When I started speaking with students and teachers about gambling, I was struck by how many of the students most interested in sports betting were also the strongest math students. They carefully analyzed statistics and could recite players’ recent performances from memory.

They spent far less time asking why an app kept encouraging them to place another bet, or how the company behind it expected to make money from them. Ironically, the archetypal high school math whiz may be more exposed to gambling than protected from it.

This matters especially for boys. A recent Common Sense Media survey found that 36 percent of boys ages 11 to 17 had gambled in the previous year, rising to 49 percent among 17-year-olds. The challenge for schools and parents is to equip young people to understand both the mathematics of a wager and the commercial interests of gambling companies.

Our world is awash in numbers

Twenty-five years ago, the mathematician Lynn Steen argued that the information age was changing what it meant to be an informed citizen. “Our world is awash in numbers,” he wrote. “As the printing press made literacy a societal imperative, the computer has made numeracy an essential goal of education.”

Steen was writing at a moment when information once confined to experts was becoming available to everyone. If people developed the capacity to think quantitatively, that shift could “serve as a stimulus to democratic discourse.” Without widespread numeracy, however, it would “mystify rather than enlighten.”

In many ways, today’s world is an extension of the one Steen described. Anyone with a smartphone can access more quantitative information than an entire newsroom could have accessed a generation ago. AI can analyze datasets and explain statistical concepts in seconds. The cost of producing, interpreting, and distributing quantitative information has collapsed.

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The way we encounter those numbers has changed, too. ESPN integrates DraftKings odds into its broadcasts. CNN displays Kalshi election prices. Increasingly, the same number functions as information, an advertisement for a product, and an invitation to speculate. Many young people—especially boys—now learn about probability through gambling before they study it in a classroom.

Gambling’s expansion has brought obvious risks. More young people betting means more financial losses, and smartphones have made gambling easier to access, hide, and turn into a daily habit.

Gambling products will keep evolving

Schools are beginning to adapt. Massachusetts recently launched a sports betting curriculum for middle and high school students. Virginia now requires gambling awareness instruction as part of its health standards. Similar efforts have emerged in Canada, Australia, and the United Kingdom as educators try to keep pace with a rapidly changing gambling environment.

The case for gambling literacy is gaining ground, but for it to be effective, it must keep pace with a rapidly changing market.

A curriculum written when states first began legalizing sports betting in 2018 would have focused on moneylines (who will win) and point spreads (how much they’ll win by). Today, same-game parlays account for more than half of all sportsbook wagers. Introduced only in 2019, they combine multiple outcomes into a single wager with more complicated underlying mathematics, and typically less favorable odds for the bettor.

Sports prediction markets have reshaped the landscape yet again. Platforms such as Kalshi and Polymarket present gambling through the language of finance. Robinhood now offers event contracts alongside crypto, stocks and ETFs, and high fees mean prediction markets now generate more revenue for Robinhood than stock or crypto trading. The next generation of gambling products will almost certainly look different. A curriculum organized around today’s products will always trail tomorrow’s market. A stronger curriculum would be organized around questions that remain useful even when products change.

Learning from media literacy

Media literacy has already taken that approach. Rather than organizing lessons around Facebook, Snapchat, or TikTok, educators shifted toward what the National Association for Media Literacy Education calls “habits of inquiry.” Students learn to ask who created a message, why it was presented that way, what assumptions it relies on, and whose interests it serves. Those questions remain useful as platforms disappear and new ones replace them.

Gambling literacy should borrow that framework. The goal should not just be to equip students with the skills to understand the mathematics of a same-game-parlay. It should also be to instill in them the habits of inquiry that will remain useful as products continue to evolve. Students should understand probability, expected value, sample size, and regression to the mean. They should also learn to ask why certain bets are promoted, what information is left out, and how companies profit from wagers.

Education alone will not protect young people from every gambling-related harm. Even well-informed adults struggle with products designed for speed, convenience, and repeated engagement. Gambling literacy should complement advertising restrictions, safer product design, and limits on practices that encourage compulsive use. As AIBM’s sports betting policy framework argues, information and awareness are most effective when combined with meaningful consumer protections.

Twenty-five years ago, Steen concluded that quantitative literacy was “not a call for more mathematics,” but “a different and more meaningful pedagogy across the entire curriculum.” He argued that students needed “tools to think for themselves, to ask intelligent questions of experts, and to confront authority confidently.” Today, they also need those tools to keep from getting taken by whoever’s on the other side of their bets.

Americans are betting billions on prediction markets, staking money on everything from elections to album sales to football games. Legally speaking, though, they aren’t betting at all. Prediction markets are, according to them and to federal regulators, technically investment platforms, and the event contracts they offer are a type of financial derivative.

Despite their status as legitimate financial platforms, prediction markets have engaged in marketing tactics that would make even a casino blush.

As the Wall Street Journal recently reported, Polymarket—the second largest prediction market in the country—set up dummy websites so that college-aged influencers could fake big wins on social media, often with captions highlighting how “free” the profits were and how winnings were paying for extravagant lifestyles. Kalshi, the largest prediction market, has allegedly employed similar tactics: the newsletter Garbage Day found a third-party service was paying “clippers” to post fake winning bets on Kalshi, often without disclosing that these were ads.

While many of the winning wagers on social media are fake, actual losses by Americans on prediction markets are very real, to the tune of more than a billion dollars on Kalshi alone since 2021. Federal regulators—who have beaten the drum relentlessly about their exclusive right to oversee prediction markets—need to impose reasonable guidelines surrounding advertising. Absent these rules, prediction market companies will continue to engage in misleading practices to entice Americans to gamble.

Financial institutions face a host of rules around advertising. Under rules from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), companies like Charles Schwab, Fidelity, and Robinhood take great care with the wording of their marketing materials. Ads might emphasize the tools at a firm’s disposal to boost customers’ retirement savings, but profits are never presented as guaranteed, and any testimonials require clear compensation disclosure.

Prediction markets, though technically investment platforms, are not regulated like other financial firms. They fall under the oversight of the Commodity Futures Trading Commission (CFTC), an agency formed in the 1970s to regulate things like pork-belly derivatives. Because prediction-market event contracts are technically swaps—a type of derivative contract—the CFTC insists they fall within its jurisdiction.

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Put aside for a moment the question of whether the CFTC has the expertise to regulate what is, in practice, a mass-market sports betting platform (it does not), or whether it has sufficient staff to provide that oversight (again, no). The CFTC is focused on regulating derivatives, not marketing. The last time the agency released specific advertising guidance was 2007. The 267 pages of rules around prediction markets the CFTC published in June set no regulatory standards for advertising, marketing, or communicating with the public.

The practical result: aside from the baseline rules covering the private sector from the Federal Trade Commission (FTC), prediction markets are free to advertise however they see fit.

Kalshi, for its part, does not want to be seen as operating without guardrails. The company presents itself as the rule-abiding, regulated operator, in contrast to Polymarket, which is technically based offshore.

On its website, Kalshi boasts that the National Futures Association (NFA) “imposes specific marketing and advertising restrictions” to protect prediction-market customers from “false, deceptive, or manipulative advertising.” The NFA does exactly that for its members. The only problem is that Kalshi isn’t a member of the NFA and is not subject to any of its rules. The company, and the entire industry, cling to the credibility conferred by financial regulation without actually being bound by those regulations. A company spokesperson confirmed via email that Kalshi is not an NFA member and wrote that the section of its website that includes the reference to the NFA “is actively being revised.”

The result has been a flood of misleading and deceptive ads that would be out of bounds for any other financial firm. As the Journal reported, Kalshi paid college-aged influencers to boast of how much they were betting—and winning—on the platform, most of whom never disclosed that they were being paid. Among them was a 15-year-old video-game streamer whose partnership was canceled only after the company’s lawyers weighed in. “Yo brother, legal team confirmed that we can’t work with minors rn,” a Kalshi employee messaged the streamer, according to the Journal. “Kinda sad tbh.”

The companies advertise this way because it works. Young people—especially young male sports fans—are inundated with gambling content on social media. A generation of young people are becoming gamblers, not necessarily because they are excited to gamble, but because they fear missing out on the winnings their peers seem to be raking in.

Regulators are perpetually behind new technology; prediction-market advertising is a clear case in point. But the current situation is untenable.

The CFTC—on its own or as directed by Congress—needs to adopt specific marketing rules or clarify other agencies’ authority to oversee prediction-market communications. At a minimum, those rules should ban promises of guaranteed winnings, prohibit depictions of fabricated or simulated winnings, and require disclosures of paid partnerships in every ad.

Just as important, the rules must bind not only the platforms but their affiliates––the influencers, clippers, and marketing contractors through whom prediction markets increasingly reach the public. Here, the CFTC would not need to invent anything: it already requires those who solicit customers for a regulated exchange to register as Introducing Brokers. Extending that requirement to anyone paid or incentivized to drive traffic to a prediction market would sweep the affiliate economy into the regulatory system—including membership in the NFA, whose advertising rules Kalshi already touts.

Prediction markets cannot both claim to be investment platforms and market themselves like sleazy gambling companies. If they want to be treated as legitimate investment platforms, they need to act—and advertise—like it.

Drawing on a framework from James Surowiecki, author of The Wisdom of Crowds, the film highlights three main problems with prediction markets: insider trading, gaming the system, and altering reality. It investigates politicians trading on inside information, an alleged botting scheme on Spotify, and angry gamblers threatening a journalist in an effort to change his reporting on the Israel-Iran conflict.

