New Survey Raising Red Flag Over Gen Z Views on Gambling

A new survey from Betterment is causing waves among responsible gambling advocates.

According to the results released by the group, 26% of Gen Z respondents said they treat gambling as a legitimate investment strategy. The report also found that 60% of them get most of their financial information from social media, where sportsbooks and prediction markets focus their advertising.

The results show that more young bettors are blurring the lines between gambling and investing, increasing the dangers of problem gambling.

Blame Points to Prediction Markets 

The study is bad news for the prediction industry, which has been fighting for its existence in the U.S. court system. Operators originally pushed back against problem gambling protocols, but that has changed over the last few months. However, results from the Betterment survey show the damage may already be done.

Unlike sportsbooks, prediction markets closely resemble traditional stock market investments. Several prominent exchanges like Robinhood and Crypto.com offer both, further blurring the lines between betting and investing. 

Most prediction markets focus their advertising on social media platforms, where many Gen Z investors get their financial news. These ads show up while users scroll for the latest news, making it easy to make a transaction quickly when they find a tip they like. There aren’t many restrictions around how these operators can advertise, giving them far more freedom than the country’s regulated gambling markets. 

Gen Z Has Access to Prediction Markets Earlier

The majority of US gambling markets set the minimum age at 21 for sports betting and casino games. A big reason is the hope that this will keep online betting out of high schools, giving teens more time to mature before getting started. By verifying each player's age and identity, it creates a significant barrier to deter underage bettors.

With a few exceptions, most prediction market platforms set their minimum age at 18. As a result, players can experience this gambling-like experience years before they can legally bet using online casinos or sportsbooks.

CFTC Rhetoric Isn’t Helping

Currently, the Commodity Futures Trading Commission has sole authority to regulate the prediction market industry. While most states oppose this and have challenged it in court, the federal regulator works hard to defend it.

In several lawsuits the CFTC has filed to defend the industry, the regulator has argued that prediction market transactions are a form of swaps, not gambling. It cites the Commodity Exchange Act to make that distinction and argues it allows the CFTC to preempt state laws regarding the industry.

By attempting to draw a solid line between gambling and investing, the regulator may be misleading young investors into letting their guard down when using the platform. If so, it could be setting the US up for another massive spike in problem gambling.