Yves here. We must confess that this article confirms our priors, that the treatment prediction markets as a non-sanctioned/restricted activity is a sign of societal breakdown.
By Ayesha Khan, a medical student at the CUNY School of Medicine and a Truman Scholar. Her work focuses on the intersection of health policy, climate change, and health equity. Originally published at Undark
Gambling has long been treated as a vice: risky, addictive, and deliberately set apart from everyday life. Casinos are zoned away from schools. Sportsbooks display warnings. The danger is acknowledged, even when laws and restrictions on gambling fall short.
But what happens when gambling is repackaged under the guise of asset trading and made accessible on a daily basis? Prediction market platforms such as Kalshi, Polymarket, and Manifold are betting that Americans will not notice the difference.
These platforms allow users to buy what they call “shares” or “contracts” to trade on real-world outcomes, including elections, inflation reports, court decisions, and geopolitical events. These platforms present themselves as tools for forecasting rather than gambling. They resemble spreadsheets more than slot machines. Users do not bet; they trade. Odds are reframed as probabilities. Risk becomes insight.
This shift is not subtle. In late 2025, CNN announced a partnership with Kalshi that would integrate prediction-market probabilities into its coverage. Real-money odds began appearing alongside trusted journalism.
After the U.S. Supreme Court struck down a federal ban on sports betting in 2018, legal wagering expanded rapidly. Today, about 22 percent of Americans and 48 percent of men ages 18 to 49 report having at least one online sportsbook account, according to a 2025 poll by the Siena Research Institute and St. Bonaventure University. Most states now permit sports betting in some form, and roughly 30 allow online betting.
The National Council on Problem Gambling estimates that about 2.5 million adults in the U.S. have severe gambling problems, and the organization’s 2024 survey found that nearly 20 million reported indicators of problematic gambling behavior in the past year. The 2025 poll found that among bettors, 52 percent reported chasing losses (continuing to gamble in an attempt to win back money already lost), 20 percent said they lost money they could not afford to lose, and only 9 percent had ever sought help.
The cultural script for gambling harm still assumes a familiar aesthetic: a casino floor, a sportsbook counter, a telltale desperation. Prediction markets disrupt that image by making gambling feel intellectual.
Timothy Fong, an addiction psychiatrist and professor of psychiatry at the University of California, Los Angeles who has studied gambling disorder for more than two decades, argues that this reframing obscures the real risk. “You don’t actually have to ingest into your body for it to have a tremendous impact on your body, your brain, your mind, your spirit, and your wallet” he told me. The harm from gambling, he emphasized, is not just financial. It extends to physical health, mental health, family stability, and public health.
In behavioral psychology, one of the strongest drivers of risky behavior is the belief that skill or intelligence can control uncertainty. In gambling disorders, this is often called the illusion of control. Prediction-market apps lean into it. Their design encourages users to feel not impulsive but informed, as if the right podcast episode, chart, or probability can turn chance into mastery.
When trusted institutions — particularly mainstream media outlets — amplify that frame, the guardrails fall further. As Fong put it, “When you normalize an activity, and you promote it on CNN with partnerships, what do you do? You decrease perception of harm.” And, he added, when “you decrease perception of harm, then that increases likelihood of engagement.”
That shift matters most for the people most likely to be harmed. In Fong’s view, normalization does not simply broaden the market for gambling. It changes who enters it first, particularly young people ages 16 to 24 and those with mental health conditions, substance use disorders, or financial vulnerability.
From a neurobiological perspective, the mechanism is familiar. Gambling activates the brain’s reward circuitry; dopamine surges not only when someone wins but when they anticipate a win. Uncertainty itself becomes reinforcing. Mobile platforms intensify the loop through real-time updates on constantly shifting odds and push notifications that keep attention locked in a state of watchfulness.
This chronic activation takes a toll. Stress and reward pathways remain engaged, disrupting sleep, elevating cortisol, worsening anxiety, and impairing concentration. Over time, compulsive engagement deepens depression and erodes impulse control, using the same neurological scaffolding that sustains other addictions.
Clinically, patients who struggle with prediction markets look no different from those harmed by traditional gambling, Fong said. The pattern is the same: escalating losses, secrecy, shame, chasing losses, relapse, and the defining feature of addiction — wanting to stop and being unable to.