The documentary is a useful primer: well-made, briskly paced, and fair to skeptics. But it missed opportunities to go even further, in two main ways. The first is its lack of focus on sports. After noting that sports account for more than 85% of the volume on these platforms—and that the legal battles over prediction markets are almost exclusively about sports contracts—the film mostly ignores sports in favor of political and culture markets and the controversies those markets often create.

Sports prediction markets cannot be evaluated in isolation from traditional sportsbooks. Their strongest argument has never been that they uncover truth or help people hedge meaningful risk. It is that they offer a cheaper, fairer, and less exploitative version of a product tens of millions of Americans already use.2 The relevant comparison is not between prediction markets and a world without betting; it is between prediction markets and DraftKings and FanDuel.

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The second is that the documentary never says how much money people lose—or that prediction markets require losing traders. The film briefly acknowledges that platforms collect fees, but never quantifies them or returns to the subject.

Unlike the three problems Surowiecki outlined, regular users losing a lot of money doesn’t require bad actors, or even wrongdoing. It’s simply what happens when the platforms work as designed.

The World Cup was the obvious place to address both omissions. Over the course of the tournament, Kalshi processed more than $50 billion in volume, while regular users lost roughly $640 million3, including $80 million on the final Sunday alone.4

There is nothing inherently wrong with people losing money speculating, whether it’s on sports, Spotify markets, or stocks. For many users those losses represent payment for entertainment, which is a perfectly good trade.

But the central legal fight over these platforms is about whether their contracts are financial products, and the industry’s answer is yes. That claim underpins their availability in states without legal sports betting and their existence inside brokerage apps, a swipe away from index funds and retirement savings.

What’s most dangerous about prediction markets is not their facilitation of insider trading, the ways they can be manipulated, or even how they can change the outcomes they’re supposed to measure. It’s that they’re the latest frontier in a broader shift away from lower-risk investments that build wealth over time and toward higher-risk gambles that usually erode it—products the platforms are pushing and many users are choosing.5 The people on the losing end are too often the ones who can least afford to be, and a generation that saves less and gambles more eventually leaves the rest of society with the bill.

4

Losses on the final were so massive because the vast majority of regular users bet on Argentina, who lost. Other popular bets by retail users, such as Messi to score and over on the total goals market, also lost. In fact, the retail frenzy on Argentina was so massive that it shifted the price significantly, to the point where traders could bet Spain on Kalshi and bet Argentina on certain sportsbooks and lock in a profit (arbitrage). Kalshi had a such a good price on Spain that basically every sharp I know had massive Spain bets on the platform. I personally had over a $100,000 position on Spain (shown as “Argentina No” on the slip below) on Kalshi.

It’s a case built largely on the industry’s messiest examples—viral and misleading ads, skyrocketing losses, unfair political access. ProphetX, recently approved by the CFTC as the first sports-native exchange and clearinghouse, is a cleaner test of the industry’s affirmative case.2 The company isn’t pretending sports trading is spiritually different from sports betting; it tried the state-regulated route first.3 Its argument is that structure matters: users trade against one another instead of a house, market makers compete to post prices, and the resulting product looks more like a financial exchange than a traditional sportsbook. I sat down with cofounder Jake Benzaquen for a wonky conversation about what, exactly, gets better when sports betting becomes an exchange—and what new problems arise.

Chapter timestamps for the recording are at the bottom.

The Price is the Product

The best case for prediction markets is that they offer better pricing than sportsbooks; while most users probably won’t win, they’ll lose less. Without heavy marketing spend and high taxes, peer-to-peer marketplaces can pass savings on to consumers. Betting on an NFL spread at DraftKings generally means risking $110 to win $100; the same bet at ProphetX costs about $105. In the long run, the average customer loses at a rate of 2-3%, instead of 4-5%, with bigger savings on more exotic wagers.

This is not true for Kalshi, where fees are so high—currently generating roughly $2 billion in annualized revenue—that prices are often equivalent to sportsbooks. ProphetX will start at a flat 2% commission, with no parlay fees. Jake is adamant that improved monetization won’t simply mean higher fees, but more volume and maker-taker pricing meant to “split the pie as evenly as possible” between liquidity providers, recreational “takers,” and the exchange.4

Peer to (Smarter) Peer

Prediction markets love to say you’re trading against your neighbor. Jake won’t: “the idea that you’re just trading against your friend is obviously disingenuous.” Most trades are against liquidity providers, often sophisticated trading firms, but their presence is necessary to post prices and “make” the market.5 Even so, he believes that retail-facing disclosures about who is on the other side of a trade are effectively “chasing your tail. It sounds easy on the surface, but there’s a lot of complexity.”

Internal Market Makers

Some prediction markets run their own in-house market maker, such as Kalshi Trading, which provides liquidity and sometimes seeks to profit on the markets its sibling exchange runs.6 ProphetX doesn’t. Jake says they can get enough liquidity from outside market makers, and points to a “long-term view… that playing in your own exchange causes a lot of downstream effects…the fairness, the quality of the pricing and the underlying mechanisms that power these markets get impacted when you have someone playing in the environment that you favor.”

Built for Sportsbooks, Not Exchanges

The obvious objection to sports prediction markets is that most states already have legal sports betting. So why should there be a federally regulated version at all—one that bypasses both the state regulatory framework and the high taxes sportsbooks pay?

Jake’s answer is that the state system simply cannot facilitate exchange wagering, because it doesn’t allow market making, institutional trading, or varied distribution channels. The CFTC, meanwhile, “has all of those things.” It’s also a matter of cost: between high state taxes and the 0.25% federal excise tax on handle, running a low-margin sportsbook is close to impossible.7 Jake described the federal path as not just easier for operators but fairer for consumers, who get better prices and more freedom to trade— “assuming [they’re] able to understand… how [sports markets] work.”

The State Regulation Dead-End

ProphetX didn’t start out federal. New Jersey let it launch one of the country’s first sports exchanges; everywhere else, Jake says, doors were “shut in our face every single time.” When ProphetX asked Virginia regulators how soon it could go live, it was told two to three years before anyone would even meet with them, because “they’re focused on understanding what sportsbooks are, and then after that they’re gonna work on casinos.”

State regulators, in his telling, have “prioritize[d] casinos and iGaming over actually fair marketplaces and exchange wagering—” a move that generated more tax revenue, at times against the interest of the citizens who wager.8 They “made their own bed by poor regulation, poor regulatory bodies, and a poor mindset.” As Jake puts it, borrowing a line from Twitter: “Congrats to the states: you lose. Now all the innovation is going to the feds.”

New or Stolen Money?

One of the loudest fights over prediction markets is whether their volume is new or poached. The American Gaming Association (AGA) argues platforms like Kalshi and ProphetX are siphoning billions in handle away from licensed sportsbooks, with state coffers paying the price. Others insist the volume is entirely additive, arriving through financial channels traditional sportsbooks cannot access.

Jake lands somewhere in the middle. He has little patience for the AGA, which uses “the least mathematical formulas of all time to create [that] narrative,” and credits Sporttrade CEO Alex Kane for “call[ing] them out on their BS.” But he doesn’t buy the all-additive story either. Are Robinhood’s parlay traders former FanDuel customers? “A lot were,” Jake figures, “but a lot weren’t.”

Maintaining Product Parity

In most states, sports betting is 21+. CFTC-regulated prediction markets are 18+.9 Asked about the younger bettors that allows, Jake told me: “Our decision was made out of parity to the rest of the market... if the CFTC chooses to change... to 21+, I certainly would completely understand and would even probably applaud that.”

Flagging Problem Trading

How ProphetX will catch problem trading isn’t settled yet. Responding to the idea of turning responsible-gambling tools on by default,10 Jake leaned the other way: “You probably make it more trigger based than actually default. That way you can observe specific behaviors that are leading to [problem gambling], and then try and cut it off at the head... repeated deposits… betting significantly above what their average trade size is. Things like that are probably the better mechanism… than defaulting it on or off.”

Some Form of Something

Prediction market advertising is barely regulated, and a lot of it promises easy money and frequently reaches minors. Jake agrees there’s a problem: “there’s nothing going on in terms of regulating these advertisements,” and thinks it should change but isn’t sure how. “There needs to be some form of something,” he says, for operators when they write their own rules. Right now there’s “nothing to point to.”

Equally important is who enforces any of it. While the CFTC has proclaimed full jurisdiction over prediction markets, it’s a financial regulator—marketing rules are “not their strong suit.” Still, there are “some extremely low-hanging fruit,” such as cracking down on affiliate marketing and mandating in-post disclosure. (I argued for exactly that in my own comment to the CFTC, which you can read in full here.) “It’s really easy, as an operator, to be like ‘it was an affiliate account, we’re no longer working with them, sorry about that,’” Jake says. You can just “scrub your hands of it… that’s not something that should be the case.”

(On June 20th, the Wall Street Journal reported that Polymarket had paid dozens of young creators to post videos of themselves placing trades and cashing in—except the trades were staged on lookalike copies of its site, and the winnings were invented. Creators were told to keep the payments quiet, and nearly a quarter of the videos worked in the word “free.” In 118 of the videos the Journal reviewed, creators appeared to win almost $900,000. Had those bets been real, they would have lost more than $166,000.)

