Prediction markets are surging, with weekly industry-wide volume climbing to $16.4 billion in the second week of the NFL season, including Kalshi’s first $3 billion day. Behind this massive growth is a successful marketing pitch made primarily for younger users: that ‘trading’ on the outcome of a sports game, an election, or a reality TV show is a form of investing that can build fast wealth. That marketing pitch is highly misleading, and it is reaching young Americans at unprecedented levels.
Selling Young Americans on Betting Instead of Investing
As young Americans increasingly look to alternative paths to achieving economic security, which we outlined in our State of the Economy for Young Americans report, prediction markets are exploiting the rising sense of “financial nihilism” among young people and convincing them that betting on event contracts is a path to fast money and wealth.
Prediction markets often tell audiences that knowledge in a subject can give them an edge. Kalshi’s co-founders pitch the platform as a way for people to “monetize their knowledge… because everyone is an expert on something.” Yet, research shows that only a small number of users profit on prediction markets. One study found the top 1% of users on Polymarket capture 76.5% of the profits. Many of these winners are sophisticated traders, who will be joinedby Wall Street trading firms with sophisticated trading strategies to profit by capitalizing on novice users.
There is evidence that this sleight-of-hand contributes to diverting young Americans’ hard-earned money away from traditional savings and investing and toward high-risk gambling. Survey data shows the conflation between gambling and investing is already taking hold. In a survey commissioned by Betterment, the online wealth management fiduciary, 52% of Gen Z investors reported redirecting money meant for investing towards betting on sports, while a recent US Bank study found that 33% of Gen Z and 29% of Millennials would consider using prediction markets to build wealth, compared to 26% of Gen X and just 15% of Boomers.
Targeted Advertising
Prediction markets use a range of marketing techniques to lure younger users onto their platforms—including paid social media influencers, targeted and FOMO messaging, and celebrity endorsements. While targeted advertising is not per se concerning, we highlight these examples to showcase how prediction market strategies more closely resemble sales pitches for gambling or other forms of consumer recreation rather than advertising for traditional investing.
Sponsored Influencer Content
Through affiliate programs, prediction markets pay influencers to promote the platform on popular social media platforms like TikTok or Instagram. According to reporting by Politico, Polymarket’s chief marketing officer paid at least $350,000 to influencers through his personal PayPal account, many of whom promoted the platform on X without disclosing the payments.
Certain prediction market companies have also allegedly deployed content creators with false advertisements to attract customers. In June, the Wall Street Journal reported that Polymarket paid social media influencers to promote fake videos of successful wagers. One video featured a young man claiming to have won $100,000 by wagering that the president would say “McDonald’s” in January. In reality, the president never said the word, and over 50 accounts that made the same bet lost money.
Because prediction markets have asserted that they’re regulated by the Commodity Futures Trading Commission, which does not require the disclosure of paid promotions for financial derivative products, anyone paid to promote an event contract only has to follow the Federal Trade Commission’s weak guidelines. In contrast, the securities laws—which govern traditional wealth-building investments sold to the public—require disclosure of the paid promotion of securities. The SEC has recently enforced these disclosure requirements through past guidance and enforcement actions involving initial coin offerings, including against notable individuals for failing to disclose compensation for promoting crypto tokens such as Kim Kardashian, Jake Paul, and John McAfee.
Targeting & Messaging
Prediction markets and their affiliates aggressively target their advertising based on demographics and interests. Through images, memes, and videos, they court young women through content built aroundcultural events, music, and reality TV, while pulling in young men with wagering on sports, video games, cryptocurrency prices, and more. Prediction market platform Novig, for instance, has positioned itself as a sport-only trading app, with advertising aimed at young men.
Advertising content also intentionally evokes fear of missing out (FOMO), a common apprehension that social media amplifies. Prediction market ads and sponsored influencer content routinely show peers cashing in on winning trades, framed as savvy financial moves rather than lucky bets. Seeing people their own age making easy money creates pressure on young people to join in, and research links FOMO to conformity-driven and impulsive spending. MediaNug, a social media advertising agency, seemingly advised content creators in the promotion of Kalshi’s World Cup campaign to feature actors who look 25 – 35 and use FOMO as one of its 18 hook formats.
Celebrity Promotions
Prediction markets also enlist celebrities to promote the platform and manufacture a halo effect. Research shows that advertisements featuring celebrities and influencers make gambling feel more legitimate and socially acceptable to young people who see them. That same familiarity also lowers their perception of risk, since it’s harder to see the danger in something endorsed by a trusted figure.
Prediction Markets Are Skirting State Gambling Advertising Rules
Conclusion
Event contracts on gambling-style outcomes are gambling. Federal regulators need to stop aiding and abetting the flouting of state and tribal law. Though policymakers could always improve the regulatory framework governing gambling, the United States has typically had an appropriate state-based regulatory regime tailored to the needs of the jurisdiction. This same framework includes the advertising rules prediction markets now ignore. Regulating event contracts on prediction markets that involve gambling as gambling would apply important consumer protections that are essential in promoting responsible gambling and clearly demarcating how it is different from wealth-creating investment strategies.
