Prediction Markets And Gambling Addiction Concerns
A 36-year-old law enforcement agent in Texas, Kevin, has a history with gambling addiction. That led to the end of his first marriage and also forced him to file for bankruptcy.
When he first heard about the prediction market Kalshi, he knew he should stay away. Kalshi provides an easier option for users in Texas since Kevin would have to either use a bookie out of state for sports bets, or drive to a physical casino.
Despite all this, Kevin created a Kalshi account and convinced his wife that it wasn’t gambling, but more like stocks as a stock exchange for real-world events. However, that scenario — detailed in The Guardian — has raised concerns about prediction markets and gambling addiction increases in the United States in recent years.
Prediction Markets and Gambling Addiction Concerns
Kalshi has exploded in popularity with more than 5 million monthly users trading on pop culture, politics, weather, and any event with an outcome. Sports are also a massive category on these platforms. Polymarket, Kalshi’s competitor, is also now available in the US and rising in popularity.
This popularity has led to parodies on television shows and live Polymarket odds during the Golden Globes telecast. This past Super Bowl, Kalshi amassed more than $1 billion in trading.
With this surge in recent years, researchers report a rise in Americans seeking help for gambling addiction. Experts say that while prediction markets have different oversight than sportsbooks, they are just as addictive.
Lia Nower, Director of Rutgers University’s Center for Gambling Studies, states, “The more people gamble, the more activities they gamble on, and the more ways they gamble, the more likely they are to develop a problem.” In turn, prediction markets create an additive effect to gambling addiction.
Kevin lost $5,000-$10,000 on Kalshi within a year, which was enough to impact his family’s finances.
Most Traders Lose Money on Prediction Markets
Traders lose money on prediction markets just like bettors on traditional sportsbooks. According to the Wall Street Journal, seven in 10 traders record losses on Polymarket while a tiny number of accounts make 67% of the profits. Similarly, Kalshi reported 2.9 unprofitable users for every profitable one in April.
However, there are clear distinctions between prediction markets and traditional sportsbooks.
Sportsbooks and casinos have a house that the players bet against. Meanwhile, prediction markets don’t have a traditional “house,” but users trade against each other. This means they are regulated on the federal level by the Commodities Futures Trading Commission (CFTC).
Legal and Public Health Issues
Many public health advocates and state lawmakers say the distinction between prediction markets and online gambling is functionally meaningless. Kevin states that Kalshi and regular betting have the same numbers and stats, just dressed up a bit differently.
According to the National Council on Problem Gambling (NCPG), close to 20 million Americans reported problematic gambling in 2024. Also, one in five problem gamblers attempts suicide, which is the highest rate of any addiction disorder.
For many experts, gambling addiction looks the same whether someone uses prediction markets or online sportsbooks. This is why Kalshi announced a $2 million investment in the NCPG to expand consumer education campaigns and increase awareness, but won’t promote the hotline on its platform.
Prediction markets argue that there’s no incentive to make people lose on their platform, which is fundamentally different from sportsbooks and casinos.
Prediction Markets Increase Advertising
Polymarket and Kalshi advertising is everywhere and hard to avoid for people in recovery from gambling addiction.
A popular YouTube content creator, Rob Minnick, creates gambling recovery content after quitting in 2022. However, while he was careful to block ads that relate to gambling, casinos, and more, Kalshi promotions still reached his page. He believes common sense and consumer protection laws in several states should protect people from Kalshi ads on a channel dedicated to recovery.
Shortly after a cease-and-desist letter to Kalshi, the ads stopped. Minnick believes these companies will push the limit until someone speaks up.
In a 2025 study, 85% of Americans believe prediction markets’ sports categories are the same as gambling, and close to that number stated they should be regulated the same. Kalshi is in the midst of 13 federal lawsuits but is confident in its position that it operates fundamentally differently from a casino or sportsbook.