Drawing Lines

A common theme throughout our conversation was how the line between gambling and investing keeps dissolving. Neither Jake nor I see much daylight between placing a sports trade and buying a zero-day option—if anything, the sports trade probably has a better expected return.11 But I still wince when I see sports promoted alongside stocks and bonds in financial apps, because I know how many Americans will, often to the detriment of their long-term finances, trade investments likely to grow for bets guaranteed to shrink. Much of ProphetX’s growth, meanwhile, is coming from brokerage integrations.

As to who’s responsible for the consequences of housing parlays alongside savings and investment accounts, Jake points to the brokers. “Not to just completely rinse myself of any blame here, but it really has to be on them… we can’t control how they offer our markets,” he told me.

He has a few ideas: “Educational stats or pop-ups on what margins look like on different products,” plus “disclaimers and…things that you need to check into rather than just terms and conditions.” Safe trading, in his framing, isn’t only a consumer-protection priority but a business necessity: “brokerages should be trying to [educate users] for the longevity of everyone.” He’s not optimistic, though, and thinks “it’ll only get a little bit worse before it gets better.”

It’s easier to point to what shouldn’t be done than what should. Jake says he’d probably back clear rules if they existed, but when it comes to special treatment for “gambling” products, he maintains “it’s more difficult to actually define…than to debate where it should be applied.” He worries about the addition of leverage and margin, which could easily get into “credit bookie type scenarios.”12

Jake criticized how state-regulated sportsbooks lure bettors into casino games: “As someone who lived in New Jersey and would open up the FanDuel [sportsbook] app, [where] they put the blackjack button right over where your bottom right thumb would be and you’d accidentally click every single time, and then play a hand…. It’s just messed up. [At ProphetX we’re] trying to prevent that, of course.”

Chapters

• 0:00 — Intro: ProphetX’s path to the CFTC

• 1:18 — The case for federal regulation

• 2:57 — Pricing and fees

• 5:08 — Who you’re really trading against

• 8:13 — Internal market makers

• 11:01 — Parlays and future regulation

• 13:10 — New money or stolen money?

• 16:17 — Lost tax revenue, or bad regulation?

• 19:30 — Low margins and 18-20 year old users

• 22:14 — Responsible-gambling tools

• 25:35 — Advertising and affiliate marketing

• 29:45 — Where gambling and investing blur

• 33:15 — Dark patterns

• 35:05 — My thoughts on how ProphetX could improve

• 38:32 — ProphetX’s pitch to bettors

• 40:02 — States without legal sports betting

• 41:52 — Should negative-sum investments carry a warning?

If you’ve ever read or listened to a prediction market evangelist, you’ve likely heard some version of this argument. On the Axios Show a couple weeks ago, Kalshi CEO Tarek Mansour called it a “fundamental difference in structure.”2 Sportsbooks, he said, are “designed for customers to lose”; that model “does not exist in prediction markets.”

This pitch is effective because everything it points at is true. Sportsbooks really do limit and ban winners. Casinos really are extractive by design. Kalshi really does operate as an exchange rather than a bookmaker, profiting through transaction fees instead of directly from user losses.

But Kalshi uses those truths to sell a much bigger fiction: that because it profits from trading volume rather than directly from user losses, its business does not depend on users losing money.

The Exchange Model

Every trade on Kalshi has a maker and a taker. The maker offers a price—say, $0.50 for a contract that pays out $1.00 if the Yankees win—and the taker can choose to accept it.

Engineering a market in which these trades are possible—i.e. “making” the market—is harder than it sounds. Bettors don’t like to wait. They want the Lakers now—not in an hour, not in five minutes, not even in 30 seconds. Sportsbooks handle this by taking the other side of every bet themselves; wagers clear the moment you click place.3 Exchanges can’t do that.4 Someone has to have posted a price you’re willing to take, or your order just sits and waits. Kalshi’s central challenge, along with every other prediction market and exchange, is ensuring there is enough liquidity so that whenever a user places a trade, someone is there to take the other side.

Posting an order is riskier than accepting one. Imagine you offer to sell a “Lakers lose” contract, and it sits in the order book for a few minutes. Then news breaks that LeBron James is out with an injury. The Lakers’ chance of winning drops, so the value of a “Lakers lose” contract rises. Your offer is now below the fair price, meaning anyone who sees the news first can snap the contract up at a price that’s favorable to them and unfavorable to you. This is called adverse selection: when you leave an order up, you’re vulnerable to new information moving the market before you can adjust.

Traditional sportsbooks aren’t immune to adverse selection. When a line is mispriced or new information comes out, sharp bettors pile in before the book can adjust. Sportsbooks respond by moving lines fast, limiting or banning bettors who consistently beat them, cultivating a customer base filled with recreational bettors, and by charging a vig: a spread built into the odds on both sides of a bet. It’s why if you want to bet on a 50/50 event they’ll charge you -110, meaning you need to risk $110 to win $100. The vig helps insulate them. Even though some bettors sneak in good bets, the house’s overall portfolio stays profitable.5

Market makers on Kalshi and other exchanges face adverse selection without sportsbooks’ tools. They can’t ban bettors who pick off their stale offers.6 And the spreads they can charge are constrained by competition with other market makers.

So Kalshi has to make market making worth it. It can do this in a few ways: direct liquidity programs (paying users to market make), fee rebates,7 better technical/backend access, dedicated support, and more. But Kalshi’s main tool is the fee structure itself. It makes market making cheaper by making market taking expensive: The user who wants the trade now pays most of the fee, while the trader offering a price pays much less.

There is nothing unusual about an exchange treating makers and takers differently. Market makers get better terms because they supply the liquidity that makes the product usable and helps generate fees for the platform. The key question is how much the taker pays for immediacy.

On Kalshi, the answer is: a lot.

Take the simplest example: a coin flip. A contract pays $1 if the coin lands heads. The true odds are 50/50, so the fair price is $0.50. With no fees, buying 100 contracts at 50 cents would be a fair bet: you risk $50 to win $50.

But a taker on Kalshi does not pay $50. Kalshi charges $1.75 in taker fees per 100 contracts; the maker on the other side pays about $0.44.8 So the taker isn’t risking $50 to win $50. They’re risking $51.75 to win $48.25. That is an expected loss of about 3.4%, meaning for every $100 a user trades, in the long run they’re going to lose $3.40.9

Kalshi maintains that this fee is wholly different from the vig. In legal and mechanical terms, that might be true. But for the ordinary user taking a price, the distinction barely matters: either way, a fair price becomes a bad bet.10

Kalshi does not offer literal coin flips.11 But prediction markets’ own pitch is that prices are incredibly accurate, honed by the wisdom of crowds. They’re correct. Which means the vast majority of users might as well be betting on a coin flip, losing the fee each time.12

The asymmetric fees also help lock users into roles. It’s incredibly difficult to win long-term as a market taker on Kalshi, so sharp traders mostly sit on the maker side, posting prices and managing risk.13 Ordinary users (the “dumb money” who power exchanges) mostly do the opposite: taking the price in front of them, regardless of fees, because they want the trade now.

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The Rake

Exchanges aren’t inherently zero-sum. Stocks and bonds trade on exchanges, and participants can collectively win because the underlying assets can create value. A company can grow. A bond can pay interest. An index fund can rise because the economy becomes more productive.

Prediction market wagers, whether they’re on wars, weather, or sports, do not work this way. A contract on an invasion, a hurricane, or the Lakers can go up in price, but that gain comes from the other side going down in price. It does not generate cash flows or represent ownership of anything productive.14 It merely resolves.

This distinction matters because it changes what Kalshi needs from its users. A stock exchange can thrive while users collectively build wealth. A prediction market can only thrive when users keep cycling money through zero-sum contracts. A small number of sophisticated users will win, but the system only works if others lose enough to fund them and the fees.

This gives Kalshi the same core dependency as a casino or sportsbook: a steady flow of users who lose enough money to keep the business running.

The main difference is where the money goes first. Sportsbooks collect from losing bettors directly. Kalshi collects from trading volume. But on a zero-sum exchange, volume is not some morally neutral good; it is the process by which ordinary users lose money to sharper ones.

The same dynamic exists in poker rooms. The house doesn’t play; it takes a rake from every pot and has no stake in any particular hand. The pros help keep the tables active, but they are not there out of generosity. Like market makers on prediction markets, they show up because they can take money from the losers. Without losing players, they leave—the competition is too good and the fees are too high—and there are no games left to rake.15

Kalshi doesn’t kick out winners for the same reason poker rooms don’t kick out the pros: the winners are the mechanism that makes the rake work. The liquidity, the tight spreads, the seamless trading—all of it depends on funneling losers to the users who profit from them.

None of this means prediction markets cannot be useful, that they are worse than sportsbooks, or that they should be outlawed.16 They can aggregate information, generate accurate forecasts, and in some cases let people hedge real-world risks. Even when it comes to sports, prediction markets can offer better pricing and a fairer ecosystem than traditional bookmakers.17 Skilled users are not punished for winning, which matters.

But prediction markets still need losers.

Kalshi pitches itself as morally superior to casinos because it isn’t on the other side of users’ trades, so it has no stake in whether they lose. That is a lie. Kalshi does not need to beat users directly. But it does need enough regular users to keep losing to sharper ones, while charging a fee on every trade. Those fees are now generating roughly $100 million a month.18

Thirty years ago, Ace Rothstein explained that in the gambling business, “The cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all.”

Kalshi might not call itself a casino. But the rule still applies.

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Are Americans—and young men especially—engaging in more vice than ever before? What qualifies as a vice? And is it any of the government’s business?

