As prediction markets continue to evolve and penetrate new states, a new study has revealed that operators hold a key long-term advantage: player age. This indicates that perhaps prediciton markets could become even more popular than traditional sportsbooks.
The report – undertaken by Truist Securities analyst Barry Jonas – describes that contract-based events trading markets are almost exclusively used by those under the age of 50.
In an investor note, Jonas outlined that only 7% of users fall into the 49+ age bracket.
While these findings do not guarantee impermeable longevity for prediction platforms, they do suggest that a generation of users will age alongside the growth of sports, politics and culture derivatives markets.
Engagement matches legal gambling age
The study uncovered that only 5% of users are 21 or younger, followed by a steep engagement increase for those aged 22 to 29. Specifically, this group of players accounts for 22% of all users.
Figures continue to rise when evaluating players in the 30 to 39 bracket, contributing 36% of industry-wide activity in the US.
Meanwhile, those in their 40s represent around 31% of the total user base for prediction platforms.
Education metrics accumulated by Truist Securities found that 19% of all users hold a college degree. When evaluating graduate degrees, that figure rises to 26%.
Income was another pertinent point of interest – although just 3% of players earn more than $250,000 yearly, 36% generate an annual salary ranging between $50,000 to $100,000.
The analysis also shows that 30% of players take home $100,000 to $150,000 each year.
Unregulated markets doing the heavy lifting for operators
Sports betting is currently legal across most of the US, with states free to create local frameworks for regulated sportsbooks as well as anti-sports wagering measures.
However, because prediction platforms are regulated by the Commodity Futures Trading Commission (CFTC), they are not held to the same restrictions constraining sportsbooks from entering states opposed to traditional gambling.
Jonas' data confirms that there is tangible hunger for sports betting-adjacent entertainment in states without sportsbooks. For example, users in California – where sports gambling remains illegal – formed 16% of prediction platform interaction during the study.
Sports markets stand as the most popular vertical, with 76% of players buying 'shares' on specific in-game outcomes.
Popular national sports leagues eat a major portion of player investment. In his team's analysis, Jonas verified that 83% of traders explored NFL markets, 81% backed NBA outcomes and around 50% bought NCAA football and basketball options.
Up to 59% of users entered into baseball markets, beating the 47% tied to ice hockey interactivity.
Though notably intense usage is seen across sports, figures remain strong for economic (53%), politics (47%) and corporate (44%) outcomes. Weather gains similarly noteworthy traffic, with 39% of users reportedly participating in markets based on the current climate.
Of users polled, 21% said they engage with prediction platforms daily. Precisely 29% partake in prediction markets multiple times per week, 19% use prediction services weekly and 8% enter into contracts once monthly.
Wager sizing virtually equal across the board
Wagers valued between $51 to $100 were preferred by 26% of users during the analysis period.
Engagement remained consistent across higher thresholds; 25% favored $101 to $250 stakes, while 22% purchased contracts worth up to $999.
Just 5% of study participants wagered over $1,000 on single events. Perhaps surprisingly, only 21% triggered contracts of $50 or less.
So, although a younger demographic dominates the holistic market, there is no clear leader when it comes to stake weighting.
Kalshi crowned market leader
Kalshi, led by former ballerina Luana Lopes Lara and business partner Tarek Mansour, accounted for 58% of user activity. The operator has become embroiled in various legal disputes over the last several months yet, according to Jonas' numbers, its performance is yet to suffer a tangible impact.
Competitor Polymarket (34%) struggled to compete with fledgling sports trading markets offered by traditional gambling stalwarts as DraftKings Predictions (46%) and FanDuel Predicts (44%) outperformed the New York-headquartered derivatives organization.
Respondents also engaged with Robinhood (34%) and Coinbase (23%).
Both DraftKings and FanDuel benefitted from advertising their predictions products to existing online sportsbook users; 68% said they had placed sports wagers with DraftKings, while 60% described previously using FanDuel Sportsbook.
Looking beyond those industry titans, Jonas' study brought to light appreciable overlap with BetMGM (38%), Caesars (22%) and Bovada (11%). Illegal, unlicensed sportsbooks captured 8% of users asked in the Truist Securities report.
Interestingly, Jonas says that 18% of users view prediction markets as "speculative gambling," while 20% consider these platforms as tools for legitimate investment opportunities.
Study "shows promise" in legal prediction market
Jonas refrained from sharing a decisive opinion as to the morality or legality of prediction markets. However, the study author believes that prediction platforms should be considered legitimate sources of entertainment by the wider industry.
In his conclusion, Jonas explained that there is no debating the growing popularity of prediction market operators: "What is clear is that for the most part PM users enjoy and frequently trade on these platforms."
Importantly, "most users believe they are ahead," said Jonas – pointing to a possible psychological advantage at the feet of operators.
With court battles ongoing and ethical questions surrounding the likes of Kalshi and Polymarket – particularly as startup competitors such as Fanatics fight vehemently against controversial political and/or war options – Jonas was also keen to purposefully describe the importance of the contemporary industry for all operators:
"Bottom line, while the courts may very well change the calculus here at some point, we think the survey validates why OSB operators are focusing on this new market opportunity; and at a bare minimum OSB operators can boost their databases ahead of potential state OSB legalization down the road."
In total, 446 individuals were polled as part of this study, which utilized Survey Monkey's database infrastructure for data collection and storage.
