The Shifting Norms of the Vice Economy
On the growing backlash against sports betting, the “alcohol recession” among younger generations, and the impact of AI on the vice economy
Vice is a major economic driver. 84% of Americans participate in vice spending, per a recent Bankrate study, in at least one of the six most common categories, such as alcohol, sports betting, and tobacco.
Vice is also a malleable concept. What we consider as “vices” are purely socially constructed, meaning that they can morph and shift alongside changing social norms. Throughout history, activities once condemned as morally reprehensible — from gambling to alcohol consumption to certain forms of entertainment — have been reframed as acceptable, even celebrated. Meanwhile, behaviors that were once mundane, like smoking in offices or excessive social media use, can become widely frowned upon.
Lately, shifts in consumer sentiment, regulatory pressures, and advancements in technology — particularly artificial intelligence — are reshaping the vice economy. The age-old struggle of personal freedom versus societal acceptance is playing out in new ways, as younger generations redefine what constitutes indulgence and personal responsibility.
Specifically, the legalization of sports betting, once hailed as a major economic driver, is now facing backlash due to its financial and social consequences. Meanwhile, a cultural shift among younger generations has led to a decline in alcohol consumption, forcing the beverage industry to reconsider its strategies. Moreover, the continued deployment of AI is seeping through the vice economy, unlocking new opportunities while raising ethical concerns. Together, these trends indicate that the boundaries of vice are evolving, prompting stakeholders to adapt to an uncertain future.
The Growing Backlash Against Legalized Sports Betting
The sports betting market in the United States has undergone explosive growth since the 2018 Supreme Court decision to overturn the Professional and Amateur Sports Protection Act (PASPA); in 2024, the legalized sports betting market surpassed $13.7 billion in annual revenue, up 24% from $10.4 billion in 2023. By January 2025, 38 states and Washington, D.C., had operational sports betting markets, with 30 permitting online platforms, per the trackings of Legal Sports Report.
The movement to legalize sports betting was initially embraced as a means of generating tax revenue and curbing illegal gambling, but recent studies suggest that the widespread availability of online betting has led to unintended harm for consumers. Some early research — not yet peer-reviewed — points to an uptick in both debt and bankruptcy (as high as 28%) linked to a state’s legalization of sports betting. The aforementioned Bankrate study found that one in ten sports bettors are taking on debts to fund their betting.
There’s no doubt that the ability to place bets digitally has made betting more accessible, but this increased accessibility brings its own set of challenges. Unlike traditional betting environments, where real-world frictions, such as travel time and operating hours, naturally limit participation, digital betting is typically available 24/7, which increases the risk of impulsive gambling. Additionally, personalized algorithms and targeted marketing, along with frictionless digital payment options, may end up encouraging frequent betting. Together, these factors contribute to a higher likelihood of excessive gambling, particularly among vulnerable populations.
There has been no shortage of reports by mainstream media outlets ringing the alarm of the societal and personal cost of legalizing sports betting. Here’s Charles Fain Lehman for The Atlantic:
Alarming patterns have started to emerge. Two recent working papers look at the economic impacts of legalization. One, by Northwestern University’s Scott Baker and colleagues, finds that legal sports gambling depletes households’ savings. Specifically, for every $1 spent on betting, households put $2 less into investment accounts. States see big increases in the risk of overdrafting a bank account or maxing out a credit card. These effects are strongest among already precarious households.
A second paper, from the economists Brett Hollenbeck of UCLA and Poet Larsen and Davide Proserpio of the University of Southern California, tells a similar story. Looking specifically at online sports gambling, they find that legalization increases the risk that a household goes bankrupt by 25 to 30 percent, and increases debt delinquency. These problems seem to concentrate among young men living in low-income counties — further evidence that those most hurt by sports gambling are the least well-off.
2024 also marked a pivotal point in the sports betting industry. As David Hill pointed out in his Rolling Stone article:
This year, a number of sportsbooks have pulled up stakes and left the business, choosing to eat the losses of costly licensing fees rather than continue on. […] Eye-popping endorsement deals and marketing budgets are being dramatically scaled back. State legislatures that once welcomed sportsbooks and their promises of tax-revenue windfalls with open arms have grown frustrated after those companies couldn’t deliver. After a cascade of 38 states adopted sports betting, voters and legislators in the states that have yet to come on board have pumped the brakes, with California, Georgia, and Texas all recently rejecting it. The tide appears to be receding.