These were some of the questions posed at a recent conference hosted by the Center for Expanding Viewpoints in Higher Education at Tufts University. I participated in the opening panel, along with Charles Fain Lehman of the Manhattan Institute and Shaleen Title, a lawyer and activist who formerly served as a commissioner on Massachusetts’s Cannabis Control Commission, with Ian Cross of WGBH moderating. Our full conversation can be watched here. What follows is a summary of the discussion and my major takeaways.

Why Vice, Why Now?

Roughly half of American men have a sports betting account, and more than a quarter have placed a bet in the last six months. More than 60 million Americans smoke marijuana, and nearly 20 million use it daily or near daily. OnlyFans creators collectively earn more than NBA players, and the average American boy today first encounters pornography around age 12.1 While these activities have existed for millennia, they’ve quickly moved out of the shadows and into the mainstream.

Two forces drove this shift. The first is political. In the last ten years recreational marijuana has gone from legal in 4 states to legal in 24, sports betting from 1 to 40. Legalization decreased friction and marketing drove normalization; millions of Americans who would have never used an underground bookie or local pot dealer now place bets with DraftKings and shop at dispensaries.

The second is technological. Smartphones have supercharged vices, making them immediately accessible and increasingly potent. Americans can now gamble on every pitch from the shower, have marijuana several times stronger than anything available in the past quickly delivered to their door, and with a few clicks access sexually explicit content that would make Hugh Hefner blush.

The common thread is not that Americans necessarily want more vice. It’s that vice has become frictionless and technologically optimized, available at every moment of weakness—and the companies delivering it have perfected how to keep people coming back.

What Makes a Vice a Vice?

One of the main points of disagreement was over definition. For Charles, certain activities are inherently vices—bad habits that induce “a weakness of the will” and make us worse off by their nature. (He recently wrote an essay for National Affairs titled “The Case for Prohibiting Vice.”) Shaleen rejected that framing entirely, arguing that the through line for these activities is persistent human demand. If people have always sought them out, and always will, the relevant question isn’t whether they’re good or bad, but how we manage that reality.

I ended up in a somewhat different place. I don’t think Charles is entirely wrong—most of us do things that leave us worse off, and that’s worth taking seriously. But the category is too broad to be useful. Too many things can fit: gambling or drugs, obviously, but also social media, junk food, or mindless television. What makes something a vice, in my view, is less the activity itself than the pattern of engagement: whether it’s driven by escapism, and whether it crowds out more meaningful parts of life.

Today’s Vices are Lonely

One of the most useful distinctions to come out of the panel was between social and solitary vice. While certain vices have increased, others—mainly alcohol and cigarette smoking—have decreased dramatically.2 This is mostly a good thing: alcohol alone accounts for far more deaths, hospitalizations, and violence than gambling, marijuana, and pornography combined. But it can also act as a social lubricant.

People can drink and smoke cigarettes together, at bars, parties, or dinners. Their replacements are increasingly solitary. Social gambling and marijuana usage have fallen, with today’s consumers more likely to place bets alone than at the casino and get high by themselves versus with friends. This is partly explained by other societal trends, but some of it likely comes down to increased potency, driven by profit-maximizing producers competing to make stronger products. Someone who gets a little high is more likely to enjoy being around others than someone extremely stoned, and someone betting on a team to win is more likely to watch a game with friends than someone who’s sweating every pitch.

Americans, particularly young people, are already in the midst of a loneliness epidemic. As the U.S. Surgeon General warned in 2023, roughly half of Americans experience loneliness, and the health consequences of social disconnection are similar to smoking up to 15 cigarettes a day. Against that backdrop, the generational shift towards antisocial vices is cause for concern, even if on paper the vices may be less dangerous than what they replaced.

Regulate the Sellers, Not the Users

One thing we all agreed on was the importance of regulation, both because of the government’s ability to protect people and the relative simplicity of controlling corporate activity versus individuals. Technological innovation has given suppliers of vice the upper hand, and consumers need policymakers on their side to combat predation.3

The challenge is designing guardrails that people find appealing. In the 1960s, Americans could smoke a cigarette on an airplane but couldn’t gamble at every moment. Today those have completely reversed. What changed policy was secondhand smoke: once Americans understood that smoking didn’t just harm the smoker but the people around them, the political system had a non-moral reason to act. Americans are generally against legislating personal choices, but their calculus shifts once externalities become clear.

The question for gambling, marijuana, and pornography is whether the harms extend visibly beyond the individual user. In extreme cases they clearly do—compulsive gamblers and drug users devastate their families, workplaces, and communities. But most of the external harm from modern vices accumulates slowly and invisibly. It’s someone who loses a bit more money than they should, smokes a little more than they’d like, consumes porn in a way that subtly shapes how they think about sex and relationships. Damage is diffuse, probabilistic, and often easy to dismiss, making it a hard case to build coalitions around and to legislate.4

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Impacts and Internalities

One of my favorite questions was from a student who asked whether it was even possible to agree on the negative externalities of these vices. Obviously if he were to smoke marijuana and go drive, that would be bad for society. But if he were to take an edible before going to bed, and it moderately impaired his ability to focus or study the next day, would that be so terrible?

This points to an asymmetry in policy debates about how to address vice. Identifying harms and externalities is easy. The harder calculation is on the other side of the ledger. How do we value the relaxation one derives from smoking a joint, or the additional enjoyment a bettor receives when they have money on a game? Should we remain neutral on the young man who stays home to watch porn instead of going to a party with his friends? Should we treat his revealed preference as valid, or decide that his personal utility function has been distorted by a product engineered to exploit his vulnerabilities?

These are not questions with empirical answers. And yet they are exactly the questions that legislators must grapple with when weighing policy responses.

Nearly 150 years ago, Mark Twain wrote that, “nothing so needs reforming as other people’s habits.” Charles, Shaleen, and I couldn’t agree on whose habits needed reforming, or to what extent that was the government’s job. But we did agree that the companies profiting from those habits deserve far more scrutiny and active regulation than they’re currently getting, and that the young people increasingly consuming them—alone, on their phones, in the midst of historic levels of social isolation—deserve better than what’s being sold to them.

I was not alone.1 Gambling on current events has exploded recently due to prediction markets, platforms where users can trade ‘event contracts’ on everything from Oscar winners to wars (the vast majority of volume is on sports). On Kalshi, the largest prediction market in the US, there was more than $50 million traded on last night’s awards.2

Prediction markets are increasingly being integrated into mainstream media, through both paid deals—Kalshi’s branded ticker across CNN and CNBC’s broadcasts, Polymarket’s odds displayed throughout the Golden Globes—and organic coverage.

Not everyone is happy. Critics see prediction market odds displays as shilling gambling, a Faustian bargain where media companies lend their credibility to betting platforms in exchange for a cut of their viewers’ losses.3 As Judd Legum wrote in December, the partnerships “fundamentally change the nature of news,” turning it from something you watch into something you wager on.

Advocates counter that prediction markets produce useful information and accurate forecasts.4 Prediction markets, they note, outperform pundits, polls, and expert panels, because people bet more carefully with money on the line and because the potential for profit attracts those who know what they’re doing.

Both arguments are fair. Prediction market odds are genuinely informative, and media consumers would benefit from using them to calibrate their beliefs about what is likely, or unlikely, to happen.5 The same is true for sports betting odds, which have been around for far longer and are far more accurate than the talking heads ESPN pays to make predictions.6 Few things annoy me more than a commentator treating a game as a coin flip when betting markets give one team an 80% chance of victory.

But Kalshi didn’t pay for an exclusive CNN partnership to help people think probabilistically. They paid because every time an anchor says ‘according to Kalshi,’ some percentage of viewers are going to download the app and start gambling. The same is true for sports. ESPN hosts aren’t using betting odds to sharpen their analysis; they’re reading ad copy for DraftKings. And the promotion extends well beyond TV—Kalshi generated 5.2 billion digital ad impressions in the first two months of 2026, nearly twice as many as FanDuel, the next most frequent online betting advertiser.7

There’s nothing wrong with putting prediction market odds on television. There is something wrong with prediction markets paying to put themselves on television. But ads, however ubiquitous and annoying, are ads—they try to change your mind, not your environment. As I’ve written before, the real danger with prediction market expansion has always been distribution; these are gambling products that now sit alongside stocks and retirement funds in brokerage accounts.8

This is best epitomized by Robinhood, the gamified brokerage most popular among young Americans. After initially partnering with Kalshi to offer event contracts, Robinhood acquired its own prediction market exchange last year. Contracts are listed on the home screen, one swipe away from retirement accounts and crypto, promoted more aggressively than any asset that might actually make users money. (Below is a video of me logging into Robinhood and betting on Michael B Jordan to win best actor.)

Prediction markets are the fastest growing product in the company’s history, on track to generate $300 million in fees this year. That money comes entirely from users: prediction markets just reallocate money among participants, minus the cut the platform takes. Bettors as a group are guaranteed to lose exactly what Robinhood makes.9

Schwab’s CEO, who called prediction markets “95% sports gambling” and told the Wall Street Journal in December the company “ideally wouldn’t have to” offer them, changed course in January, telling Bloomberg they’re “absolutely open” to adding event contracts. CME Group, the world’s largest derivatives exchange, has partnered with FanDuel to launch contracts that resolve every 60 minutes, on an app designed to mimic FanDuel’s sportsbook.

To place a bet on DraftKings you have to download a gambling app, create an account, and deposit money: a series of steps that requires you to decide you want to gamble. Millions of Americans haven’t made that decision, and never would. But they already have Robinhood. They already have Schwab. The money is there, the account is open, and the bets are increasingly one tap away from their savings.

