SouthernWorldwide.com – Prediction markets, platforms where individuals can bet on the likelihood of future events, are increasingly attracting young men, drawn by the allure of quick financial gains and the excitement of speculative trading.
Thomas Christian Owens, a 29-year-old manufacturing engineer, decided to try his luck with prediction markets early this year, opening an account on Kalshi. After depositing $500, he began placing bets, viewing it as a birthday treat and a way to potentially earn some extra money for himself and his family.
While Owens experienced some initial successes, his trading journey soon led him into financial losses. This experience mirrors a broader trend where young men, like Owens, are drawn to prediction markets for the thrill, the possibility of rapid wealth, and sometimes, a perceived path to financial security.
A recent survey by Navigator Research in April revealed that nearly 40% of men aged 18 to 34 engage with prediction markets. On Kalshi, a prominent U.S. prediction market, a significant portion of its 4 million active users, approximately 3 million, are male. Furthermore, six out of ten of Kalshi’s total users fall within the 18 to 34 age bracket.
These markets have recently come under increased scrutiny due to allegations of insider trading, with several high-profile cases involving men. One notable instance involved a Google employee accused of profiting over $1.2 million on Polymarket by trading on non-public company information.
Another case involved a U.S. special forces soldier who was arrested after allegedly betting on the removal of former Venezuelan leader Nicolás Maduro before the information became public. Former Congressman George Santos is also facing investigation for suspected insider trading activities on Kalshi.
Experts suggest that men’s inclination towards risk-taking might explain their predominant presence in prediction markets. Michael Liersch, a behavioral finance expert and chief planning officer at Edelman Financial Engines, noted that young men often exhibit greater confidence in financial decisions and risk-taking compared to women, partly due to a strong belief in their own judgment.
The Appeal of Prediction Markets
Prediction markets offer users the opportunity to wager on a diverse array of potential outcomes. Trading on these platforms typically involves placing bets on “yes” or “no” propositions, known as event contracts, which are priced between $0 and $1. A correct prediction results in a $1 payout per contract, while an incorrect one leads to a loss of the wagered amount.
The scope of events users can bet on is vast, ranging from governmental confirmations of extraterrestrial life to the winners of major sporting events like the World Cup. Owens, a sports enthusiast, primarily focuses his trades on sports-related events, including bets on his local NBA team, the Oklahoma City Thunder.
Oklahoma City resident Thomas Christian Owens started trading on the prediction market platform Kalshi for the first time this year. Provided by Thomas Christian Owens
Owens experienced a significant win early on with a basketball “combo” bet, where multiple event contracts are combined into a single trade. This particular bet yielded him $456 from a $50 wager, representing a return of over 800%. He also successfully predicted the outcomes of three professional basketball games, turning a $196 investment into nearly $1,700.
Another popular type of wager on prediction markets is “mention markets.” These allow users to bet on whether specific words or phrases will be uttered by public figures, such as politicians or celebrities, during live events.
Steven Zhang, a 20-year-old student at UCLA, was introduced to Polymarket through a social media advertisement. The ad invited users to bet on what President Trump might say during a presidential debate. Intrigued, Zhang and his friends decided to participate, initially investing $20 in a crypto wallet and placing several bets, which they ultimately lost.
Twenty-year-old Steven Zhang trades mostly on Kalshi mention markets, which allow users to bet on whether someone will say a specific word or phrase during an event. Provided by Steven Zhang
Zhang now trades on Kalshi, focusing on highly unpredictable outcomes, such as the specific phrases used by NBA game announcers or developments in the U.S.-Iran conflict. He currently has about $150 in his account, emphasizing that he only invests what he is comfortable losing.
For Zhang, the appeal of prediction markets lies in the inherent uncertainty and the direct consequence of being right or wrong. He finds the dynamic of potential wins and losses to be a core part of the engaging experience.
Experts suggest that a portion of men’s attraction to prediction markets can be attributed to biological differences. Men are generally more inclined to consider speculative investments and exhibit a lower aversion to potential financial losses compared to women.
“They have maybe less of what economists call an endowment effect, which is when they have a certain amount, they don’t care [if they] lose it all as readily as maybe women do,” David Bieri, an associate professor at Virginia Tech, explained to CBS News.
Bieri further noted that successful bets on prediction markets can offer men more than just monetary gains; they can also provide social status and bragging rights. He quipped, “Which young man does not want to be the ‘Wolf of Wall Street’?”
The Risks of Prediction Markets
When Owens initially opened his Kalshi account, his primary goal was to supplement his income and provide financial assistance to his family members who were experiencing financial difficulties.
“I’m not supporting anybody as a dependent right now, but I have a few family members that are really down on their finances at the moment, so trying to help them out, too,” he shared.
Beyond the pursuit of extra income, men may also be drawn to prediction markets as a means of achieving financial security. A recent survey by Northwestern Mutual indicated that 75% of men feel financially behind and view speculative investments, including prediction markets, as a potential way to catch up. This sentiment was shared by 69% of women.
“When people feel behind, sometimes risky choices can look like a shortcut,” John Roberts, chief field officer at Northwestern Mutual, commented to CBS News via email. He added that pervasive news about rising prices and potential Social Security benefit cuts can heighten this sense of pressure.
However, the reality for most prediction market users often deviates from their initial expectations. Following a series of losses, Owens’ account balance recently fell below his initial deposit of $2,500, standing at $1,700. As a precautionary measure, he has since limited his bets to amounts under $100.
“I had almost $4,600 at one point but squandered that, for sure,” Owens stated in a text message.
While a small number of Kalshi users have amassed substantial fortunes, such outcomes are exceptionally rare for the majority. An analysis by The Wall Street Journal found that over 67% of profits on Polymarket were concentrated among just 0.1% of accounts.
A spokesperson for Polymarket declined to directly address CBS News’s questions for this report, instead issuing a statement: “Polymarket is open to eligible adults 18 and older, and we continue to build on our mission to share human-informed knowledge with the world through open, capital-backed markets.”
According to Jordan Bender, managing director of gaming equity research at Citizens, the odds are generally stacked against the average prediction market user. Research conducted by Citizens revealed that the median return on investment for a prediction market user was -8%, indicating an average loss of $8 for every $100 invested.
“People shouldn’t expect to walk into betting of any type and walk away a winner,” Bender advised.
