As prediction markets gain popularity, recent insights suggest there’s a surprising factor driving this surge: young adults aged 18 to 20. This age group, typically too young to legally gamble in many states, may be turning to prediction markets for their excitement.
Barry Jonas, an analyst at Truist, notes that platforms like Kalshi are seeing a significant increase in trading activity related to college football. According to data from HoldCrunch, a company founded by a former FanDuel executive, Kalshi’s college football trades recently hit 32% of its total trading volume, eclipsing the NFL and NBA. This trend hints at a growing interest among younger users within prediction markets.
Prediction markets let users wager on various events, from sports to politics, and are filling a market gap in states where online sports betting is restricted or where age limits are enforced. While most online sports betting is available only to those 21 and up, platforms like Kalshi and Polymarket allow users as young as 18 to participate, although there are some state-specific restrictions.
Interestingly, NCAA President Charlie Baker recently requested the Commodities and Futures Trading Commission to put safeguards in place before allowing college sports to be included in these betting options. The rise of prediction markets offers a unique avenue for those in states with strict gambling laws. For instance, a survey by Juice Reel revealed that 9% of users in California, where sports betting is illegal, have linked their accounts to prediction platforms. Texas follows closely with 6%.
In contrast, New York, where sports betting is legal, has 6.8% of users connecting to prediction accounts. This might be influenced by New York’s dense population of financial traders, who are already familiar with trading futures and derivatives. According to Ricky Gold, founder of Juice Reel, seasoned gamblers are drawn to prediction markets due to higher betting limits that sportsbooks sometimes impose.
Data suggests that even though regulated sportsbooks handle 70% of the bets, they only account for 38% of the total money wagered. Meanwhile, prediction markets represent a smaller proportion of bets—only 1%—but they encapsulate 13% of the total handle. This disparity highlights the potential for higher stakes for experienced bettors.
As the landscape of prediction markets evolves, it will be interesting to see how regulations adapt to protect users, especially younger ones. Understanding these dynamics can shed light on the future of both prediction and sports betting in the US.
For more detailed insights on prediction markets and their regulation, you can check sources like CNBC and recent studies from organizations like the National Council on Problem Gambling.
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