The industry’s defense is that prediction markets are different from gambling: that they serve a hedging function, like insurance, and produce socially valuable information.10 There’s something to this. Farmers can hedge temperature risk. Small businesses can hedge tax policy. Those are real use cases. They’re also not what’s happening. Sports contracts account for more than 90% of prediction market volume. The platforms know it—which is why marketing is aimed at college students trying to get rich quick, not soybean farmers managing yield exposure.

I watched more of the Oscars last night than I would have otherwise, because I had money on it. I cared about categories I’d never heard of and rooted for people whose movies I hadn’t seen. I texted friends asking their thoughts on Sinners vs Marty Supreme.

Critics worry that gambling promotions in news and sports coverage encourage people to bet more. They’re right, but lots of people are also only watching because they have money on the outcome.11 That’s what makes partnerships between news outlets and prediction markets, or between sportsbooks and media companies, so appealing: gambling platforms get more volume, while media companies get more engagement. In my case, that attention cost $1,000. For the millions of Americans now one tap away from gambling with their savings, it could cost far more.

1

After sending a screenshot of a bet to a group chat, one friend responded with his own wager on Chalamet to not win the Oscar.

In my life I have gambled on many things: the winner of a sporting event, how many slices of pizza I can eat, whether someone could distinguish between Coke and Pepsi, to what degree a company’s stock price will rise or fall, if a raindrop will take more or less than ten seconds to reach the bottom of a car window, and the color of the next leaf to fall off a tree. I recently lost an ungodly amount gambling on a game of mini golf. I have gambled with friends and bookies, at casinos and cafeterias, on brokerage apps and diner napkins.

I say this not to confess degeneracy, but to make a point: all of that was gambling, the verb—risking money on uncertain outcomes. Only some of it involved gambling, the noun—a business designed so that users, collectively, lose.

This distinction matters because it’s being exploited. Prediction markets like Kalshi, Polymarket, and now Robinhood have rebranded sports betting as investing, sidestepping state gambling laws by calling their products ‘event contracts’ regulated by the (now gutted) Commodity Futures Trading Commission. Since entering the mainstream during the presidential election, they’ve expanded nationwide and into brokerage accounts. As of today, Robinhood is offering custom parlays and marketing them as ‘multi-leg contracts.’

Deregulation and corruption made this possible. But prediction markets make a more philosophical argument for why their gambling products should be legal and relatively unregulated. As Kalshi’s head of crypto, John Wang, wrote in a now-deleted post: “Cynics love to call trading gambling, as if speculation is some parasite that corrupts ‘real economic activity.’ That’s totally backwards. Speculation is a feature, not a bug.”

Wang is not totally wrong. Speculation does exist in every market, and it provides necessary liquidity and price discovery. But there is a difference between markets where participants can collectively win (or break even) and markets where they’re guaranteed to lose.1

All investing involves the verb form of gambling: you are betting on an uncertain future. A pension buying index funds is taking a risk. So is a venture capitalist backing a startup, a roulette player placing his chips on red, and a Kalshi user betting on the Chiefs.2

But only the latter two involve gambling, the noun: a business that ensures that users, on average, will lose. The value of an index fund or a company can grow. Roulette tables and prediction markets don’t work this way. The house takes a cut of every transaction, and the pot only shrinks.3

Prediction market platforms know this. They market sports betting and getting rich quick, then explain to regulators that their products are really about hedging risk and price discovery.

By calling it finance instead of gambling, prediction markets sidestep the entire regulatory apparatus: they can operate across the country, ignore the rules traditional gambling operators have to follow, and not pay state taxes. The ambiguity is the business model.

People lose money in index funds during downturns, or on individual stocks which go to zero. But markets can go up; gambling products can’t.4 The more these products proliferate—and the more they’re allowed to masquerade as financial instruments under the guise of democratizing finance—the more people will lose.

The government can’t, and shouldn’t, ban speculation. But it can, and should, regulate products that are structurally designed to take money from users.

In a 2018 blog post titled Do the Rich Get All the Gains from Economic Growth?, the economist Russell Roberts makes a simple observation: when we compare the bottom 20% of earners in one period to the bottom 20% in another, we’re not looking at the same people.

Some stay poor, but many move up the income distribution and are replaced by new entrants at the bottom. To understand how people are actually faring, you need longitudinal data that tracks the same individuals over time.

Roberts’s conclusion is optimistic. When researchers follow the same people, they find that 84% of children—93% of those in the poorest quintile—out-earn their parents. Headline statistics about stagnant household income, meanwhile, can mislead: as marriage rates have fallen and more Americans live alone, household income can decline even as individuals do better. “When you follow the same people over time,” Roberts writes, “the largest gains often go to the poorest workers; the richest workers often make no progress.”1

“People who have gambling issues, they’re going to have a gambling issue,” DraftKings CEO Jason Robins told Fortune in 2024. “There is a small number of bettors whose activity can become disordered,” wrote Bill Miller, president of the American Gaming Association, the same year in Newsweek.

How small? The National Council on Problem Gambling estimates that 2.5 million adults meet the criteria for a severe gambling problem in a given year, with another 5-8 million experiencing “mild or moderate” problems.2 As I’ve argued elsewhere, these figures likely understate overall harm, since most affected gamblers won’t reach these thresholds. But even taken at face value, they are snapshots. It’s different people in the frame each year.

Longitudinal studies are time-consuming, expensive, and rare. As a group of experts wrote in a 1999 report commissioned by Congress:

There is almost no research that examines the incidence of pathological or problem gambling cases over a representative, recent time period. Nor are there longitudinal studies that provide trend data for population cohorts or that track the progression of individuals into or out of the states of pathological or problem gambling.

The few studies that do exist show high turnover. One longitudinal analysis from Missouri found that only one in eleven problem gamblers at the first measurement remained problem gamblers seven years later. A 2017 WHO report reached a similar conclusion, noting, “In any given year, around half move out of the problem gambling category and are replaced by ‘new’ problem gamblers.”

This might sound, at least in part, like good news—people recover. But many don’t drop out until after the damage has been done: their savings drained, job lost, relationships ruined.3 A thousand people in crisis for a month each is far more dangerous than a hundred people in crisis for a year—even though the total amount of time in crisis is less—because it’s ten times as many people at risk of hitting bottom.4

The episodic nature of problem gambling makes static prevalence estimates misleading. If 5% of gamblers have serious problems at any moment, and half cycle out each year to be replaced, then over a decade the share of people affected isn’t 5%. It’s closer to 15 or 20%.

Churn exists in other addictions too. But gambling harm can accumulate unusually fast.5 A drinker who loses control usually wakes up with a headache; a gambler who loses control might not have a home to wake up in.6

In Mario Puzo’s 1978 novel Fools Die, the casino boss Alfred Gronevelt explains:

Percentages never lie. We built all these hotels on percentages. We stay rich on the percentage. You can lose faith in everything, religion and God, women and love, good and evil, war and peace. You name it. But the percentage will always stand fast.

Gronevelt is describing the law of large numbers. Over enough bets, variance disappears. But while casino revenues may be smooth, individual gamblers’ results are not. Their years are punctured by spikes: the parlay win they’ll never forget, the night of excessive loss chasing they’d rather erase.

Roberts followed the same people over time and found reason for optimism. Applying the same methodology to gambling cuts the other way. When you freeze the frame, gambling harm can look contained. But real life doesn’t stand still, and over time a lot more people wander into the shot.

The second flaw lay in how prevention itself was practiced: clinicians were targeting the wrong people. High-risk individuals were getting all the attention, despite accounting for a relatively small percentage of total disease. “A large number of people exposed to a low risk is likely to produce more cases than a small number of people exposed to a high risk,” he wrote. Small risks multiplied across millions outweighed large risks concentrated among thousands.

Rose was measuring heart disease and attacks—clear, binary outcomes. But his insight, what has been termed the “Prevention Paradox,” also applies to harms which exist on a spectrum. Gambling is a perfect example. As researchers at the University of Massachusetts School of Public Health and Health Sciences wrote in a 2021 report commissioned by the Massachusetts Gaming Commission,

A far greater number of individuals experiencing gambling-related harm are low-risk gamblers because there are far more low-risk gamblers than high-risk gamblers in the population. The ‘paradox’ is that more aggregate harm is suffered by the low-risk gambling population even though, individually, people in the high-risk population (e.g., heavy gamblers and those experiencing gambling problems) suffer the greatest amount of harm per individual.

The report found that 70% of all gambling harm arose from lower-risk groups, and was based on data from 2013 and 2014. In the decade since, widespread legalization of sports betting and the rise of mobile gambling—90% of bets in the US today are placed on smartphones—has pushed that percentage even higher, as constantly available, frictionless betting makes it easier than ever to develop a problematic relationship with gambling.1

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Some of this can be blamed on the gambling industry’s predatory practices. Online sportsbooks and casinos collect massive amounts of data, which they use to profile users and extract as much money as possible via push notifications, targeted promotions and more. As a judge in the UK recently ruled in a lawsuit against British operator Sky Betting & Gaming (which is owned by Flutter Entertainment, the same company that owns FanDuel, America’s #1 sportsbook and casino), the company engaged in “parasitic” profiling which violated data protection laws through targeting marketing to a gambling addict.

