Prediction Markets Attract Young Men Disproportionately

Online prediction markets, such as Polymarket and Kalshi, are experiencing rapid growth, becoming a multi-billion dollar sector. These platforms, where one can bet on events ranging from sports to geopolitical developments, primarily attract a specific demographic: young men. This phenomenon raises many questions, particularly regarding risks and regulation. As Jonathan Cohen, Head of Sports Betting Policy at the American Institute for Boys and Men (AIBM), puts it, the "vibes are definitely young male vibes." He sees a strong neurological component in young men’s high-risk appetite. It's more than just betting; it's a lifestyle fueled by influencers and social media. The appeal of these markets seems deeply rooted in internet culture, blending elements of crypto trading, meme investing, and sports betting. Platforms like Polymarket and Kalshi are classified as "commodity futures trading," not gambling. This has far-reaching consequences for legislation. Although operators emphasize that it's about "information," critics view it as "normalized" gambling. The reality is that customers are not just small gamblers, but also professional "hedge funds" that fleece amateur players. What we are seeing here could have serious implications for young players. Their losses are often immense.

Numbers and facts

Prediction markets are a huge business. Kalshi was recently valued at $22 billion, Polymarket at $9 billion. Demand for betting in the US has surged. According to a study by analytics firm Morning Consult, 71 percent of prediction market users are male and disproportionately under the age of 45. A quarter of American men aged 18 to 24, specifically 26 percent, reported using at least one of these platforms in the past six months. In comparison, only 14 percent of the general public did so.

“Everyone's always had an opinion, but this is the first time in history you can literally have an opinion with your money on everything.” – Cameron George, Crypto Trader and Content Creator

The majority of bets on these platforms are placed on sports events. However, prediction markets are not without controversy. Critics see them as minimizing the risks of gambling. The design and marketing of the platforms allegedly downplay risks. Often, beneficiaries are insider traders. For example, Gannon Ken Van Dyke, a US special forces soldier, won over $409,000 through an alleged bet on Polymarket about the removal of Venezuelan President Nicolas Maduro before the information was public. Almost twice as many Polymarket accounts betting over $1,000 have lost money. A Wall Street Journal analysis found that 67 percent of profits on Polymarket go to 0.1 percent of accounts.

Background

The phenomenon of prediction markets taps into a variety of male interests: crypto speculation, "finance bro" culture, meme investing, and online prediction communities. Professor Elvira Bolat from Bournemouth University observes these overlaps. She argues that the platforms present themselves more as information markets or trading environments, although their behavior strongly resembles gambling. Influencers like YouTuber Logan Paul also promote the platforms, often without highlighting the risks. Polymarket even opened a bar called "The Situation Room" in Washington D.C., whose launch videos predominantly showed men. Kalshi told the BBC that the proportion of female users on its platform increased from 13 percent to 26 percent over the past year. They stated that they collaborate with organizations to combat problem gambling and promote responsible trading. However, according to US regulations, influencers do not have to provide risk warnings in this context.

Why it matters for German players

For German players, the world of online prediction markets as it exists in the US is largely irrelevant in this form. In Germany, all online gambling is subject to strict rules under the Interstate Treaty on Gambling 2021 (GlüStV 2021). This means that legal online casinos in Germany hold a license from the Joint Gambling Authority of the Federal States (GGL). This GGL whitelist is the only seal of quality that German players should trust.

Platforms like Polymarket or Kalshi, which declare themselves as “commodity futures trading” and not gambling in the US, would most likely be classified as gambling in Germany. They would therefore be subject to German rules. These include, among other things, a stake limit of 1 euro per spin on slot machines and a monthly deposit limit of 1,000 euros via the central monitoring system LUGAS. These protective measures are intended to shield young and risk-taking players from excessive losses. Therefore, I see the danger that prediction markets will ultimately be classified as what they are: gambling. They will also have to be regulated as such in Germany. The problem of “insider trading” as it occurs on these platforms in the US would be a massive violation of gambling regulations in Germany anyway. The German system aims to prevent manipulation and unfair advantages to ensure equal opportunities. Prediction markets that allow profits through insider knowledge fundamentally contradict the spirit and letter of the GlüStV 2021. Therefore, I can only strongly warn against viewing these as serious investments. It is a game where you can lose a lot.

What it means for GGL-licensed casinos

Developments in the US clearly show how important strict regulation is for player protection. For GGL-licensed casinos in Germany, this confirms the chosen path. The GlüStV 2021, with its clear guidelines on player protection, deposit limits, and the central LUGAS register, provides a framework designed to prevent problematic excesses like those seen in prediction markets. Operators of online casinos in Germany are obliged to actively pursue problem gambling prevention and identify risk groups. Marketing and advertising are also subject to strict rules to avoid trivializing gambling and to protect young people in particular. The approach in the US, where prediction markets circumvent gambling regulation by classifying themselves as "commodity evaluation," is a negative example. It underscores the need for clear differentiation and consistent enforcement of gambling laws. The GGL must remain vigilant to prevent similar "grey zone" offerings from gaining a foothold in Germany. This should not happen, as the consequences for players would be immense.

“Whether this is gambling or investing, to me the answer is ‘Yes.’ Because it's both.” – Jason Trost, Founder of Smarkets

Polymarket and Kalshi do not operate in the UK because they would be classified as gambling there. For example, there are also no platform restrictions by user age. However, for Germany, this is a very clear case. This also includes advertising with influencers without risk warnings.