On a parallel track, the move to legalize online casinos is also starting to stall. Whereas sports betting has become widely accepted, online casino-style games like blackjack and roulette remain heavily restricted, with only seven states currently allowing them. Concerns over the social costs of expanded online gambling have prompted regulators to resist further legalization. Additionally, land-based casino operators have lobbied against online expansion, fearing job losses and revenue declines at physical locations, Bloomberg reports.
In response, platforms that used to embrace sports betting and online gambling are starting to tighten their policies around gambling-related content. Some streaming services that once hosted gambling-related sponsorships are now reconsidering their policies amid mounting scrutiny. YouTube, for example, recently announced it will soon prohibit creators from verbally referring to gambling services not approved by Google, as well as displaying their logos and linking to them in videos. Interestingly, YouTube says this rule excludes videos showing online sports betting and people gambling in person, indicating that sports betting is, for now, still treated as a separate and legalized form of gambling.
With financial harm increasingly linked to sports betting, lawmakers are beginning to reconsider the social costs of legalization. The Commodity Futures Trading Commission (CFTC) has also flagged concerns about the intersection of gambling and prediction markets, particularly as cryptocurrency platforms enter the space. Some experts argue that the expansion of online betting has created structural disadvantages for amateur gamblers, as sportsbooks and betting platforms leverage sophisticated algorithms to maximize their profits. This has given rise to startups like DubClub, which aim to level the playing field by offering expert betting guidance.
Despite such efforts, the broader industry remains under scrutiny, with some analysts arguing that the economic benefits of legal gambling do not outweigh the societal harms. In light of this shift, the sports betting industry will likely need to self-regulate and implement stronger safeguards, such as age verification, spending limits, and loss caps, to address the growing concerns around potential addiction and consumer protection in the digital age.
The “Alcohol Recession” and the Rise of Sober Living
Another recent shift in the vice economy is the decline in alcohol consumption among younger generations. Turns out, the “dry January” trend is extending into a year-round behavior for a significant portion of Millennials and Gen Z consumers. According to Gallup data compiled by The Hustle, among middle-aged and older Americans, alcohol consumption hasn’t changed much. However, only 59% of 18-to-34 year olds (aka. Gen Z and younger millennials) self-identified as alcohol drinkers, down from 72% of 18-to-34 year olds in the early 2000s.
This trend is further corroborated by a 2024 survey by the Pew Research Center, which found that the percentage of 18- to 34-year-olds who say they ever drink has fallen by 10% in the last two decades, from 72 to 62%. Instead of getting tipsy in a noisy nightclub, the cool kids today are more likely to sip specialty coffees or mocktails in a “kitchen rave.”
The reduced consumption among the younger generations is driving an overall decline in alcohol sales. IWSR, a global data firm that researches beverages, found that the U.S. alcohol volumes fell 2.6% year-over-year in 2023 and 2.8% for the first seven months of 2024.
This so-called “alcohol recession” reflects changing attitudes toward drinking, driven by health consciousness, economic factors, and social media trends. Younger consumers are increasingly embracing “sober-curious” lifestyles, where alcohol consumption is reduced or eliminated in favor of alternatives like non-alcoholic spirits and cannabis-based products. It is perhaps no accident that the decline in alcohol sales has coincided with a doubling of the share of Americans who smoke marijuana, especially among young people, over the past decade.
Social media has further complicated young people’s relationship with alcohol. The decline of alcohol isn’t just about hangovers and health — it’s also about avoiding the aftermath of drinking. Drunken fun is no longer glorified as it once was in pop culture; instead, social media has created an environment where self-documentation and curation are paramount. Losing control, making poor decisions, and waking up to regrettable texts simply don’t align with a generation that prefers to maintain agency over their “personal brand.”
Moreover, alcohol marketing is not easy on social platforms either, as organic content promoting alcohol remains restricted on most platforms, despite paid advertising being permitted for older audiences. TikTok has opened up to alcohol advertisers in the U.S. as of June 2025, allowing brands to target users aged 25 and older. However, influencers are still prohibited from promoting alcohol through branded content, thus limiting the type of creatives that could be done for alcohol brands on social platforms.
This trend has led to a re-evaluation of the beverage industry’s marketing strategies. While major alcohol brands continue to invest in high-profile sponsorships — such as Grey Goose’s collaboration with tennis star Frances Tiafoe for the U.S. Open, which included a social media content series and a giveaway offering premium seats at the tournament — they are also adapting to the changing landscape.