The city of Baltimore filed a similar lawsuit against DraftKings and FanDuel earlier this year, alleging the operators “specifically targeted our most vulnerable residents.”2

Operators are also to blame for the widespread normalization of gambling through marketing campaigns featuring athletes and celebrities—ads that often encourage problematic behavior. Consider FanDuel’s recent campaign featuring the comedian Eric André, where he literally stalks a man throughout his day—while he’s watching sports, when he’s eating, even when he opens the freezer—relentlessly pushing him to “act on his hunch” and place a bet. Another FanDuel ad depicts a man sitting in a pool, staring at his phone tracking bets while his family and friends socialize and enjoy life without him, with the tagline ‘Cherish Every Moment.’

Perhaps the most egregious example came earlier this month, when Stephen A. Smith (who signed a $100 million contract with ESPN, which recently disbanded its own sportsbook), promoted a gamblified version of Solitaire where users compete to win money. In an AI-generated ad for the “World Solitaire Championship” Smith is shown at NBA games, in bed, at yoga class, and even at his own wedding playing the game. “If you want to make it,” the television personality says, “quit distracting yourself, and keep your head in the only game that matters.”

But focusing solely on the gambling industry’s villainy misses the larger picture. These companies aren’t uniquely responsible for corrupting some pure digital ecosystem. The product they’re pushing just happens to be the one with the most immediate and quantifiable consequences.

Every tech company is now in the addiction business. Netflix’s CEO famously said their biggest competitor was sleep. Snapchat and Duolingo punish users who don’t engage daily by destroying “streaks.” TikTok’s feed is a variable-reinforcement machine, adjusting in real time to every pause and replay to determine what hooks you. The swipe feature on modern dating apps was inspired by a famous experiment by the behavioral scientist B.F. Skinner which “turned pigeons into gamblers.” They all use the same manipulation playbook; gambling apps just keep score with dollars, not minutes.3

For a recent STAT news article, I spoke with a college sophomore whose gambling falls into the gap between fine and addicted, where most harm actually exists. “I started checking the odds first thing in the morning,” Danny told me. “I’d wake up, grab my phone, and open PrizePicks before even looking at my texts. Sometimes I’d bet, sometimes I’d just check the lines. Then I’d look again between classes, and during meals. I wasn’t losing a ton or failing out, but it started affecting me a lot… when my bets hit I felt on top of the world, but when they lost I felt like an idiot, and couldn’t concentrate on school or even on hanging out with my friends.”

This is what statistics miss. When people cite “problem gambling” rates of 1-2%, they’re capturing only the most extreme cases.4 It’s like measuring social media’s harm by counting only those in treatment for internet addiction. Examined via another metric—encroachment upon one’s life—the numbers are much higher.

The real tragedy is how unremarkable Danny’s story feels. As Derek Thompson recently wrote in a piece aptly titled The Monks in the Casino, “Americans—and young men, especially—are choosing to spend historic gobs of time by themselves without feeling the internal cue to go be with other people, because it has simply gotten too pleasurable to exist without them.”

There likely won’t be a dramatic ending to Danny’s story. He won’t lose his tuition, drop out or hit rock bottom. He’ll just become a lesser version of himself; more anxious, less present, emotionally tethered to an app that cares most about his lifetime value. Multiply him by millions and you get what Jonathan Haidt calls “the great rewiring”—young people whose brains have been reconstructed to feed on intermittent digital rewards.

Forty-four years ago, Rose concluded his paper on the Prevention Paradox by saying, “the only acceptable answer is the mass strategy, whose aim is to shift the whole population’s distribution of the risk variable.” Mobile gambling achieved that shift—just backward.

Danny’s checking odds, his roommate’s checking TikTok, I’m alternating between writing this piece and checking Twitter. None of us are sick enough to be a statistic, but we’re all sicker than we should be. Small harms, infinite scale. What Rose called a paradox, we call Thursday.

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This week’s version is technically correct; Americans did legally wager $148 billion on sports last year, more than they spent on movies, books, concerts and sports tickets combined. But it’s also misleading, because bet and spent measure completely different things.

When you pay $200 for a concert ticket, that $200 is gone. But when you place a $200 sports bet, you sometimes get money back. Of course, in the long run bettors get back less than they put in. In modern sports betting, that amount—the vig, or house edge—is about 10%, meaning for every $100 users bet they lose about $10, and get back $90.

The more apt comparison for this Tweet, therefore, is probably not $148 billion but $13.7 billion, or sports betting revenue—how much users actually lost.1

Yet dismissing the $148 billion as meaningless would also be a mistake. It captures something important about how gambling works on paper versus how people actually experience it.2

When someone places a $100 bet, the math might say they’re paying $10 for entertainment. But that’s only true in aggregate, across thousands of bets. In reality, that person either wins (likely more than $10) or loses their entire $100. There’s no scenario where they lose exactly $10.

That distinction matters. Most entertainment comes with a fixed price tag. Gambling is variable: bets either win or they don’t. The $148 billion in handle represents millions of Americans taking these binary shots. Casinos can ride out the variance because they’re taking tons of bets, and in the long run statistics works. But most gamblers are here for a good time, not a long time.3 They don’t experience a 10% entertainment tax. They experience winning or losing.

This is why both numbers are important. One is the the economic cost, what actually leaves Americans’ pockets for good. The other is the scale of risk Americans are taking, the amount of money they’re willing to put in play.

I used to play in a poker game where every night started with a coin flip tournament.4 Eight players, single elimination bracket. Everyone anted up $100, and after three rounds of flips, one person would be up $700 while the other seven were down their hundred.5

I once lost twenty weeks in a row.6 Two grand gone on coin flips, despite the math saying I shouldn’t be up or down anything.7 Expected value is tidy, actual results are messy.

Focusing on just one figure misses the point. $13.7 billion tells us what sports betting costs in aggregate. $148 billion tells us what’s actually at stake every Sunday. Both are real, both matter, and neither tells the whole story alone.

Last week, the FBI announced two investigations related to illegal gambling involving current and former NBA players.

The first, “Operation Royal Flush,” named thirty one indictees including various members of the mafia and five-time all-star and current Portland Trail Blazers coach Chauncey Billups. The defendants are charged with running illegal poker games using devices including marked cards and rigged shuffle machines to cheat players out of millions. The second, “Operation Nothing But Bet,” had six indictees including Miami Heat point guard Terry Rozier. The defendants are charged with rigging betting outcomes and feeding insider information to gamblers.1

There’s overlap between the two investigations—three defendants are charged in both, including Damon Jones, an NBA player turned assistant coach and close friend of Lebron James—but it’s best to examine them individually.

Operation Royal Flush

To understand this case, it helps to know how high stakes poker really works. Most games with buy-ins above a few thousand dollars don’t happen in casinos. They’re held in private homes, hotel suites, or back rooms. Players prefer them for the convenience and curated lineups.2 You can pay electronically instead of carrying bricks of cash. Hosts often provide open bars, private chefs, masseuses, and pretty much every amenity one could imagine.3

The problem is when you control the cards, dealer, table, and invite list, you can also control the outcome.4 Private games have always been easy to rig. If someone is willing to cheat—and at these stakes, someone always is—hosts can tilt the odds.

That’s essentially what prosecutors say happened. According to the indictment, the defendants ran a network of cheated poker games in New York, Los Angeles and Las Vegas. Billups and Jones were used as bait, high profile figures who were in on the scam and drew unsuspecting high rollers eager to play with them.5 Between 2019 and 2023 they profited more than seven million dollars, including $1.8 million from one particularly unlucky mark known only as John Doe #1.

For anyone who’s spent time around high stakes poker, none of this is new. These setups have existed for decades—Billups’s involvement was an open secret—and it’s widely known that many of the biggest private games are cheated. The only surprise is that it’s making headlines.

Operation Nothing But Bet

If Operation Royal Flush is proof old scams never die, Operation Nothing But Bet shows how easily they evolve. It’s also far more ominous.

Prosecutors allege that players and insiders shared confidential information with gamblers and manipulated prop bets—wagers on an individual player’s performance. The most brazen example: Rozier allegedly told co-conspirators he would remove himself from a game, who then placed hundreds of thousands of dollars in bets on him to record fewer than his expected number of points, rebounds and assists.6 Rozier left after nine minutes and didn’t return. Afterward, one bettor brought the proceeds to Rozier’s house, where the point guard counted his portion of the winnings in cash.

For the league it’s an existential integrity crisis, one that calls into question its embrace of legalized gambling. For sportsbooks, their entire business model depends on bettors believing that games are clean. And for fans who might never sit at Chauncey Billups’s poker table but watch every Heat game, there’s a sickening new possibility: that every missed free throw might not be a bad night but a payday. Billions in revenue and the faith of millions depend on a trust that’s now under assault.

The arrests have reignited the fundamental debate over legalized sports betting: whether it protects or threatens game integrity. Sportsbooks point to this case as proof the system works—their algorithms flagged unusual betting patterns, which triggered the investigation. Without legalization, they argue, this corruption would’ve stayed in the shadows, at unregulated bookmakers unaffiliated with leagues and unconcerned with catching cheaters.

Critics argue legalization didn’t uncover corruption; it created it. Widespread normalization and the explosion of exotic bets—along with the ability to combine them all into parlays, magnifying the payout—turned every possession into a potential scheme. A player can’t manipulate his rebounds prop if that market doesn’t exist—and before legalization, it didn’t.7 Today, companies like FanDuel and DraftKings offer hundreds of micro-markets per game.

