Prediction Markets Surge with $1.2bn Super Bowl Volume, Stirring Gambling Concerns
Polymarket and Kalshi, two leading prediction market platforms, collectively recorded approximately $1.2 billion in trading volume on Super Bowl Sunday, according to analysis by Piper Sandler. This staggering figure highlights the rapid growth of these platforms, where users can wager on events ranging from sports outcomes to political scenarios, sparking a fierce debate over whether they constitute gambling or legitimate investment vehicles.
User Perspectives: Investment or Gambling?
Yadin Eldar, a 21-year-old student at Florida State University who has been using prediction markets since 2019, emphasizes that these platforms are not traditional gambling. "I wouldn't describe it as gambling," he stated, "but a mix of betting and options trading. It's not like when you go to the casino, and play against the house, and hope you get to win against the house. That's not what it is." In contrast, Zachary Azra, a 20-year-old economics student at the University of North Carolina at Chapel Hill, views prediction markets differently. "A prediction market is another way to gamble money that's framed in a way that looks like good investments," he remarked, having used the markets for five months.
Regulatory Gray Area and Political Ties
Prediction markets operate in a regulatory gray area compared to conventional gambling. While sports betting platforms face age restrictions and state bans, prediction markets are available in every state and allow users as young as 18 to place bets. They are regulated as financial products by the Commodity Futures Trading Commission, offering "event contracts" with binary payoffs. However, the Biden administration attempted to crack down, with the FBI raiding Polymarket CEO Shayne Coplan's home in November 2024 for allegedly allowing U.S.-based users to bet despite a ban. Polymarket claimed this was retaliation for users betting on Donald Trump winning the election.
The Trump administration has taken a softer stance, with close ties to the industry. Donald Trump Jr. is an investor and unpaid adviser to Polymarket, as well as a paid adviser to Kalshi. Additionally, Trump Media & Technology Group announced plans to launch its own platform, Truth Predict, further embedding prediction markets into the political landscape. These markets have gained visibility in politics, with media outlets partnering with Polymarket and Kalshi to quote their odds, lending legitimacy amid declining trust in traditional polling.
Insider Trading Risks and Public Concerns
Concerns about insider trading loom large in prediction markets. Harry Crane, a statistics professor at Rutgers University, noted that these markets reward those who get information faster, sometimes appearing suspicious. For instance, bets on Venezuelan opposition leader María Corina Machado winning the 2025 Nobel Peace Prize spiked before the official announcement, though it was linked to public metadata. In response, New York representative Ritchie Torres introduced draft legislation in January to curb insider trading by federal officials after a suspicious Polymarket trade around a U.S. operation in Venezuela.
Grant Ferguson, a political science instructor at Texas Christian University, warned that prediction market odds could influence voters or political narratives, potentially discouraging participation if outcomes seem predetermined. Meanwhile, Cait Huble, director of public affairs at the National Council on Problem Gambling, expressed concern that users may not recognize the risks. "The buying and selling of futures contracts via prediction markets carries substantially similar levels of risk to the consumer as traditional sports betting," she said, including financial harm and gambling-related issues.
Future Outlook and Calls for Caution
Azra advocates for warnings on prediction markets, similar to those on tobacco products, to educate users about the gambling-like consequences. "People should know you most likely won't make money from this," he advised. Without intervention, he predicts these platforms will grow in popularity, with more people attempting to make quick money. As prediction markets continue to blur the lines between gambling and investment, the debate over their regulation and societal impact intensifies, with billions of dollars at stake and political influence expanding.
