Prediction markets have moved from a niche forecasting tool into a mainstream alternative to sportsbooks, and the shift is concentrated almost entirely in one demographic: men under 35.
Kalshi’s monthly active users grew from 600,000 to 5.1 million since the start of 2025
, and independent polling shows
Gen Z and Millennials use prediction markets far more often than Gen X or Baby Boomers
. Our data points to three drivers: a lower legal age limit, an “investing” framing that feels different from gambling, and app design borrowed from fintech rather than casino software. The money at risk, however, behaves exactly like a sports bet.
Key takeaways
-
Kalshi’s monthly active users rose from 600,000 to 5.1 million between the start of 2025 and early 2026
, while
it had more daily app users than DraftKings and FanDuel during the 2026 FIFA World Cup
. -
39% of men aged 18-34 report using prediction markets, versus 23% of women in the same age group
, and
males 18-34 are more than twice as likely as the general population to use prediction markets for sports
. - The age gap is partly structural:
Kalshi is legal in 49 states and allows betting from age 18, while traditional sports betting is legal in 39 states with most limiting participation to people 21 and over
. - Framing matters more than outcome:
a majority of both the general public and young men ages 18-24 view prediction markets as closer to gambling than investing
, yet
41% of prediction market users say their top reason for using the platform is to make money
. - The economics are unforgiving regardless of framing:
a Galaxy Research analysis of roughly 2.9 million Polymarket accounts found 69.2% finished below break-even, with combined losses of $338.9 million
.
Table of contents
The loophole that created a parallel market
Prediction markets such as Kalshi and Polymarket sell “event contracts” rather than bets. A trader buys a “yes” or “no” share on whether an outcome will happen; if it does, the share settles at $1, and if not, it settles at zero. Because these contracts are structured as derivatives rather than wagers, Kalshi is regulated federally by the Commodity Futures Trading Commission rather than by individual state gaming boards. That distinction is the whole business model:
traditional sportsbooks are regulated by states and typically restricted to users 21 and older, while prediction markets are technically investment platforms, regulated at the federal level, and available in all fifty states to users 18 and older
.
That gap exists for an 18-to-20-year-old cohort that cannot legally use a sportsbook in most states but can open a prediction-market account the same day they turn 18. It also exists for residents of states that have never legalized sports betting at all, since federal registration bypasses the state licensing process entirely.
How fast prediction markets are growing
The growth curve is steep by any standard.
Kalshi increased its annualized trading volume from $300 million to $40-50 billion between August 2025 and December 2025, according to a Foresight Ventures research report
.
Dune Analytics data puts sports’ lifetime share of Kalshi’s volume at roughly 85% of an approximately $112 billion total, split between Sports contracts worth $73.9 billion and an “Exotics” category worth $20.9 billion
.
The 2026 World Cup accelerated things further.
Kalshi reported 3 million new users during the tournament, with traders pouring over $1.2 billion into predicting the World Cup winner alone
.
H2 Gambling Capital estimated that prediction-market activity reached around 27% of all legal US sports-betting volume during the World Cup, up from 9% at the start of the year
, and
Kalshi had more daily app users than either DraftKings or FanDuel during the tournament, according to Apptopia
.
Sportsbook operators are feeling it.
The Financial Times reported that Kalshi generated an estimated $1.3 billion in annualized revenue from sports contracts, roughly 20% of DraftKings’ estimated $6.5-6.9 billion in 2026 revenue
, while
Flutter Entertainment, FanDuel’s parent company, saw its stock fall 18.15% over five days, 33.58% over a month and 57.43% over six months
as the comparison went public. Polymarket is growing too, but more slowly:
as recently as March 2026, Kalshi and Polymarket each held around 50% of prediction markets’ total trading volume, but trading has since increased dramatically on Kalshi and only modestly on Polymarket
.