Both sides are right. Legalization did create detection systems which caught this corruption—but it also created the conditions for it. The same technology that flags suspicious bets enables bets that otherwise wouldn’t exist. Two of the three main ‘integrity monitors’ in the US, Sportradar and Genius Sports, make most of their money selling data to sportsbooks, who use it to create the exotic markets those same companies then monitor. The NBA, along with the NFL, MLB, and NHL, also own equity stakes in these companies. The watchdogs profit from what they’re watching.

This creates a perverse incentive: catching corruption is bad for business. As Declan Hill, a match-fixing expert at the University of New Haven, recently told The New Yorker, the leagues’ primary concern “is that nobody knows about match fixing.”

Last year the NBA banned Jontay Porter, a benchwarmer nobody had heard of. But Terry Rozier? A starting point guard making $24 million a year? The league cleared him to play, even as the FBI continued to build its case. One NBA agent spelled out the calculation: “the NBA can’t risk catching a star because if they did, it discredits the whole league, it discredits the morality of the game, it discredits everything.”

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Chasing More

As legal sports betting has spread across the country, leagues have rushed to collect their share of Americans’ gambling losses. Like all bettors, they chased the promise of easy money. They’re now discovering, like all bettors, there’s no such thing. The bill always comes due, though not always in the currency you expect.

The solutions aren’t complicated. Ban micro bets—wagers on a single pitch or possession—that are the easiest to manipulate and have the highest rate of user harm.8 Prevent active players from appearing in betting ads. Stop the incessant gambling promotion in stadiums and during broadcasts. Enforce stricter rules and levy larger fines on teams and coaches surrounding injury reports.9

The price tag is steep. The cost of inaction might be steeper.

Leagues have built their future on FanDuel’s mantra: Make Every Moment More. But more is a dangerous promise. More engagement becomes more addiction. More markets become more manipulation. More innovation becomes more exploitation.

When everything is more, nothing is enough. The love of sport is drowning in the noise. Leagues can still choose differently. But first they need to remember what they’re supposedly protecting, before there’s nothing left to save.

If it feels as if gambling is everywhere, that’s because it is. But today’s gamblers aren’t just retirees at poker tables. They’re young men on smartphones. And thanks to a series of quasi-legal innovations by the online wagering industry, Americans can now bet on virtually anything from their investment accounts.

In recent years, this industry has been gamifying the investing experience; on brightly colored smartphone apps, risking your money is as easy and attractive as playing Candy Crush. On the app of the investment brokerage Robinhood, users can now buy stocks on one tab, “bet” on Oscars outcomes on another, and trade crypto on a third… read the rest in The New York Times

“I don’t think so,” he said. “This is something the church ought to talk about, and one of the reasons that doesn’t happen is because people don’t want to feel legalistic or fundamentalist.”1

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I disagree with Dr. Moore that it is impossible to gamble responsibly. But I strongly agree that we need to have better conversations about the topic. Most existing efforts stink, in part because they are funded by casinos, but mainly because, as I wrote a few months ago, they “frame everything around personal responsibility” and “individual weakness, instead of the environment designed to exploit those weaknesses.”

I mainly write about the public policy side of gambling, which tends to focus on how politicians and regulators can force or incentivize gambling operators to behave more responsibly.2 But the consumer side still matters. Gambling is here to stay, and just as we teach young people about safer sex and alcohol use, we should teach them about safer gambling.

With that in mind, here are my three pillars of responsible gambling for gamblers.3 Not everyone bets, and that’s ok. But if you do, these are the beliefs and habits you need to keep in mind to play safely.

Pillar #1: Life First

As with any substance or vice, gambling is most problematic when it begins to affect other areas of one’s life. That can mean skipping school or slacking at work, spending less time with (or lying to) friends and loved ones, or diverting money meant for other things to gambling.

Gambling doesn’t have to visibly crowd out other activities to be a problem. If one is preoccupied with gambling, or routinely feels depressed or anxious because of it, it isn’t healthy and should be curtailed. Those feelings can easily lead to more gambling, or to using drugs and alcohol to escape.

It can be hard to pin down exactly what “negatively affecting one’s life” means, and even harder to self-regulate. After all, we’ve all engaged in activities—be it gambling, drinking, social media, whatever—in unhealthy ways. But gambling’s rapid expansion, especially on young people’s phones, means more people are at risk of harm. Maintaining a “life first” heuristic—stopping when gambling interferes with commitments, relationships, general finances or mental health—can help gamblers, and those around them, recognize when the activity has crossed the line from fun to dangerous.

Pillar #2: Knowing the Odds

One of the most worrying things about modern sports betting is just how delusional users are. Polls show as many as 70% of online sports bettors believe they are winning or breaking even. That’s more than 20 times the real rate.

Being delusional about how much money you’re making is not necessarily correlated with dangerous behavior. Sixty percent of NFL bettors account for just 1% of profits, suggesting that most overly optimistic gamblers aren’t ruining their lives. Online casino players, meanwhile, are far more likely to know that the odds are against them. Yet they still lose more money than sports bettors and have higher rates of addiction.4

But it’s simply not possible to be a responsible gambler—on sports or anything else—without having a rough idea of how much you’re losing or are expected to lose. Just as credit card users must understand how interest works and smokers must understand they’re at a higher risk of cancer, gamblers must understand, roughly, the price of a bet. This is especially relevant given the increased popularity of parlays and same-game-parlays, complex bets that give gamblers far worse odds.

One does not need to be a math savant to responsibly place a bet; it can be enough to understand that “the house always wins,” set an amount you’re willing to lose, and stick to it. But as online gambling continues to spread, millions are risking their hard-earned money on what they mistakenly believe are good bets.5 The old advice about investing applies equally well to gambling: Don’t put your money in something you don’t understand.

Pillar #3: Risk Management

The house doesn’t beat the player; it just gives him the opportunity to beat himself — Nick “The Greek” Dandolos

Putting aside the emotional costs, sports betting can be a fairly cheap hobby.6 A bettor who wagers $25 on a team to win in every single NFL game is expected to lose just $320 over the course of a 5 month season.7 A Yankees fan who bets $10 on Aaron Judge to hit a home run—one of the worst performing wagers—has to bet on every game for two months before their expected losses equal the cost of an Aaron Judge jersey.8 Most gamblers are able to keep their losses manageable most of the time. The problem is the few times they can’t.9

Some are lost from the beginning. The gambler with $100 to his name betting $50 a game will go broke regardless of how skilled he is at picking winners.

But most gamblers who ruin themselves do so by “chasing,” or placing more and more bets trying to get even. Chasing usually follows multiple losses or one particularly bad beat. But it can also be triggered by a big win or hot streak, and the gambler’s desire to reach that same high, often by betting larger and larger amounts.10

One of the reasons gambling is so dangerous is that it purports to solve the very problem it creates.11 This is true of many vices—as Homer Simpson famously quipped, alcohol is “the cause of, and solution to, all of life’s problems.” But it is particularly true for gambling, because unlike alcohol and drugs, more bets can, at least in theory, remedy past losses. Gambling addiction is, after all, “the only disease where you can win a bunch of money.”

Being a responsible gambler means knowing when to stop. This is easier said than done, of course, and it’s also, in my experience, something you only learn after some very painful mistakes.

As one sports bettor put it, “You have to be able to go to bed a loser… Discipline is the key. Too many chase after losses and let ego get in the way. All ego does is make you go broke.”

Final Thoughts

It’s difficult to proactively describe what responsible gambling is, in part because so much is about avoiding pitfalls. But one of the reasons it’s so hard is that many people’s reasons for gambling are problematic, even if they’re not problem gamblers.12

Some people gamble for a bit of fun, just like some people have a couple drinks for fun. But some don’t. As Norm Macdonald wrote in Based on a True Story: Not a Memoir, many gamblers “gamble in order to escape the reality of life.” This is just as true for the $5 bettor who becomes fully immersed watching his favorite team as it is for the professional who grinds out thousands of tiny edges. It is, often, true for me.

Is that wrong, or even sinful? I don’t think so. As Macdonald noted, escaping the reality of life is, to a degree, “why everyone does everything.” More importantly, I’m not inclined to moralize, and I acknowledge that the urge to gamble is human.

The question thus becomes how to mitigate harm, which requires better policy but also better conversations and cultural norms. Hopefully this is a good start.

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Intro

This piece is very personal. I placed my first bet when I was 12, and have been gambling on the internet since I was 15.

While I am happy to say gambling has been a net positive in my life — it’s brought me endless entertainment, taught me problem solving, improved my understanding of chance, given me incredible friends and made me a few bucks — it has not been without its downsides.

There have been countless times I’ve lost more than I wanted to, that I’ve chased losses, that I’ve been unable to sleep or had gambling ruin my mood.

The majority of my those instances came before I was legally allowed to gamble, and were almost all were due to the ability to bet at any time on my phone. I’m lucky that none were devastating, that I’ve learned from my mistakes, that I’ve been blessed with family and friends and positive role models who have guided me in my gambling journey.

But I’ve seen firsthand how mobile gambling makes it so easy to fall off a cliff. I know too many people who have had their lives ruined, and am confident that if there are a thousand other universes, I’m a full fledged gambling addict in at least a hundred.

Most of what I research and write about is policy, because I know it has the ability to impact peoples’ lives. I know, for instance, that requiring separate apps for sports betting and casino games would make a difference. It would help protect me and so many others who don’t really want to play casino games but get pulled in anyway.

