Betting has become a national pastime. Each sports-related show includes a segment touting best bets. ESPN even offers a show dedicated to sports betting. All televised sporting events feature advertising by FanDuel, Fanatics Sportsbook, Draft Kings, Caesars, or other Sportsbooks. Most NFL teams sponsor a betting site.
But now there is a new game in town, predictive markets. Individuals bet on binary (yes or no) predictions, that can range from “Will Trump win the Presidency?” to “Will Gobble be the turkey pardoned in the annual Thanksgiving Presidential pardon.” Bets can include words Trump uses in a speech, “Will he use the word stuffing?” to “Will a certain leader wear a suit?” “Will ‘X’ win Best Actor in the Academy awards?”.
Predictive market bets are based on politics, culture, and sports. But, by far most bets are sports bets.
Online sports betting was made possible by two Supreme Court decisions in 2018. The Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) and allowed each state to enforce its own sports betting laws. At the same time, the Supreme Court ruled in favor of a New Jersey law allowing sports gambling. To date, almost 40 states and the District of Columbia have legalized some form of sports betting. But companies that are in the predictions market can also include sports gambling, allowing those whose states do not allow gambling to gamble using sites such as Kalshi and Polymarket.
In 2024, it was estimated that $150 billion was gambled on sports. An estimated 50 million people bet $16 billion on last year’s Super Bowl. Fifty-five percent of adults engaged in some form of gambling in 2024. In the predictive markets arena, Polymarket has almost 500,000 online active users and Kalshi has almost 2 million.
At present, only one Sportsbook has reported a profit, but this is believed to be due to the cost of customer acquisition. Online betting is more flexible and easier to access than illegal bookies. The revenue potential is beyond prediction.
To be successful, the predictive and sports betting markets must set the arbitrage precisely. Sites make their money by booking the losses and charging a percentage fee from the winnings.
While predictive markets are binary bets (yes or no), sports bets fall into several categories. The simplest is win/lose (betting on which team will win). Another well-known bet is the point spread (for example, the Patriots were 4½ point favorites in the NFL playoffs).
A popular binary bet is called over/under. Gamblers bet if the total number of points will exceed or go under a number set by the Sportsbook (e.g., if 30 points is the over/under for a game, gamblers can bet that the total points from both teams will be over 30—called over or less than 30—called under)
Some bettors choose is a future bet, for example, betting on which team will win the Super Bowl early in the season.
The most unusual sports bets are prop bets. They are limited only by the imagination. For example, you can bet the color of the Gatorade in the Superbowl, the number of receptions for a particular receiver, the total number of yards gained by a team, etc. Prop bets can be anything associated with the game.
For seasoned and frugal gamblers, parlay bets combine two or more wagers into a single bet. Parlays are popular because there are bigger payouts while risking less money. The number of legs (bets) in a parlay and the odds attached to each of those legs determine the winnings.
Predictive markets bet on anything that can include politics, sports and culture. For example: “Will the United States confirm that aliens exist?”. An enormous concern is with insider trading. It is virtually impossible to determine if a bet was due to insider trading (for example, one person made a considerable amount of money betting that we would capture the president of Venezuela long before we did it).
What makes online betting unique is both the breadth of possible bets and online access. You can even bet on a game while it is happening. Online gambling websites are capable of recalculating odds in real time.
But the question that always follows is, what is the risk of this betting?
Short answer: it is a problem. A recent study found a correlation between easy access to sports and predictive market gambling and significant declines in credit scores, increases in bankruptcies, debts, and missed loan payments. As predictive market betting grows, this will only increase.
Many experts are concerned about the rise in gambling addiction, especially among young people. In 2024, an estimated 2.5 million U.S. adults suffered from severe gambling addiction, with an additional 5 to 8 million experiencing mild-to-moderate, or “problem” gambling behaviors. Roughly 10% of men aged 18–30 exhibit signs of problem gambling.
One thing that we do know is that the country is not prepared for a gambling addiction crisis. NIH (National Institutes of Health) has agencies dedicated to alcohol and drug use, but none for problem gambling, and there are no federal regulations for sports betting advertising (e.g., tobacco).
So, for now, we have to watch and wonder. Is this merely a form of entertainment or a potential looming crisis?
Angela Rieck, a Caroline County native, received her PhD in Mathematical Psychology from the University of Maryland and worked as a scientist at Bell Labs, and other high-tech companies in New Jersey before retiring as a corporate executive. Angela and her dogs divide their time between St Michaels and Key West Florida. Her daughter lives and works in New York City.
Elizabeth Fisher says
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