The Next Opioid Crisis
Audio Recording by George Hahn
Today you can “trade” on the outcome of thousands of future events, from the Fed decision next month to the Grammy Awards in February. Without leaving the house, you can wager on Taylor Swift’s wedding or Time magazine’s person of the year. One of Kalshi’s MIT-trained founders says their platform is “like the stock market, but instead of buying and selling companies, you’re buying ‘yes’ or ‘no’ on whether something is going to happen.” The Gen Z billionaire at the helm of Polymarket touts his exchange as a “global truth machine.” These platforms do harness the “wisdom of the crowds,” but, to be clear, this is gambling rebranded as “prediction markets.”
Casino Economy
America was built on risk and speculation. The country could fairly be described as a “casino economy,” however, and prediction markets — alongside crypto, options trading, and sports betting — are taking it to new levels.
Weekly volumes for Kalshi and Polymarket breached the $2 billion mark for the first time in October, surpassing the peak reached during the last presidential election. Then came the New York City mayoral election. As residents headed to the polls, they saw billboards flashing the odds: MAMDANI (94%) — CUOMO (6%). With the race over, we can now bet on the likelihood of city buses becoming free before 2027 or rents being frozen. Leveraging its popularity, Polymarket is in talks to raise money at a valuation of $15 billion. Kalshi is attracting offers from VC investors valuing it at $10 billion.
Amid the mania, these platforms are moving deeper into the mainstream:
- Robinhood, the stock trading app, is expanding in prediction markets with Kalshi as a partner, declaring it’s the “fastest-growing business” it has ever seen.
- Google struck a deal to integrate odds from Kalshi and Polymarket into its search results so you can ask questions about future market trends.
- The owner of the New York Stock Exchange agreed to invest up to $2 billion in Polymarket, which is preparing to return to the U.S. after being kicked offshore.
- FanDuel is joining with derivatives exchange CME to launch a new platform, allowing it to bypass restrictions in states where gambling is illegal.
Sports leagues are also getting in on the action. In October the National Hockey League signed agreements in the U.S. with Polymarket and Kalshi, naming both official partners. Kalshi’s CEO said it’s a clear sign “prediction markets are here to stay.”
Doubling Down
Many people seem to have forgotten about Alex Kearns. I haven’t. I remember staring at his photo — a 20-year-old with a big smile and a fascination with the markets — and seeing my oldest son. In 2020, after receiving incorrect messages saying he owed the online trading platform Robinhood $730,000 (he owed nothing), the University of Nebraska student spent much of the night desperately trying to get in touch with the company. The next morning he left a note for his family saying he didn’t want to burden them with this debt. Then he took his own life.
That should have been a wake-up call. Instead, America has doubled down.
The operators have drawn legal challenges from state authorities. The Massachusetts attorney general sued Kalshi, arguing that the company “disguises” sports betting as “event contracts,” which are regulated by the federal Commodity Futures Trading Commission. In states where sports betting is off-limits, customers are turning to prediction markets to “invest” in sports. Sportsbooks mostly restrict access to people under 21. Prediction markets are available to anyone 18 and up.
Don’t count on the Trump administration to intervene. A week before Trump returned to the White House, Kalshi named the president’s eldest son, Donald Trump Jr., as a strategic adviser. Days later, the company publicized its entry into sports betting. Now Trump’s social media company is launching Truth Predict, allowing users to bet on events ranging from elections to inflation-rate changes.
Dopamine in a Hoodie
America’s pastime isn’t baseball but gambling.
We spend 10x more on gambling than music, Netflix, and cinema combined. Twenty million Americans struggle with or are at high risk of developing an online gambling problem. Young men are especially vulnerable. Men are more susceptible to gambling than women, just as they’re more likely to engage in illicit drug use, drink excessively, or die of opioid-related overdoses. Gambling has the highest suicide rate of all addictions. When you have a meth addiction, people notice — the sores, tooth loss. When you’re gambling, and you’re in deep, you lose your kids’ college fund or mortgage the house, but your struggles remain hidden.
The Supreme Court’s decision in 2018 to overturn a federal ban on sports betting has fueled the nation’s compulsion. Before the ruling, Americans legally wagered less than $5 billion on sports annually. Last year, with sports gambling legal in more than three dozen states and D.C., those bets ballooned to $160 billion. The mediums shapeshift to distract, but they are gambling. Some of the costumes:
- Fantasy sports are gambling in drag.
- Robinhood is gambling dressed as investing.
- Crypto? Gambling with a marketing department.
Normalizing Risk Porn
We know what happens when you give states the green light: Bankruptcies soar 30%. Americans grasp the scale of the crisis. More than 40% of adults see legalized sports betting as a “bad thing for society.” Still, the dopamine cocktail is too much to resist.
All-in
Sports leagues aren’t going to lose their zeal for gambling, despite back-to-back betting scandals in the NBA and MLB that raised concerns about the integrity of the games. Spoiler alert: The leagues will distance themselves from the alleged conspirators — but not from the gambling industry. Direct sponsorship deals between legal sportsbooks and top leagues may be worth more than $1 billion annually. A number of teams have agreed to put physical betting shops inside their stadiums and arenas.
