Young adults between 18 and 21 — too young to legally gamble on sportsbooks — have traded $5.4 billion on prediction market Kalshi so far this year, according to a CNN analysis.
Kalshi, which has seen an explosive rise in popularity over the past few years, allows users to bet on everything from the next leading man in the “James Bond” franchise to how long it will take for the US and Iran to reach a nuclear deal.
It also lets users place sports bets, which – combined with parlays, an all-or-nothing bundle of bets that is popular with sports gamblers – account for 80% of Kalshi’s overall volume.
The CNN analysis found that Kalshi users between 18 and 21 traded roughly $3.9 billion in sports and parlays this year – and that figure is only expected to keep climbing.
“For people under 21, we offer responsible trading education and age-verification technology, and we don’t allow the use of credit cards,” a Kalshi spokesperson told The Post. “If you ask our millions of traders, they would tell you that an exchange model is significantly healthier than a sportsbook model: our profits aren’t tied to trader losses, so we don’t have the same predatory incentives.”
Critics have argued that prediction markets serve as a loophole for young gamblers, since they are regulated like financial markets – meaning they’re available to anyone 18 and over – and not casinos and sportsbooks, which are 21 and up.
Gen Z – those born from 1997 to 2007 – has been seen as an investing-savvy cohort, investing earlier and diversifying their assets more than previous generations. But the concern is that an early introduction to prediction markets could derail this progress.
More than half of Gen Z investors have redirected money intended for their long-term investment strategies toward sports bets, according to a Betterment survey of 1,000 investors.
A survey of a thousand boys by Common Sense Media found that a third of 11-, 12- and 13-year-olds were already gambling, and by the age of 17, 50% said they had gambled in the past year.
According to CNN, Kalshi is only expected to see an increase in sports bets from young people on its platform through the rest of the year.
“Normally you’d have a big summer lull, but the World Cup changed that completely,” Jonathan Michaels, who runs a gaming industry consulting firm, told the outlet.
“Prediction markets will also see record numbers this fall with the football season, and that’ll certainly trickle down into college-age students.”
Kalshi has seen more than $173 billion in overall trading volume so far this year, as of last Friday, according to data from Paradigm, a major investor in the company.
Users between 18 and 21 account for 3.14% of total trading volume, a Kalshi spokesperson told CNN.
Kalshi has added safeguards to its platform for young users, including deposit limits and warnings sent to users with patterns of risky behavior.
Earlier this year, the company announced a $2 million donation to the National Council for Problem Gambling to promote trader health and safety.
Kalshi controls an estimated 90% of the US market for prediction platforms. Polymarket is the second-largest US prediction market.
The industry is regulated by the Commodity Futures Trading Commission, though a group of 44 state attorneys general, dozens of Native tribes and the casino industry are fighting in court to change this.
The American Gaming Association, a casino industry lobbying group, has argued that prediction sites are unlicensed sportsbooks and should not be allowed to offer sports bets.
“Most parents and grandparents don’t realize that the ‘prediction markets’ are offering a backdoor into sports-betting in jurisdictions where the legal betting age is 21,” AGA president Bill Miller told CNN.
“This means their freshman son or daughter is prohibited from entering legal sportsbooks, but now they can just pull out their phone and use Kalshi to bet on football.”
The NCAA, NFL, NBA, PGA Tour and other sports leagues have also urged the CFTC to raise its minimum trading age to 21.
Proponents of prediction markets have argued that 18-year-olds are also legally allowed to trade on the stock market and risk their earnings on other CFTC-regulated markets.
There are some smaller prediction markets that voluntarily ban under-21-year-olds from their platforms.
Merchandising company Fanatics, for example, recently launched a 21-and-over prediction site.