Prediction markets, which allow users to trade contracts based on the outcome of future events, are gaining traction among younger adults, raising concerns about potential gambling-related harms. At a recent industry event in Manhattan hosted by Kalshi, a leading prediction market platform, company founders highlighted the role of data and forecasting in decision-making, particularly for parents. However, experts caution that these platforms may pose risks similar to traditional sports betting, especially for younger users.
Kalshi operates differently from conventional sportsbooks by matching traders who bet on opposing outcomes, and it profits from fees on executed trades rather than from lost bets. Unlike sports betting, which typically restricts participants to those 21 and older, many prediction markets including Kalshi allow users aged 18 and above. This distinction has attracted a significant number of young users: a CNN analysis indicated that individuals aged 18 to 21 accounted for approximately $5 billion of Kalshi’s trading volume this year, about 3 percent of the total.
Though Kalshi emphasizes that its markets extend beyond sports to include events such as awarding an Oscar or forecasting weather, the majority of trading activity remains sports-related. The company has previously marketed itself as the first legal sports betting app available nationwide. Its leading competitor, Polymarket, also derives most of its volume from sports, and both firms recently entered partnerships with the National Basketball Association.
Despite structural differences from traditional gambling platforms, psychological and clinical experts report that users generally perceive prediction markets and sports betting as interchangeable forms of betting. Experts such as social workers and pediatricians specializing in addiction medicine warn that young people’s brains are especially susceptible to the immediate gratification and dopamine rush associated with these activities. Younger clients seeking treatment for gambling addictions have reported first engaging with prediction markets, highlighting growing concerns about these platforms as entry points to problematic betting behavior.
Kalshi has sought to address these concerns by implementing age-verification measures and deposit limits for younger customers. The company also partners with Birches Health to provide resources for compulsive behavior treatment. However, critics point to an apparent contradiction: Kalshi denies that its platform constitutes gambling while simultaneously funding problem gambling organizations and acknowledging addiction risks among users.
Kalshi’s founders have publicly advocated for regulatory frameworks favorable to their business model. The company won a lawsuit against the Commodity Futures Trading Commission to allow trading on election outcomes, although state regulators have pushed back. Attorneys general from 44 states have signed a letter seeking to reclaim oversight authority, characterizing prediction markets as a new form of casino gambling and citing research linking early exposure to gambling with higher rates of addiction.
Legal challenges persist, including charges filed by Utah’s attorney general against Kalshi’s founders for allegedly profiting unlawfully from gambling activities. Despite these disputes, Kalshi continues to expand its offerings. At the recent event, founder Luana Lopes Lara mentioned markets on scenarios involving artificial intelligence and economic collapse, noting that a notable portion of users wagered in favor of a doomsday economic forecast.
While the company frames its platform as a tool for enhanced decision-making through data-driven predictions, the intersection of prediction markets and youth gambling addiction remains a contentious issue as regulators, health professionals, and the industry navigate an evolving landscape.