What makes prediction markets uniquely unsettling is not only how they function, but what they ask users to gamble on. The platforms convert collective real-life events such as elections, wars, public health crises, and economic downturns into tradable assets. These outcomes are emotionally charged and morally complex. When personal finances become tied to geopolitical events, emotional regulation becomes harder, not easier.
This reframing also makes harm harder to detect. Gambling disorder remains underdiagnosed in part because patients rarely volunteer gambling behavior unless asked directly. When the behavior is labeled trading or forecasting, clinicians and families may miss it entirely. Losing sleep over a sports bet draws concern. Obsessively refreshing election probabilities on a polished app often does not.
Regulation has not caught up to the new aesthetic, though some attempts are being made. Prediction markets occupy a shifting legal space. Because they are not always treated as gambling, they may evade safeguards required of sportsbooks, including warning labels, spending limits, and age-verification norms. Just this year, court fights over whether wagers on these platforms constitute gambling, the introduction of bipartisan legislation, and a federal investigation all underscore how unsettled that boundary remains.
We have seen this pattern before: A product scales faster than society’s ability to measure its harm, and faster than the government’s willingness to contain it. Fong captured the moment succinctly: “Not only has the horse left the barn, but all the horses have left the barn.”
For clinicians, this means asking new questions about financial risk-taking that can function like addiction. For policymakers, it means closing regulatory gaps that allow high-risk products to masquerade as sophistication. For the public, it means recognizing that not all bets are obvious and not all harms announce themselves loudly.
When everything becomes a wager, the cost is not always measured in dollars. Sometimes it is paid in sleep, stability, and mental health. For decades, public health has watched dangerous behaviors gain acceptance through rebranding. Gambling cannot be next.
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If the U.S. changes direction in its race to the bottom – not likely, but as Yogi Berra could have said, “You never know when something surprising might happen” – then making this sort of gambling illegal – its debts uncollectible by legal processes – would be a big step towards sanity. In my opinion.
The bettor doesn’t bet with credit in these markets, does she? Only the House incurs a debt, created when the House sits as first judge of the Outcome of the bet. The House, by managing the wallets of bettors, is acting like a bank and is therefore a master of credit creation and destruction in the virtual world of the prediction market.
Seems like the stock market, or our attitudes to the stock market, was among the Pandoras that opened this box. Somewhere along the line investing came to seem no different than gambling, and markets just a large casino—a casino where all the rich players got richer no matter what.
The Atlantic gave one of its (non-gambling) journalists $10,000 to experiment with online gambling, leading to a cover story detailing the experience.
The article is reg-walled, but the related podcast (or at least transcript thereof) is not.
It was interesting how quickly and completely this otherwise sane and generally gambling-skeptic experimenter was sucked in.
Your podcast link didn’t work for me but I did find it and read the transcript. Very interesting. Thank you.
https://www.theatlantic.com/podcasts/2026/03/sports-gambling/686333/
I hate losing more than I like winning, which is maybe not any healthier psychologically. I can see it is a phobia of self-distrust of my own impulse control. I know I am easily conned or dominated. I certainly want to believe I can figure out how to win the game. So, I feel myself vulnerable to a gambling addiction I have never succumbed to, while also (pathologically?) failing to take risks in other areas of my life.
I wonder if the social moralizing of the OP isn’t a bit misdirected in a way I cannot quite put my finger on. What is it that makes it so hard for public authority to distinguish predatory activity and discriminate against it? Is it just aesthetics? A much older, half-forgotten regime of moral control imposed that repulsive aesthetic as a price of doing (predatory) business.
I remember when Barney Franks created Boston’s Combat Zone, a tiny enclave of commercial sex-related business as a refuge for Scollay Square businesses scattered by urban renewal. An unwritten requirement was that the business had to present itself as to some large degree, filthy and decayed. There was a political struggle over how thorough a repression to carry forward, but it went on at several levels. I suppose an economist could show how imperfect repression created opportunities to realize economic rents on the willingness to engage in predatory conduct. The Mafia had an interest in there being businesses outside the pale of acceptable conduct that they could monopolize or dominate.
