Prediction-market companies are pulling in young traders with a product that economists once imagined as a sober forecasting tool for elections, policy and business decisions. The current version looks much more like mass-market betting: Kalshi and Polymarket say their event contracts are financial trades rather than gambling, but a user buying a contract on whether a team wins can experience it much like a sportsbook bet.
From forecasts to wagers
The original academic pitch came with limits. In a 2008 Science paper, 19 economists argued that prediction markets should be allowed for economically meaningful events, while saying they would “presumably not include” sports and suggesting an annual wager cap of about $2,000, roughly $3,000 today. Today, sports-heavy trading dominates major platforms: TickerTracker data showed sports markets and sports-heavy parlays at about 84% of Kalshi’s volume over the past month, or $18.5 billion, and sports-related markets at about 99% of Polymarket’s U.S.-facing site, or $2.1 billion.
The stakes extend beyond the academic debate. Because U.S. law treats financial contracts differently from gambling, prediction markets are available to people over 18. Addiction experts and some state regulators say the platforms are adding to a public-health problem, while the companies maintain they are not enabling sports gambling and do not operate like casinos or bookmakers.
Polymarket is also facing scrutiny over how the boom is marketed. A Wall Street Journal investigation found that paid creator George Makihara appeared in videos to place 145 Polymarket bets from January to mid-May, adding up to almost $410,000, including one clip showing a $100,000 win on whether President Trump would say “McDonald’s.” The investigation found none were real.
Some economists still see useful information in these markets, from inflation and Fed-rate expectations to corporate earnings and Wall Street forecasts. The unresolved issue is whether that benefit can coexist with sports and pop-culture wagers now driving much of the trading volume, with few wager caps and users as young as 18.
