Why More Young Adults Are Betting on Prediction Markets Instead of Building Wealth
/By Shelley Murasko
For many years, gambling was largely confined to casinos, horse racing, and sports betting. It took some effort to participate - you had to travel to a casino or racetrack, and age restrictions created another barrier.
I experienced this firsthand when my father taught me to play blackjack on a riverboat casino along the Mississippi River in Iowa. He showed me not only the excitement of the game and the odds of reaching 21, but also an important lesson: gambling should be viewed as entertainment, not as a way to make money.
Before we walked in, we decided how much we were willing to spend, and once that money was gone, we stopped playing.
Today, however, a new form of wagering has exploded in popularity: prediction markets. Unlike traditional gambling, prediction markets allow people to buy and sell contracts based on whether they believe a future event will occur.
While they can serve legitimate purposes in forecasting and information gathering, many young adults are increasingly treating them as an investment rather than entertainment.
As a financial planner, I find this trend concerning because it can divert young people away from one of the most powerful wealth-building tools available: long-term investing.
What Are Prediction Markets?
Prediction markets allow participants to buy and sell contracts based on the outcome of virtually any future event. Some examples include:
Will Los Angeles record a daily high temperature above 90°F on a specific date?
Who will win the Republican nomination for Michigan governor?
Will a certain company release a new product before year-end?
Who will win Big Brother in 2028?
Will the Federal Reserve cut interest rates at its next meeting?
Participants buy contracts for a small fee, say $.35, that pay a fixed amount - typically $1 - if their prediction proves correct. The market price reflects the collective estimate of the probability that the event will occur.
These markets have become increasingly accessible through platforms such as Robinhood, which now offers access to certain event contracts, along with specialized prediction market exchanges.
Why Are Young Men Especially Drawn to Them?
Research has shown that young men are significantly more likely than other groups to participate in speculative investing and gambling activities. Studies from analytics firms like Morning Consult note that 71% of core prediction market participants are men under 45. 1. Prediction markets combine several features that make them especially appealing:
They feel more intellectual than casino gambling.
They reward following politics, economics, sports, or current events.
They offer constant opportunities to trade.
Social media frequently highlights large winners while rarely mentioning the many people who lose.
To most participants, prediction markets don't feel like gambling. They feel like investing.
But there is a very important difference.
Investing vs. Predicting
When you invest in a diversified S&P 500 index fund, you become a partial owner of hundreds of America's largest businesses.
Those businesses generate earnings, innovate, hire employees, develop new products, and over time, have often grown in value. Historically, the S&P 500 has returned roughly 10% annually before inflation over long periods, although returns vary considerably from year to year and are never guaranteed.
Prediction markets work differently.
Every dollar won by one participant comes directly from another participant who lost. Before fees, these markets are generally zero-sum: one participant’s gain is another participant’s loss. After accounting for trading fees and platform costs, they become negative-sum for participants as a whole.
That makes prediction markets fundamentally different from investing, where businesses can create new wealth over decades.
Can People Actually Make Money in Prediction Markets?
Certainly. Some highly sophisticated traders do earn profits.
These individuals often have:
Advanced statistical models
Programming skills
Large amounts of historical data
The ability to monitor markets continuously
Strict risk management disciplines
In many ways, they're competing much like professional poker players.
For the average participant, however, the odds are far less favorable.
The market price already reflects the collective views of thousands of participants, including professionals who closely follow the underlying events. Consistently identifying pricing mistakes is extremely difficult.
Many beginners experience a few early wins, become overconfident, increase the size of their wagers, and eventually discover how difficult it is to maintain an edge.
The Opportunity Cost
Perhaps the greatest risk isn't simply losing money.
It's not investing.
Imagine a 22-year-old who regularly commits $250 per month to prediction markets instead of investing.
If that same $250 were invested monthly in a diversified S&P 500 index fund earning a hypothetical average annual return of 10%, it could grow to approximately:
$50,000 after 10 years
$190,000 after 20 years
$1.5 million after 40 years
Of course, future returns will differ from historical averages, but the example illustrates the remarkable power of compounding over time.
Money repeatedly lost - or tied up - in speculative trading doesn't have the opportunity to compound.
Warning Signs Parents and Grandparents May Notice
Prediction market participation often happens entirely online, making it easy to overlook.
Some signs that a young adult may be heavily involved include:
Frequently discussing odds, probabilities, or political forecasting.
Constantly checking event outcomes throughout the day.
Using apps that offer event contracts or prediction markets.
Becoming unusually emotional after news events because of their financial impact.
Increasing deposits into brokerage or betting accounts despite limited savings.
Talking about "having an edge" or believing they've discovered a system that consistently beats the market.
None of these behaviors necessarily indicate a serious problem, but together they may warrant a conversation.
A Better Long-Term Bet
Prediction markets are likely here to stay. They can provide interesting information about how crowds assess uncertain events, and for some participants they may simply be a form of entertainment.
The concern arises when they become a substitute for disciplined investing.
Building wealth has never required correctly predicting tomorrow's weather, next year's election, or the winner of a reality television show.
Instead, it has historically rewarded patience, diversification, regular saving, and allowing time to work in your favor.
If you're talking with a young adult about money, consider emphasizing a simple message:
The most reliable way to become wealthy isn't by predicting the future. It's by owning a small piece of the businesses that help create it.
1. Labiak, Mitchell. “The Vibes Are Young Male Vibes: Why Prediction Markets Attract a Certain Type”, BBC News, May 21st, 2026, Why young men are drawn to prediction markets
Past performance is no guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Investing involves risks. Wealthrise Financial Planning is an investment advisor registered with FINRA. This material is provided for informational and educational purposes only. It should not be considered investment advice or an offer to buy or sell securities.
