By Ray Birch
MADISON, Wis.—One of the fastest-growing threats to credit union deposits may not be fintechs, challenger banks or cryptocurrency. It may be sports betting.
New transaction level research by Filene Research Institute and Vertice AI found that the heaviest online bettors maintain 56% lower median deposit balances than non-bettors, raising fresh concerns that the explosive growth of legalized wagering is quietly siphoning money out of credit union accounts and into betting platforms.
The findings, based on an analysis of 1.76 million members across 31 credit unions over a full year, suggest the industry's long-running fight to retain deposits may be entering a new phase. Unlike previous concerns over money flowing to high-yield savings accounts, fintechs or cryptocurrency, sports betting represents an outflow where the industry's researchers say members generally are not building wealth—they're consuming it.
"We're not making any judgments," Mitch Rutledge, CEO and co-founder of Vertice AI, told CUToday.info. "If that's what people enjoy for entertainment, that's their choice. We're simply stating what the data show. The real risk for credit unions is the impact on deposit levels."
A Problem Hidden In Plain Sight
The research began after Filene CEO Mark Meyer repeatedly heard the same question from credit union executives while traveling across the Northeast.
"They were voicing concerns around members and particularly online gambling," Stephen Arnold, Filene's chief strategy officer, explained. "Those conversations kept coming up independently."
Curious whether the anecdotal concerns reflected a broader trend, Filene turned to its partnership with Vertice AI, which analyzes anonymized transaction data through Filene's MemberPulse platform.
What they found surprised even the researchers.
More than 9% of checking account holders showed gambling or prediction market transactions during the study period. Arnold believes that figure is almost certainly understated because the analysis captures only activity visible through credit union accounts. Members using outside banks, fintech accounts or digital wallets to fund betting platforms would not appear in the data.
"We think that's the floor," Arnold said. "There's likely more betting activity happening outside the walls of the credit union that we simply can't see."
The Youngest Members Are Betting The Most
Perhaps most concerning for credit unions is who is placing the bets.
Millennials and Generation Z represent just 44% of membership but account for roughly two-thirds of all betting activity, according to the study. Those are also the members credit unions hope will become future mortgage borrowers, wealth management clients and lifelong relationships.
"The betting activity is much more pronounced in younger members," Arnold said. "These are exactly the members credit unions really need and want to grow and foster for the future."
Outside research reinforces that trend. The American Gaming Association has reported continued record growth in legalized sports wagering since the Supreme Court's 2018 decision opened the door to state legalization, while numerous consumer studies have found participation highest among younger adults.
The Filene findings suggest that generational shift could eventually reshape member deposit behavior.
Heavy Bettors Drive The Market
The research also found betting is far from evenly distributed.
Just 4% of members account for half of all betting dollars, indicating a relatively small but intensely engaged group drives much of the wagering activity.
Those heavy bettors also have the weakest financial position.
"They carry a 56% lower median balance than everyone else," the report found.
Rutledge worries that dynamic could worsen because betting companies are designed to encourage greater participation.
"It is the goal of these betting platforms to have people betting as much as possible," he said. "We see the commercials. They're willing to give you all kinds of incentives to get you fully engaged—that's their business model."
If more casual bettors become heavy bettors, he said, the implications extend well beyond gambling itself.
"The real risk is that what we saw in the data is the heaviest bettors had a 56% lower deposit balance," Rutledge said. "If their goal is to get everybody to be a heavy bettor, the future risk is that all of the balances go down 56%. That is the real risk for credit unions."
Prediction Markets Add A New Twist
Traditional sports betting is no longer the only concern.
The researchers also identified explosive growth in prediction markets, where consumers wager on political events, economic outcomes and other real-world developments.
Transaction volume on platforms such as Kalshi increased roughly 1,300% over six months, according to the Filene analysis, with major global sporting events expected to drive additional growth.
Arnold said the rapid expansion means credit unions need to begin tracking the trend now rather than waiting until it becomes a larger problem.
"We want this to be the beginning of a conversation," he said. "We need to watch this over time. There's more and more money flowing into these platforms every year."
More Than A Deposit Issue
The researchers stressed the findings should not be interpreted as opposition to sports betting.
Instead, they argued the issue belongs alongside budgeting, saving and investing in financial education.
Arnold noted that, mathematically, gambling differs fundamentally from investing because betting platforms are designed with a built-in house advantage.
"If people are going to prediction markets or online gambling because they think it's a way to make money, that's false progress," he said. "If it's entertainment, that's fine. But they should understand they're consuming dollars—not building wealth."
For credit unions, that educational role fits naturally within their traditional mission of improving members' financial well-being.
A New Deposit Competitor
For years, credit unions have watched deposits migrate toward online banks, fintech apps, cryptocurrency platforms and high-yield savings accounts.
Rutledge believes sports betting should now be viewed as another meaningful source of deposit runoff.
"This is one more reality of the deposit runoff they're having," he said. "There's more outflow there than inflow."
Even when members win, he suspects much of the money remains inside betting platforms to fund future wagers rather than returning to checking accounts.
The First Step
Before launching new educational campaigns, Rutledge said credit unions should first understand the scope of the issue within their own membership.
"Every credit union leader needs to do the analysis," he said. "What does our membership actually look like? Break it down by generation, income, and the platforms members are using."
Only then, he said, can institutions determine whether betting-related financial education deserves a place alongside traditional topics such as budgeting, debt management and retirement savings.