Bringing Protection to Prediction Markets

People who bet on—or trade in—the outcomes of sporting events are gambling and need safeguards to reduce the risk of developing problems. These responsible gambling policies work, and they benefit all stakeholders: players, operators, regulators, and governments.

Recent AGA survey data shows that 85 percent of Americans view wagering on a game’s outcome or a player’s performance as gambling. And it is clear that sports prediction market customers face the same risks as sportsbook customers. Therefore, prediction market companies should adopt the responsible gambling standards that the regulated gambling industry has spent decades developing. The same logic applies to daily fantasy sports, social casinos, and sweepstakes operators.

Why Sports Prediction Markets Are High Risk

Prediction markets share many of the same risk factors as gambling—and in some cases, amplify them:

• • Youth access: To date, all prediction markets are open to users 18 and older. Most states set the minimum age for sports betting at 21.
• • Few consumer protection features: While Kalshi deserves credit for introducing some protections, most platforms lack the standard tools used in gambling.
• • Perception gap: Many users don’t view prediction markets as gambling, making them less likely to set limits or recognize when play is becoming problematic.
• • Incentives for frequent trading: Platforms profit from transaction fees, which can encourage frequent and excessive trading.

These dynamics heighten risk, particularly for younger or inexperienced users. And the harm is not hypothetical. In 2021, NCPG’s NGAGE 2.0 survey of 2,000 adults found that gamblers who traded weekly or more often were twice as likely to report problematic gambling behaviors as other gamblers.

In my 30 years working on gambling issues, I’ve seen firsthand the fallout when responsible gambling is ignored: people lose money, relationships, and health; the public loses trust; legislators and regulators respond. I’ve also seen the benefits when protections are embraced: safer play, healthier customers, stronger reputations, and more sustainable operations. Gambling and trading companies that invest in tools like self-exclusion, time and spending limits, and behavioral monitoring not only protect players but also protect themselves.

A Better Model Already Exists

The gambling industry is not perfect, but it has made real progress. Over the past 30 years, operators, regulators, and advocates have built a robust toolbox of safeguards: self-exclusion, timeouts, deposit limits, affordability checks, and real-time behavioral monitoring. These tools work now and are constantly being improved.

If a state or tribe allowed gambling companies to offer contracts on sporting events or player performance, they would bring this experience and these protections with them. But the question remains: why should consumers predicting the outcome of a game receive fewer protections than those placing a sports bet on the same game?

Practical Steps Forward

Prediction market platforms offering sports contracts should:

1. 1) Adopt the NCPG Internet Responsible Gambling Standards (IRGS). Developed over a decade and adopted by the New Jersey Division of Gaming Enforcement, these standards include essential tools like deposit limits, timeouts, and self-exclusion.
3. 2) Raise the minimum age to 21. This is the standard across most regulated gambling and should apply equally to prediction markets.
5. 3) Geofence their platforms. States and tribes that do not allow betting on sports should be able to protect their citizens accordingly.
7. 4) Build an informed customer base. Educate users about risks, including transaction fees, the role of market makers, and how incentives may influence trading behavior.
8. 5) Provide support to organizations who prevent and treat gambling problems.

Any gambling company offering trading services, especially sports event markets, should follow the same approach.

Call for Consumer Protection

The gambling industry is investing heavily in safer gambling technology—tools that monitor play, screen payments, flag risky patterns, and give consumers more control. States are also directing more gambling tax revenue than ever towards prevention, education, treatment, enforcement, responsible gambling, research, and recovery services.

Prediction market operators, however, haven’t adopted these tools, don’t pay gambling taxes and don’t contribute to these programs.

It may take years for all the legal disputes around prediction markets to play out. But it’s both common sense and the view of the public that trading on outcomes of sporting events is the same behavior, with the same risks and rewards, as betting on outcomes of sporting events. The lessons from the legalized gambling industry are clear: ignoring harm leads to backlash, while adopting protections leads to sustainability. It’s time to bring comprehensive responsible gambling protections to prediction markets.

Keith Whyte is president of Safer Gambling Strategies LLC and has 30 years of national leadership in promoting responsible gambling and preventing gambling addiction. His previous experience includes the National Council on Problem Gambling and American Gaming Association. He is also pursuing a PhD in responsible gambling.