| Metric | Figure | Period |
|---|---|---|
| Kalshi monthly active users | 600,000 → 5.1 million | Jan 2025 – early 2026 |
| Kalshi annualized trading volume | $300 million → $40-50 billion | Aug 2025 – Dec 2025 |
| Kalshi lifetime volume, sports share | ~85% of $112 billion total | Through June 2026 |
| Prediction-market share of legal US sports-betting volume | 9% → 27% | Start of 2026 – World Cup |
| Kalshi new users during World Cup | 3 million | Jun–Jul 2026 |
This velocity sits inside the broader shift toward faster, more granular wagering formats that we cover in our piece on micro-betting and in-play wagering, where shorter decision cycles and instant settlement are reshaping how operators compete for attention.
Who is actually trading: the demographic data
Independent survey data is consistent across pollsters on one point: usage skews heavily toward young men.
Gen Z (29%) and Millennials (25%) use prediction markets far more frequently than Gen Xers (15%) or Baby Boomers (2%)
, and
39% of men aged 18-34 report using prediction markets compared with 23% of women in the same age bracket
. A separate tracking survey found a similar pattern specifically for sports contracts:
males 18-34 are the most likely group to use prediction markets for sports at 11%, more than twice the rate of the overall population, while usage among people 55 and older sits below 2%
.
Industry-commissioned polling from the American Institute for Boys and Men and Ipsos adds detail on motivation.
Young men ages 18-24 are more likely than the general public to report using at least one prediction market, sportsbook or daily fantasy sports app in the past six months, 26% versus 14%
, and
41% of prediction market users say their top reason for using the platform is to make money
— a framing closer to trading than entertainment. A Morning Consult-sourced estimate cited by Moneywise suggests the imbalance could widen the market further:
71% of prediction market users are men under 45, with volumes estimated to exceed $1 trillion by 2030
.
Interestingly, the platforms’ typical account holder is not a teenager.
The average age of a Kalshi user is 33
, which suggests the “younger” effect is less about an 18-year-old surge and more about a broad millennial-and-Gen-Z cohort replacing the older demographic that still dominates casino and lottery play. That cohort overlaps heavily with the audience we track in our iGaming demographics hub, where age and gender splits across betting verticals are analyzed in more depth.
Trading language, gambling mechanics
The “investing, not gambling” framing is doing real work on user perception, even though the public does not fully buy it.
A majority of both the general public and young men ages 18-24 view prediction markets as closer to gambling than investing
, and
Americans view purchasing event contracts as closer to gambling than investing by a 61% to 8% margin
. Even so,
among Americans who have heard of prediction markets, the overwhelming majority view them as financially risky, on par with cryptocurrency investing and sports betting
.
Peer-reviewed research backs up the skepticism about how these products are designed. A 2026 Science paper on the sector argues that
the broader prediction-market landscape has expanded to include gamified, large-scale digital trading platforms optimized for engagement over epistemic rigor
, a framing that echoes concerns we raised in our analysis of XP points, loot boxes and leaderboard mechanics in casino retention. Separately, a Management Science study on gamified trading apps found that
hedonic gamification increases trading volume by 5.17% on average, though 70% of the activity gap between gamified and non-gamified platforms is driven by self-selection rather than the gamification itself
. In other words, the people drawn to playful, game-like interfaces already trade more — the design simply reinforces an existing preference.
The reality check: most traders lose money
Whatever language is used to describe the product, the outcome distribution matches other speculative, zero-sum retail markets.
Galaxy Research’s analysis of roughly 2.9 million Polymarket accounts found that 69.2% finished below break-even, with combined losses of $338.9 million
, and
sports specialists fared worst among the trader categories examined
. A separate academic study covering the platform’s full history reached a near-identical figure:
68.8% of users lost money since 2022, the top 1% of traders captured 76.5% of all gains, and the top 0.1% alone accounted for more than half of total profits
.
Automation explains much of the imbalance.
