Prediction Markets Surge Amid Confusion Over Gambling Risks

Published: 12 February 2026. The English Chronicle Desk. The English Chronicle Online.

Prediction markets are rapidly gaining popularity across the United States, raising concerns about gambling risks and regulatory oversight. Users as young as eighteen can engage in these markets, betting on outcomes ranging from sports events to political elections, blurring the line between investing and gambling. The term “prediction markets” has become central to discussions about financial risk, as platforms like Polymarket and Kalshi report unprecedented trading volumes that rival conventional stock markets. Analysts warn that the allure of constant updates and high returns may obscure potential harms associated with gambling-like behaviour.

Yadin Eldar, a 21-year-old economics student, has been active in prediction markets since 2019, describing the platforms as a combination of options trading and betting. Eldar explained that, unlike conventional casinos, these markets allow users to interact with constantly changing odds rather than play against a house. Yet, critics like Zachary Azra, a University of North Carolina student, assert that prediction markets are merely another way to gamble money, cleverly disguised as financial activity. This debate highlights growing uncertainty over whether regulators should treat these platforms as investment tools or gambling venues.

Prediction markets operate legally in all U.S. states and allow users to place bets on a wide range of outcomes. Unlike traditional sports betting, which is restricted in some regions and regulated to prevent underage participation, prediction markets impose few limitations, with platforms welcoming anyone over eighteen. Polymarket and Kalshi, two leading services, collectively handled approximately $1.2 billion in trading volume on the Sunday of a recent Super Bowl, reflecting how deeply these markets have penetrated mainstream culture. Social media amplification, through memes and screenshots, further spreads public attention, blurring the boundaries between entertainment, investment, and gambling.

The industry’s proponents argue that these platforms are derivatives markets rather than betting services. They offer “event contracts,” where users profit if a specific outcome occurs and lose if it does not. This binary payoff structure has drawn comparisons to options trading, prompting fierce debate over regulatory classification. Platforms have long engaged with the Commodity Futures Trading Commission, seeking to be treated as financial products rather than traditional betting services. However, skeptics insist the risks mirror those of conventional gambling, including impulsive behaviour, financial loss, and addiction.

High-profile interventions have brought prediction markets under scrutiny. The Biden administration notably targeted Polymarket in 2024, with the FBI raiding the CEO’s home for allegedly enabling U.S.-based users to bet despite a regulatory ban. The Trump administration, in contrast, has taken a more lenient stance, with Donald Trump Jr. publicly involved in advisory roles for both Polymarket and Kalshi. Additionally, Trump Media & Technology Group has announced plans to launch its own prediction platform, further integrating political figures into the market ecosystem. This increasing involvement of political actors amplifies public debate over influence, transparency, and ethical concerns.

Academics note that prediction markets benefit from the perceived loss of credibility in traditional polls and media. Harry Crane, a statistics professor at Rutgers University, explained that these markets reward users who acquire information quickly, potentially giving rise to insider trading concerns. Bets on political outcomes and events like Nobel Prizes have occasionally spiked suspiciously, prompting regulatory review and legislation proposals aimed at limiting unfair advantages. These markets operate continuously, unlike stock markets with fixed trading hours, making them particularly appealing to participants seeking constant updates and immediate feedback on their bets.

Critics worry that widespread engagement with prediction markets could influence real-world outcomes. Political science instructor Grant Ferguson noted that prominent odds can shift voter perception or campaign narratives, with markets potentially shaping behavior rather than merely predicting it. The interactive nature of prediction markets enables users to bet on events they may influence themselves, introducing feedback loops that challenge conventional notions of prediction versus impact. This blurred line complicates any efforts to regulate or classify the platforms definitively.

The risks of gambling-related harm remain significant. Cait Huble, director at the National Council on Problem Gambling, cautioned that users often fail to recognise the similarities between prediction markets and traditional gambling, increasing the likelihood of irresponsible behaviour and financial harm. Young participants may underestimate potential losses, assuming these markets offer reliable investment opportunities. Azra echoed this concern, comparing prediction market participation to smoking, warning that users should be fully aware of the potential dangers before engaging.

Despite warnings, experts suggest that prediction markets are likely to grow in popularity, attracting a wider demographic eager for rapid returns or entertainment. Analysts note that unless regulations or consumer protections are strengthened, the platforms may replicate the same risks associated with conventional gambling, potentially expanding their influence on both financial markets and political outcomes. Eldar believes prediction markets complement traditional polling rather than replacing it, but their growing presence in media and online culture underscores their increasing social relevance.

The ongoing debate over whether prediction markets constitute legitimate financial tools or cleverly disguised gambling operations remains unresolved. With billions wagered weekly, high-profile political involvement, and persistent regulatory uncertainty, prediction markets present both opportunity and risk. Their rapid growth, constant accessibility, and pervasive social presence suggest these platforms will continue to provoke discussion about finance, ethics, and the boundaries of legal gambling in the United States.

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