Boston at the beginning of the 1970s had “blue laws” that among other things made gay bars illegal. A range of opinion existed of course, but prevailing opinion at the time regarded this policy as properly suppressing vice. Gay bars existed — several had decades-long histories extending back to Prohibition — but they had survived by conforming to the aesthetic of obscure dive bars, hiding in plain sight with no sign or down lost alleys, paying bribes and enduring the ritual humiliation of police raids.
All that ended in the 1970s in a wave of liberalization that included Barney Frank’s Combat Zone experiment. I happen to be in Ann Arbor today, which is celebrating the 55th Annual Hash Bash.
Financial repression also began to accelerate in its snowballing erosion in the 1970s. The Savings and Loan was nearly wiped away, the remnants of Thrifts and Mutual Insurance weaponized and predatory lending elevated. States took up lotteries ostensibly for feel-good education funding. Casinos eventually became a centerpiece of urban development projects.
I posted an ad yesterday on Craigslist to dispose of a bit of redundant electronics and the only responses I have received are AI-generated text messages and emails that are part of a standard scam, which Craigslist itself warns users against. The gig economy is not bad enough apparently.
Is it really that hard to distinguish usury and fraud from productive lending or is it just hard to muster ethical convictions among the political class?
I apologize for meandering — there seem to be connections; I can’t quite complete the weave of threads. The big connection missed, I suppose, is the psychology of the political class and the damage they do when they fail to distinguish the predatory.
Thank you. Many questions.
Prediction markets: “That escalated quickly…”
https://www.youtube.com/watch?v=rFeVfwDvTyM/
The fundamental problem is not a lack of gambling regulations. Rather, it is the belief held by many people in the United States today that hard work does not pay off and that gambling is the only path to wealth and success.
Are they wrong?
I don’t mean morally wrong, necessarily. But, I do think we ought to consider the “objective” possibility that the structure of production and distribution does not have marginal opportunities to be productive. Many people are faced with a selection of gig economy jobs and bullshit jobs, thoroughly mixed with scams. They fall into debt at high interest rates that makes them desperate, even without choosing to gamble. They see a few lucky and talented make good as substack publishers or youtube influencers or tiktok stars or pornstars on OF.
If the belief is an objectively accurate depiction of reality, . . . what then? How does society motivate a system redesign?
Agreed – our society is structured so that “gambling” is a rational response to “I have no chance of making a good living any other way”. And if we are going to “regulate away” gambling, what about other things that cause harm? Alcohol? Tobacco? Fast food? Extreme sports?
The solution is to create an economic system where the majority don’t have to take a high risk/reward approach towards surviving. And recognizing that as adults, we have a personal responsibility for the actions we take
That’s just one factor. However, there are many underlying factors that make gambling so attractive to so many. The financially well off get sucked in as well, as the back gambling rooms of Las Vegas casinos, which cater to their high rollers because they are incredibly profitable, would attest.
The fraud triangle — incentive, opportunity, and rationale (moral justification) — is a more proper lens to assess the immense increases in gambling activity. The presence of any one of the 3 fraud factors is a warning sign for fraud (bad behavior). When all 3 are present, as they are in the gambling marketplace, a lot of bad behavior is going to occur.
Governmental regulation (and taxation) can have a tremendous impact on reducing both incentive and opportunity, and therefore this is where governmental focus needs to be to address the problem of gambling. There is an incredibly long history of government regulation working well to contain the problem of gambling.
Once upon a time we had the political will to regulate gambling. That political will is now gone, sold off to the highest bidder, the very moment that the use of money in politics was equated to the exercise of free speech.
Some related anecdata: At work I spend a lot of time sitting/standing around with the Indian/Pakistani guys who make up the majority of the security guards. And they’re all in on sports betting, polymarket, and consumer investing. They talk about buying shares in gold the same way as they talk about a player doing poorly in their fantasy league. And I also reached the conclusion from listening to them that a large part of the appeal is that illusion of control. They want to feel like they are in control of their lives, that they came to Canada and will become successful and make their familial sacrifices worthwhile. But they’re security guards working 12 hour shifts seven days a week in a job market with 14% youth unemployment. The lack of sleep many of them are getting probably doesn’t help with impulse control and decision-making. They are all obsessed with making it big in a way that even working class people my age weren’t at their age. We all knew that guy who swore this time he was going to Make It. Now that’s just the default attitude it seems. Even knowing the psychology and statistics of gambling I hate how tempting it is.