For a moment, it appeared the NFL was concerned. In June the league announced a partnership with the International Center for Responsible Gaming to support research into gambling among college athletes and students. But this is a league that aligned with Caesars, FanDuel, and DraftKings and hosted its first Superbowl in Vegas last year. Just as we’ve made a conscious decision to transfer wealth from young to old and poor to rich, we’ve accepted a system in which money flows from fans to leagues.
Industry Checks
There are solutions, if we have the courage to implement them. We could do more to educate consumers about the dangers and impose tougher regulations, including age restrictions. Limiting annual losses, restricting advertising, and setting up firewalls between research into gambling’s impact and the industry itself are all on the table. Paul Tonko and Richard Blumenthal, Democratic lawmakers, have proposed measures that would be a good start. However, it’s an uphill battle. The most profitable firms in history are squatting in a building (our economy) that has no scaffolding on its instincts … any sort of dopa regulation trails institutional production.
Innovation vs. Exploitation
Prediction marketplaces say they aren’t on the other side of the trade — users are trading with their peers, not against the “house.” As traders buy and sell, prices fluctuate to reflect the “collective sentiment and knowledge of market participants.”
But whether you’re putting money on the Mets or Mamdani, this is gambling, and whatever you want to call it, users can develop an addiction. I am not immune. I find these markets fascinating — I tried to bet on the presidential race but couldn’t, as I’m an American citizen living in the U.K. My documented worker status saved me from myself: I was convinced Kamala Harris had a greater-than-37% likelihood of capturing the White House. And there is a solid argument we shouldn’t infantilize grown-ups — and we should let them spend their hard-earned money as they see fit.
In the U.S. we’ve monetized healthcare, the White House, and the pardon process. However, these are dwarfed by the opportunity to monetize the less developed prefrontal cortex of a young man. Once Polymarket starts expanding in the U.S., more Americans will be swept up by the wave. Not because everyone will be in Vegas, but because Vegas will be in everyone. If policymakers aren’t motivated by the threat to Americans’ finances and mental health, they should worry about the risk of foreign governments using the platforms to influence elections and public perception.
The Right Risks
The most profitable companies all do the same thing: They tap into our flaws and monetize them, then pretend it’s innovation rather than exploitation. We need to have a wider debate about the society we want. Rather than celebrating gambling, we should embrace a different kind of risk: asking someone out, approaching a stranger, investing in relationships with friends and potential mates. This is what I ask myself when I mentor young men: How can I increase their risk appetite for the real world? How do we create a societal movement to convince people to bet on each other, not platforms? Will there be thoughtful regulation?
I don’t know, but I’m certain we’ll be able to bet on it.
Life is so rich,
P.S. I’ll reveal my Predictions for 2026 on December 4th at a free live event hosted by Section. Sign up here.
16 Comments
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What drives this interest in gambling?
My take: Americans no longer believe in the American dream.
In Sweden where I grew up in the 70s and 80s, winning the lottery was the accepted way of becoming a millionaire. With the highest income taxes in the world, people believed that no Swede could become a millionaire without cheating.
So we looked with envy across the pond to my other home, the USA, where taxes were low enough to motivate anybody to work hard and build a fortune.
Today, the benchmark is Elon’s trillion dollar bonus.
What happens to a culture like America when people working three jobs still can’t make ends meet?
… and don’t forget our $5+ trillion/year Casino Healthcare – where the health of our nation is the biggest gamble of all.
Great article.
The tradition media are the big winners in the gambling sector because they spend big on advertising and that generates heaps of revenue.
Many traditional media companies could not survive with gambling advertising. It is the Rupert Murdoch’s in this world who are making sure that no serious legislation is ever passed that would reduce the amount of gambling advertising being allowed.
Spot on as usual. I’m 76 years old and have seen gambling activity morph from back room bookies to mega million corporations. I have also seen the destruction of many young men’s lives. It is an addiction, pure and simple and I will never forgive the Supreme Court for allowing it to spread unchecked. Early civilization invented laws partially to protect us from our own destructive human nature. It appears that government has opted out of trying to protect us from ourselves.
Three big things are ruining America – legalized marijuana, legalized gambling and social media. While I understand there are counterargumentsn to this statement (I can find old friends, etc.) I simply think it is a case of the bad outweighs the good in all of these matters. Once again Scott’s writings are exceptional.
Legalized marijuana is more destructive than legal alcohol?
It’s pathetic, but if you see the decline, ROT, in the USA like I do, why not just end it sooner?
