In a notable shift within the sports betting landscape, prediction markets have seen a significant surge in trading volume, spurred by a new demographic of participants. According to Truist analysts, particularly Barry Jonas, a considerable portion of this growth may be attributed to young adults aged 18 to 20—an age group that is typically ineligible to participate in traditional gambling setups due to legal age restrictions in most states.
Recent data from HoldCrunch, a company established by a former FanDuel executive, reveals some intriguing trends. The prediction platform Kalshi has reported that its trading volume for college football has eclipsed that for major leagues such as the NFL and NBA. While older individuals can still legally wager on college sports, the emerging trend suggests a shift in user demographics that may heavily favor younger bettors. Specifically, as of January 4, Kalshi indicated that college football accounted for 32% of its total handle, while the NFL and NBA represented 24% and 22%, respectively. This shift has been gaining momentum since October.
Prediction markets, which allow users to place bets on a diverse range of outcomes—including everything from political events to entertainment and sports—are filling a niche in states where online sports betting remains illegal. Even in states where such betting is permitted, regulations often restrict participation to individuals aged 21 and older. In contrast, platforms like Kalshi and Polymarket welcome users from age 18 and up, subject to specific state regulations.
NCAA President Charlie Baker recently communicated with the Commodities and Futures Trading Commission, urging them to implement stronger safeguards by prohibiting the trading of college sports outcomes until certain protocols are established. The app Juice Reel, designed for sports bettors to track and analyze their betting activities, has identified a higher engagement with prediction markets in states lacking legal sports betting options. For instance, 9% of Juice Reel users in California have linked accounts to prediction markets, the highest percentage nationwide, while just over 6% from Texas have done the same. Interestingly, despite New York having legal online sports betting, 6.8% of users there have also connected to prediction markets, potentially motivated by a culture of financial trading that exists in the state.
Truist analysts further speculate that the young demographic of 18- to 20-year-olds plays a significant role in this trend, as residents in states like New York and California appear more inclined to engage in gambling activities outside the parameters of regulated sportsbooks. In New York, where a hefty 51% tax is levied on sportsbooks, alternate platforms evade this regulation, capturing about 40% of the total wagering handle from Juice Reel’s user base.
Notably, many seasoned gamblers may find themselves gravitating toward prediction markets as traditional sportsbooks impose limitations on their betting capabilities. Ricky Gold, founder of Juice Reel, noted that 70% of tracked bets are made through regulated sportsbooks, accounting for merely 38% of the overall handle. In stark contrast, while predictions constitute just 1% of the total bets, they encompass a striking 13% of the handle.
In summary, the evolving landscape of prediction markets appears to amplify the influence of bettor expertise, offering a more dynamic environment with potentially larger financial outcomes, particularly for high-rolling participants. This trend underscores the profound impact that age demographics and regulatory environments are having on the future of sports betting.
