Truist analysts have identified a notable trend in the rising trading volumes of prediction markets, suggesting that 18- to 20-year-olds may be a driving force behind this growth. Analyst Barry Jonas highlighted findings indicating that younger users, who typically cannot gamble legally in most states, are increasingly participating in platforms like Kalshi, which allows trades on a variety of topics, including sports and politics.
Data from HoldCrunch, a firm established by an ex-FanDuel executive, reveal that college football trades on Kalshi have outpaced those on the NFL and NBA, accounting for 32% of total trades during the week ending January 4. In comparison, the NFL represented 24% and the NBA 22%. This shift toward college sports has been growing since October and may indicate a demographic shift in prediction market users.
Prediction markets offer users the chance to bet on outcomes across various arenas, effectively filling a gap for bettors in states where online sports betting remains illegal. Unlike traditional sportsbooks, which often require users to be 21 or older, platforms like Kalshi and Polymarket permit users aged 18 and above, albeit with certain state restrictions.
The appeal of prediction markets is particularly pronounced in states like California and Texas, where traditional sports betting is not allowed. Data from Juice Reel revealed that 9% of its users in California and over 6% in Texas have connected accounts to prediction markets. Notably, even in New York, where online sports betting is legal, a significant number of users are engaging with prediction platforms—potentially due to the state’s financial trading culture.
NCAA President Charlie Baker has recently urged the Commodities and Futures Trading Commission to impose tighter regulations on college sports trading to enhance safeguards.
Why this story matters: The trend highlights shifting demographics in sports wagering and the potential impact of younger users on market dynamics.
Key takeaway: Rise in prediction markets signals a growing alternative for bettors, especially in states with strict gambling laws.
Opposing viewpoint: Critics argue that the lack of regulation in prediction markets poses risks, particularly for college sports, requiring further oversight to protect young bettors.