Meanwhile, regulatory debates over alcohol safety have intensified, with some U.S. policymakers considering stricter dietary guidelines that could impact public perception and sales. The U.S. Surgeon General recently called for warning labels on alcoholic drinks to emphasize the link between alcohol and cancer risk. Unsurprisingly, that proposal quickly invited backlash from the alcoholic beverage industry. Still, even the researchers admit that most people decide how to drink based on personal experience rather than government guidelines.
Despite these shifts in public discourse and sales numbers, alcohol remains a deeply ingrained part of our socialization and culture. Luxury cocktails, such as the $10 million worth of specialty drinks sold at the 2024 U.S. Open, indicate that while drinking habits are evolving, social experiences built around alcoholic drinks will still attract consumers. Gen Z might not know how to behave in bars anymore, but they will show up for bars that are modeled like living rooms or house parties.
The challenge for alcohol brands moving forward will be to balance tradition with innovation, ensuring they remain relevant in a marketplace that increasingly values moderation and mindful consumption. On one hand, brands must maintain the identity and heritage that loyal customers value. On the other, they must adapt to emerging trends, such as the rise of low-alcohol and non-alcoholic beverages.
Beer brands such as Heineken and Budweiser have introduced low-alcohol and non-alcoholic products, and even celebrities such as Tom Holland and Blake Lively are getting in on the craze by launching their own line of alcohol-alternative brands. While there is some concern that non-alcoholic beverages could sustain the psychological connection to alcohol by reinforcing the social ritual of drinking, studies suggest they do help reduce overall alcohol consumption, particularly among casual and heavy drinkers.
In a larger picture, this “alcohol recession” and the growing backlash against sports betting may both stem from a broader cultural shift among younger generations towards self-care and mindful living, as they exhibit a clear preference for activities that promote well-being and personal development over traditional vices. In lieu of a drunk night out or an indulgent Vegas trip, young people are joining supper clubs and going on wellness retreats; they are redefining what it means to have fun, often favoring experiences that do not center around alcohol or excessive spending.
AI’s Paradoxical Role in the Vice Economy
The deployment of LLM-powered AI tools is reshaping industries at a rapid pace, and its impact on the vice economy presents a fascinating paradox. On one hand, AI is being deployed to monitor and mitigate the risks of addiction and harmful behaviors. On the other, it is also being used to create new forms of digital companionship that blur ethical lines.
AI is increasingly leveraged by companies and regulators to detect problem gambling and excessive substance use. Online casinos, sportsbooks, and gaming platforms use machine learning to analyze player behaviors, identifying patterns that suggest addiction. For example, AI can flag users who make erratic bets, chase losses, or show signs of compulsive play, prompting automated interventions such as pop-up warnings, self-exclusion options, or direct outreach from human counselors.
Yet, as AI chatbots become smarter and more conversational, AI is reshaping some sectors of the vice economy, particularly in adult entertainment and online companionship. Already, AI-driven OnlyFans content creators are pioneering new ways to engage audiences, offering hyper-personalized experiences that drive high-value creator-fan relationships.
Meanwhile, AI-powered “companions” are gaining popularity, providing virtual relationships that challenge traditional social norms. AI companion platforms like Replika and Dippy, which offer “uncensored” AI romantic partners, illustrate the potential and pitfalls of this technology. While some studies suggest that AI companions can reduce loneliness, critics warn that these platforms may exacerbate social isolation and reinforce harmful stereotypes. Furthermore, if these AI companions are designed to reinforce positive emotional loops, how different is this from other addictive digital behaviors?
Governments and regulators are struggling to keep pace with AI’s rapid evolution, as most existing laws focus on data privacy rather than the ethical complexities of AI’s influence on human behavior. As AI companionship technology advances, policymakers may need to introduce safeguards to prevent exploitative practices, similar to consumer protections already in place for gaming and social media.
Interestingly, Gen Z’s approach towards vices and their demand for deeper connections encapsulates a paradoxical blend of pragmatism and indulgence. Economic constraints push them toward affordable junk food and tech-based escapism, while health awareness drives cannabis adoption and alcohol avoidance. However, vaping and stimulant use underscore that risk perception, not risk elimination, guides their choices. And perception is a shifting sandbox, constantly molded by social trends, scientific research, and marketing narratives.
