In a recent interview on the podcast program, The Standard (watch here), Kindbridge CEO Daniel Umfleet discussed how the U.S. health system was not ready for the legalization and proliferation of online sports betting. Consequently, the nation is now in the throughs of a digitized problem gambling crisis, with young adults bearing the brunt of damage. To prevent another crisis of its kind, public health officials and other stakeholders are carefully monitoring the growth of related digital products, with prediction markets currently being held under the microscope.
The unprecedented use of prediction markets stems from their recent explosion into a multibillion-dollar, mainstream asset class used to trade on the outcomes of events related to geopolitics, corporate earnings, elections, sports, and much more. This rapid expansion has sparked massive legal and regulatory battles, high-profile insider trading controversies, and intense debates over their societal impact. Like with online sports betting, much discussion revolves around the impact prediction markets are having on young adult males. While valid, it’s perhaps more important to shift a keen eye towards youth. The teenage gambling problem in the United States is well-documented (view details here), with the aforementioned lack of health system readiness being to credit for allowing the issue to propagate amongst adolescents. Will the nation let this happen with the most vulnerable of populations when it comes to prediction markets too? Let’s hope not.
Intervention for youth / teenager involvement with prediction markets begins with initial awareness about what may draw them into participation, subverting age restrictions with the same cunning that has allowed them to bypass those related to online casino gaming and sports betting apps (see below). Below is a summary of what may make prediction markets more alluring and amiable to youth than typical online gambling. In recognizing what these are, parents, guardians, educators, and teenagers themselves will become more mindful of mental health risks (view consequences here) related to involvement at an early age.
How Under-18 Youth May Access Prediction Markets
- Through an older sibling or relatives account
- Through an older peer’s account
- By using a parent or guardian’s credentials (ID and cc) to set-up an account on their smartphones
- By using an unregulated offshore site that does not have adequate ID verification and guardrails
Features of Prediction Markets that Teens, Parents, Guardians, and Educators Need to be Aware of to Take Preventative Action
Lower Overall Age Requirement
The legal minimum age to bet on sports with regulated sportsbooks averages at 21. Some jurisdictions, such as Washington D.C., Kentucky, and Wyoming permit 18-year-olds to place bets, but the majority of U.S. states and major platforms require participants to be 21.
Prediction markets, on the other hand, which are federally regulated by the Commodity Futures Trading Commission (CFTC) instead of independent U.S. states (such as with gambling) allow U.S. residents registration from the day they turn 18 years of age.
The lower age requirement is potentially problematic when referencing other activities that foster an environment for addictive behavior among vulnerable youth. For instance, research shows that a lower Minimum Legal Drinking Age (MLDA) correlates with an earlier onset of drinking, higher overall intoxication rates, and more frequent binge drinking among young people. While more research is recommended, evidence also suggests (view here and here) that regions with lower minimum gambling ages (e.g., 18) may experience higher rates of youth participation and problem gambling.
Logically, lower age requirements may encourage early participation in a regulated activity by increasing physical availability and fundamentally altering social dynamics. When an activity is legally accessible at 18 instead of 21, it becomes integrated into high school environments, normalizing consumption while removing regulatory oversight. There are approximately 3.7 to 4.0 million high school seniors in the United States. The Education Data Initiative reports that among senior high school students, the vast majority – about 70% to 75% – turn 18 during their senior year. This translates to roughly 2.6 million to 3.0 million 18-year-old high school students who are theoretically able to legally engage in prediction markets while on school premises and at various social gatherings where they can influence the behaviors of younger peers.
Less of a Learning Curve?
Prediction markets can feel easier for youth to understand because they use a transparent “YES/NO” pricing system that directly reflects probability. While traditional sportsbooks use complex, house-manipulated moneylines, prediction markets function similarly to stock exchanges where prices move in real-time based on supply, demand, and collective crowd wisdom. The latter are taught in high school environments in financial literacy courses and introductory AP (Advanced Placement) Microeconomics or Macroeconomics as electives for college-bound students.
What’s easier for a low-attention span teen to digest – making a YES/NO prediction for the NY Knicks to beat the Cleveland Cavaliers, or trying to decipher what it means when the Knicks have a -208 moneyline and a -5.0 (priced at -113) spread against the Cavs?
Lower Buy-In
The low buy-in associated with prediction markets may be more appealing to adolescents who may be restricted to an allowance or earnings from a part-time job at the mall. Users can often start trading with nominal investments of just $1. Meanwhile, the minimum deposit required for regulated online sports betting platforms in the United States is five-times greater for almost all supported payment methods.
Smaller Gender Divide?
Young adult males are the focus of the sports betting crisis in America, which by default makes male adolescents a target for prevention. While male youth most certainly should receive attention, it’s important for female adolescents to be included in early education about the potential harms associated with prediction markets with equal fervor.
Prediction markets are rapidly expanding their demographic, with women increasingly participating. The Wall Street Journal reports that platforms are targeting female users through culturally relevant bets (celebrity pop culture, etc.), influencer marketing, and lifestyle partnerships, resulting in a surge of female engagement across the industry. A wide body of research verifies that female adolescent consumer behavior is highly influenced by social media personas that they follow and subscribe to. Recognizing all of this, parents, guardians, school counselors and educators can develop early intervention education content tailored towards adolescent females in addition to males.
Details for how to create a prediction market youth awareness program can mirror that of gambling programs, which can be accessed here.
Kindbridge Behavioral Health is uniquely qualified to help treat youth who are struggling with gambling related behavior issues. We offer one-on-one and family counseling online and by-phone. Teenagers will be empowered with the tools and skills needed to abstain from prediction market participation and to manage peer pressure to engage in underage involvement. Insurance and direct billing accepted.
Additionally, we work with educational institutions and various organizations in building programs to educate youth on gambling related behavior issues, should a given reader be a stakeholder in such an institution. The nation has the opportunity to get ahead of another potential crisis by pulling together to grow awareness about the potential harms of prediction markets for vulnerable youth, and to keep them from underage engagement. Reach out to ask about building a youth awareness program by contacting us directly.
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