I agree strongly with Prof G & he says it much better than I can. It is a dangerous trend. You don’t have to go to Vegas (business is down nearly 20% annually), Atlantic City or get a bookie. The ease & convenience is there. It is heavily promoted in and legitimized in the highest viewed events on “TV”. Recent gambling scandals shows organized crime is still alive and well and involved. Leagues have conducted “internal investigations” in the past with no foul play found! What?! Where is the FBI, The IRS, the investigating journalists? It was off the “front page news” in days. I stopped watching NFL & NBA. The unknown outcome excitement of a live sports event was what used to make me watch. Some players, coaches and refs have taken away the authenticity and legitimacy. I am not a gambler because i hate to lose money but there was fear put into me by my father. He was a Sr Special Agent for the Treasury Department (IRS) and conducted many undercover investigations with organized crime including the case that became the basis for the book & movie, Casino. He was a sports bookie and secured information on illegal gambling activities related to the skim (from casinos) to tax evasion, etc. He swore there would never be a professional sports team based in Las Vegas. Now as Prof G mentioned, Las Vegas hosted THE SUPERBOWL, the NBA development league is based there and more. Fuggettaboutit
Love the article and love the irony of the postscript
>> I’ll reveal my Predictions for 2026 on December 4th at a free live event hosted by Section.
I assume I’ll be able to bet on all of Scott’s predictions 2 minutes after he posts.
Steve, I thought the same thing. I normally do not comment on stuff, but the irony was so blatant that I took the extra step to see if someone else had already thrown the flag. Professor G is pretty sharp; I am surprised he did not address the irony of him offering “predictions” in his article (aka gambling advice). Maybe the postscript was added automatically with his signature block and everything after “Life is so Rich.” But if you happen to get an advance copy of the predictions, please send them my way (asking for a friend of course)! I’m sure Scott’s positions in those stocks he names will well be in place before the big reveal!
I recall a story on NPR several years ago about a social online casino game (no actual cash winnings, just golden tokens online of some sort), and they profiled a woman who was so addicted to it that that she emptied all of their savings and retirement accounts and forged her husband’s name on a second mortgage. Again, she was spending real money on a social casino that did not disburse any cash winnings, and she literally bankrupted her family. The kicker is that Facebook provided leads to the online company of people (victims) who they thought were likely to be become hooked on the online gambling platform.
For me, it’s less about gambling intrinsically than it is the ease with which one can place a bet. Way back when, you needed a bookie to bet on sports, it was cash only and the whole enterprise was clearly shady as well as illegal. Now the convenience of the web, multiple sites to gamble with, all on credit and sponsored by your friendly neighborhood sports leagues and networks lend an air of legitimacy to something that can easily become problematic to those with little self control. I agree w Scott that loss maximums, stricter age limits and limited advertising can help but it seems like overall, the genie is out of the bottle.
I often find myself agreeing with Scott on so many points because he is incredibly clear in his thesis and arguments. On this one, I struggle, largely because I’m not exactly what point he is trying to make here. Gambling, whether legal or illegal, still yields the same potential risks – and unfortunately, the same types of outcomes. China, for example, has extremely limited ‘legalized’ gambling entities (state run lotteries, Macau), yet seems to have a much higher prevalence of problem gambling/addiction (estimated to upwards of 4% of the adult population, as compared to about 1% of the US adult population). Look, neither of those numbers are good – but I’m not really sure what Scott is trying to say here. Are we saying that legalized gambling in more and more forms is causing a greater propensity for ‘problem gambling’? If that’s the case, then why are we comparing it to the “Opiod” epidemic (last time I checked, Opiods were illegal, unless obtained through a medical prescription). Is Scott suggesting/recommending that we provide a greater number of disclaimers and warning signs around the dangers of gambling/the risks of gambling? That the provisioners/purevyors of gambling opportunities (casinos, FanDuel, Polymarket, the NHL, etc.) both provide safety disclaimers and specific treatment solutions for addiction? Yes, prediction markets are gambling. That point is clear. But so what exactly? What’s the call to action here, if any?
At end of the day, drug abuse and gambling are problems for people who lack common sense. Neither of these behaivors are hard to recognize as dangerous and unnecessary.
I agree, the fascination with gambling is troubling.
Yesterday I lost $2 on my low-level, high-risk, and extremely high-reward investment. I bought a lottery ticket. I cannot afford to spend more on gambling. But when I occasionally buy a lottery ticket, I see people spending ten times as much or more. I doubt that all of them can afford to lose that money. Still, they do. Ergo, my question to Professor G.: What is wrong with us, and how do we fix it? I know the answer, and Professor G. can do a lot to fix it.
I find the idea fascinating despite being apparently immune to the appeal of gambling–I feel only the anxiety about losing and get little pleasure in winning. I’m not the slightest bit curious whether it’s heads or tail. But the insanity of legalizing gambling was evident before it happened. There nothing surprising in its corrosive effect, which has been understood for as long as civilization has existed. It was bad enough when it was illegal, in fact, it’s badness was a cultural cliche. How many movies and books have been written about “degenerate” gamblers? Yet we deliberately legalized it, first to raise funds through lotteries, then we went all in on a hundred variations. We are doing the same thing with pot. It’s not harmless and no serious person ever thought it was. Does anyone smile benignly when their kid becomes a stoner? We deliberately turned the internet loose on ourselves and our children. And did the same with gaming, and now AI. At some point, it’s time to stop treating these as individual problems and recognize that businesses of technology fueled manipulation of human emotion need to be controlled. Everyone knows it, but everyone has a stake in not doing it. We’re watching these neurotransmitter manipulators destroy culture right before our eyes, yet we’re doing nothing.