someone might behave in these lucrative sign-up promotion scenarios. Other research has, however, discussed skills such as financial literacy and probabilistic numeracy proving to be preventative against financial harm. Using a nationally representative sample of 456 U.S adults, this study employs a simulated experiment with a sportsbook sign-up promotion and post-activity measures to examine whether financial literacy and probabilistic numeracy predict persistence or other related betting behaviors after a promotion. The theoretical framework combines expected value analysis, utility theory, Prospect Theory, Mental Accounting, and behavioral nudge theory to explain why individuals may continue betting even after promotions shift wagering into negative expected value environments where the “house” always wins. The main findings suggest financial literacy does not reduce persistence, while probabilistic numeracy strongly predicts the ability to understand sportsbook odds and possibly expected value reasoning. Sportsbook sign-up promotions themselves reduced participants' abilities to understand sportsbook odds, ultimately suggesting that traditional financial education alone may be insufficient in protecting individuals in environments designed to exploit behavioral biases. This emphasizes the importance of probabilistic reasoning skills in decision-making under uncertainty, particularly in gambling-related contexts.

Advisor

Long, Melanie

Department

Business Economics

Disciplines

Behavioral Economics | Econometrics | Finance

Keywords

Financial Literacy, Probabilistic Numeracy, Sports Betting, Gambling, Sportsbook Promotions, Expected Value, Behavioral Biases, Prospect Theory

Publication Date

2026

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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