Accounts classified as automated earned $246.8 million, generating 80.8% of orders despite representing just 4.1% of accounts
, and losses compound behaviorally:
15.2% of accounts stopped trading for at least 30 days after a loss, compared with 6.1% after a win
. The Wall Street Journal’s review of platform data found an even starker concentration on Polymarket specifically:
more than 70% of users are losing money, while just 0.1% of accounts captured 67% of all profits
.
These figures matter for the “trading, not betting” narrative because they show the same long-tail profit concentration seen in retail day-trading and sports betting alike: a small number of sophisticated, often automated participants extract value from a much larger pool of casual users who, on balance, lose. The framing may be different; the money flow is not. For context on how this fits the wider economics of the sector, see our macro economics of iGaming hub.
The regulatory fight that will decide the next phase
The legal foundation of the whole category is currently unsettled, and the outcome will determine whether prediction markets keep their age-18, all-state advantage over sportsbooks. In April 2026,
a Third Circuit panel affirmed a preliminary injunction barring New Jersey from enforcing its gambling laws against Kalshi, holding that Kalshi’s sports event contracts are “swaps” under the Commodity Exchange Act and are shielded from state regulation by field and conflict preemption
. That ruling only addressed the likelihood of success at the preliminary-injunction stage, not a final merits decision.
Five months later, a different circuit reached the opposite conclusion.
In a unanimous decision, a three-judge panel ruled that Ohio and Tennessee are permitted to apply their state gambling laws to Kalshi’s sports-related event contracts, holding that Kalshi had not shown its contracts satisfy the statutory definition of a “swap”
.
The CFTC has backed Kalshi’s position and has separately sued nine states over efforts to regulate prediction markets
, while
Kalshi has argued the growing circuit split demonstrates the need for a national regulatory framework rather than rules that change across state lines
.
That circuit split — one appellate court for Kalshi, one against — puts the question on a likely path to the Supreme Court. Until it is resolved, the regulatory arbitrage that currently lets 18-year-olds trade sports outcomes in states where traditional sports betting is illegal or age-restricted to 21 remains intact in some jurisdictions and blocked in others. Readers tracking how this plays out state by state can follow our licensing and jurisdictions hub for updates as rulings land.
Frequently asked questions
Are prediction markets legal for sports betting?
It depends on the court.
One federal appellate court ruled the Commodity Exchange Act preempts state gambling laws for sports-related event contracts traded on CFTC-licensed exchanges
, while
another appellate court ruled that states can apply their own gambling laws to the same products
. The conflict is unresolved and likely heading to the Supreme Court.
What is the minimum age to use Kalshi or Polymarket?
Users can bet starting at 18 on Kalshi
, matching the minimum age for stock market investing rather than the 21-plus threshold most states set for sports betting. This is the single biggest structural reason the user base skews younger than traditional sportsbooks.
Do prediction-market traders actually make money?
Most do not.
A Galaxy Research study of 2.9 million Polymarket accounts found 69.2% finished below break-even
, and an independent academic analysis found
68.8% of users lost money while the top 1% of traders captured 76.5% of all gains
. Profit is concentrated among a small group of high-frequency and automated accounts.
Why are younger bettors specifically drawn to these platforms?
Three factors combine: a lower legal age, an “investing” framing that
41% of users cite as their top reason for trading
even though
most people still view the activity as closer to gambling
, and fintech-style app design that mirrors stock-trading apps rather than casino software.
Methodology
For this analysis, GamblScout.com’s algorithm cross-referenced publicly disclosed trading-volume and user-growth data from Kalshi and Polymarket with independent survey research (Pew Research, Ipsos/AIBM, Navigator Research, SSRS) on usage by age and gender, plus peer-reviewed and blockchain-forensic studies on trader profitability. We weight regulator filings and academic analyses above company press releases when the two conflict, consistent with the approach described on our core principles hub.
Gambling involves risk. Only play with money you can afford to lose and use the deposit limits and self-exclusion tools available in your jurisdiction.
