America’s online gambling problem is getting worse, and the prediction market boom could expose vulnerable gamblers to many of the same risks as sports betting, University of Washington researcher Uttara Ananthakrishnan told Benzinga.

"For people with problem gambling issues both are equally risky," Ananthakrishnan said, comparing prediction markets with sports-betting apps.

Online Betting Removes the Friction

Ananthakrishnan said smartphones have stripped away barriers to gambling, allowing users to bet instantly and repeatedly without leaving home.

Asked about former U.S. Surgeon General Jerome Adams’ comparison between sports betting and the opioid epidemic, she agreed.

"At least for getting opioids you have to leave your house and find someone," she said. "Here you’re just literally sitting with your phone on, with your credit card on."

She said microbetting, or wagering on individual plays as a game unfolds, makes that risk more intense.

"Microbetting is literally like a slot machine."

Are the Tax Dollars Worth the Cost?

Ananthakrishnan said research examining the impact of legalized online sports betting has found higher bankruptcy and crime, deteriorating credit and other social harms.

She also questioned whether states are earning enough to justify those costs.

"They are going to be spending a lot of money cleaning up all these downstream effects," she said.

Kalshi, meanwhile, has fought states in court to keep their gambling laws from applying to its contracts, arguing that federal regulation by the CFTC takes precedence.

New Jersey’s Office of Legislative Services estimates a proposed 9% surtax on prediction-market operators could bring in $10.3 million to $15.3 million in fiscal 2027.

AI Can Make It Harder to Quit

The New York Times recently reported that DraftKings Inc. (NASDAQ:DKNG) built a machine-learning model to identify customers likely to gamble and lose more after receiving promotions. DraftKings denied improperly targeting customers based on losses.

The Times also reported, citing four former employees, that DraftKings stalled or squashed efforts to use similar technology to predict which customers might develop a gambling problem.

Ananthakrishnan said algorithms can identify when a bettor is ready to stop and put another incentive in front of them.

"It’s not even extra money, it’s one of those credits to make sure that you keep on playing," she said.

She also pointed to gambling-app "dark patterns," including instant deposits, harder withdrawals and VIP progress bars, while platforms collect data on "every swipe, every tap" and even how long users hesitate.

Prediction Markets Blur Gambling and Investing

At Robinhood Markets Inc. (NASDAQ:HOOD), event contracts sit alongside stocks and crypto and generated $156 million in second-quarter revenue, more than its $100 million in crypto revenue.

"A lot of people think about sports gambling as an investment," Ananthakrishnan said.

That raises another question: who protects problem gamblers? Kalshi operates under the Commodity Futures Trading Commission rather than state gambling regulators.

She said whoever regulates prediction markets needs to be equipped to deal with problem gambling and addiction.

"If the CFTC is not equipped to do that, then what’s the point of regulating it?"

Benzinga reached out to Kalshi for comment but did not immediately receive a response.

Kalshi and Benzinga have an existing data collaboration agreement.

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