But policy is slow, and often messy. Unintended consequences are difficult to avoid. Most of all it tends to be reactive, addressing the harms of gambling after the fact rather than the root cause: gambling on a smartphone is uniquely dangerous.

I don’t know the perfect solution: which frictions to introduce, or how best to regulate app design. But I do know we need more awareness of just how risky online gambling is, and more attention to how we can prevent harm before it occurs. And we can’t rely on the gambling industry to lead that conversation.

As family, friends, teachers, and communities, we have a responsibility to help people— let’s be real, mostly young men — protect themselves. If we rely on policy alone, the odds are not in our favor.

Humans are hardwired to enjoy gambling. Nearly every society has developed ways for people to play high-stakes games of chance. Archaeological evidence dates back to 3000 BC, when Mesopotamians wagered with dice made from animal bones. In ancient Rome, lotteries served as after-dinner entertainment for nobles and emperors, with prizes ranging from vases to human slaves. As a congressional commission determined in 1975, “gambling is inevitable.”

But gambling today is fundamentally different from every other form of gambling in recorded human history. In the last few years, limitless, frictionless gambling has become available to anyone with an internet connection. What once required a trip to the bank and casino can now be done on an app — from home or from school, at all hours of the day.

Others have written about how today’s young people are the first to grow up with limitless access to hardcore porn. They are also the first to have gambling at their fingertips. The harms from this technologically-enhanced version of gambling are already spreading. Left unaddressed, a generation of young people — especially young men and boys — are at risk of losing their money, dignity, and livelihood, all without ever setting foot in a casino… full piece here

The author, special agent supervisor of gaming compliance Michael Steinberg, wrote, “less than 1% of Wyoming sports bettors are limited” and told reporters that limits were not that severe, typically a “$500 or $1,000 maximum on a market” for patrons who had been restricted.

Steinberg was not sympathetic towards bettors who had been cut off, saying “most of the reason[s] for limiting a patron revolve around the patron ‘cheating’ in some manner.” He listed various ways users could cheat, including placing bets while at live events to get ahead of the sportsbook’s data feed and creating multiple accounts to take advantage of bonuses.

I don’t have access to the data sportsbooks gave Steinberg, and it may be true that Wyoming is unrepresentative of the rest of the country and uniquely full of “cheaters.”1 But based on my experience, conversations with current and former sportsbook traders (the people who actually limit customers) and hundreds of bettors across the country who have been limited, there are some major flaws in his analysis.

First is that restricted users are not able to bet $500 on most markets. Limits at legal sportsbooks generally come fast and furious; once they decide you are an undesirable customer it’s rare to be able to bet more than a couple hundred bucks on major markets, or $50 on prop and derivative markets.2

Take my own account at Fanatics, one of Wyoming’s five licensed operators. I’ve never “cheated” or engaged in any of the behaviors Steinberg describes, yet once they decided to limit me I couldn’t bet more than $50 on any major market, or more than $15 on any prop market.

Some books are more lenient in their treatment of restricted customers—Caesars deserves credit here, along with Fanduel which offers the highest limits and is the only operator to display max wager amounts before users submit bets—but they are the exception.

The second issue with Steinberg’s report is that most users are not limited for “cheating,” or for engaging in any of the behaviors he outlines. They’re not even limited for winning; after all, if sportsbooks banned everyone who placed a winning bet, they’d have no customers left. Bettors are primarily limited for displaying tendencies which indicate they are likely to win in the future.3

These tendencies take various forms. Decades ago betting on unders and underdogs was enough to get profiled as “sharp.”4 Today, sportsbooks are able to leverage vast amounts of data to accurately identify which customers are likely to be profitable for them in the long run, and which pose a threat to their bottom line—sometimes within just hours of signing up.5

I believe sportsbooks should be allowed to profile and restrict successful customers. They are private businesses with obligations to their shareholders, and winning bettors don’t have a god given right to bleed them dry. Moreover, high tax rates and expanded betting menus make it incredibly difficult to operate modern sportsbooks without decreasing limits or bet options for certain customers.

What’s unfortunate is that Steinberg’s report—and most policymakers' responses—ignore how modern sportsbooks actually operate. This creates problems for customers getting cut off without explanation, many of whom are pushed into the unregulated market. It also hurts low-margin sportsbooks that don’t restrict users and should receive preferential tax and regulatory treatment.

But most importantly, it misleads millions of Americans, primarily young men, who are losing and will continue to lose billions of dollars without understanding that the game they are playing is rigged.

Instead of debating whether bets should be voided if a Belarusian athlete raises a flag, regulators should ask operators a simple question: if a customer uses their own knowledge and data they’ve acquired to place informed bets, and wins, will you limit or ban them?

The answer, of course, is yes. So why are operators allowed to lie in their advertisements, and have celebrities on ESPN tell viewers they can sign up and use their smarts to win big—even though the system is designed to stop them from doing exactly that?

One of the most worrying things about modern sports betting is just how delusional so many users are. 70% of online sports bettors believe they are winning or breaking even, more than twenty times the rate of people who actually are. Bettors who think they can win are more likely to chase their losses, have difficulty quitting, and experience serious harms.

There is a simple way to combat these delusions: mandate sportsbooks tell the truth in their advertisements.6 Sixty years ago, Congress passed the Federal Cigarette Labeling and Advertising Act. Since then, study after study has shown that warning labels work. They decrease adoption rates among young people, decrease the number of people who get addicted and are harmed, and increase knowledge about the product among users and non users.

We need a similar act for sports betting, to prevent operators from lying to customers and to make sure Americans are informed about the products they’re consuming. Just as millions of Americans continue to smoke, millions will continue to gamble. The goal isn’t to stop them—but to help them understand the odds.

“They fatten upon wretchedness, and have the effrontery to demand that the laws of the State shall be adapted to their purposes.” So said Charles Evans Hughes, Republican governor of New York and eventual Chief Justice of the Supreme Court, about Empire State gambling operators in 1908.

More than a century later, Hughes’s words ring true as the United States faces an explosion of legal online gambling. Sports betting, decriminalized by the Supreme Court in 2018, has spread to 39 states. Online casinos, which include slots, blackjack, and more, are permitted in seven. Americans now gamble roughly $1 billion a day on state-sanctioned apps like DraftKings and FanDuel—far more if one includes the lottery and meme-stock or crypto speculation.

Many have championed this newfound embrace of financial thrill-seeking. According to The Economist, America’s “gambling boom should be celebrated as an expansion of people’s freedom to lead their lives as they choose.” Bill Miller, president of the American Gaming Association, the gambling industry’s main lobbying group, wrote last year that online sports betting is a “vibrant and responsible industry that prioritizes consumer protections” and is “generat[ing] significant economic benefits.” According to Miller, gambling is innocuous, “a voluntary entertainment option, comparable to attending a concert, dining out, or going to the movies.”

But gambling is not like attending a concert or going to the movies. Read the rest at City Journal

At the heart of many debates in gambling policy are disagreements around “friction,” or how hard it is to gamble. Those who support gambling believe it should be low in friction—i.e. easy, simple, and widely available. Those who are leery of gambling, on the other hand, believe it should be legal but that the government should make it harder for Americans to bet.

Both sides have a point. Gambling advocates are right that friction-inducing regulations can create inferior user experiences, give unregulated operators a competitive advantage, and often fail to achieve their intended goals.

Critics are right that unfettered access to legal gambling is very bad for a lot of people, that operators continually demonstrate they are incapable of self-regulation, and that increasing friction would benefit society overall.

As a regular sports bettor, I don’t want my apps to be buggy or difficult to use. I think that once you’re in the system, the process should be as smooth as possible. I want the search function to work well so I can quickly navigate to bets I like, and I don’t want to have to submit my bank statement, especially not after I’ve deposited or when I’m trying to withdraw.

That said, I generally find myself on the pro-friction side. It seems insane that I need a background check for a new credit card with a $2,000 limit but can lose $30,000 on Draftkings in five minutes without anyone blinking an eye.

And there is one specific form of friction that strikes me as a no-brainer. In fact, it’s so obvious I’m ashamed I hadn’t thought of it before encountering an amazing video in support of it by Clean Up Gambling: mandating separate apps for sports betting and online casinos.

In every state where both sports betting and online casinos (iGaming) are legal, casinos are built into online sportsbooks, meaning that fans trying to bet on the NFL will be prodded to risk their money on blackjack or slots. Cross-selling—where operators entice sports bettors to play casino games, via offers such as free slot spins—is not only rampant but a company mission. As Draftkings CEO Jason Robins put it in an earnings call last year, “once you’ve already acquired [the customers], cross selling is an incredibly effective and a very fast payback means of increasing not only LTV [lifetime value], but also short-term gross profit as well.”

Fanduel also attributes much of their iGaming success to cross-selling, noting in a 2022 capital markets day presentation to shareholders that 41% of customers who signed up for the sportsbook engaged with casino products in their first month. The company’s 2024 4^th quarter earnings release highlighted new online casino products, in particular “sports-themed slots content such as NBA Super Slam [which] help drive sportsbook cross-sell.”

Operators want sports bettors in the casino because casino players lose a lot more.1 In Pennsylvania, the largest state with legal online casinos, residents lost $27 million betting on sports in March. During the same period they lost $238 million to online casinos, 75% of which came from slots.

There is nothing inherently wrong with a company pushing customers towards more profitable products. One classic example of this is McDonald’s. Employees don’t ask “would you like fries and a drink with that?” to make sure you have a more balanced meal; they do it because the margins on french fries and soft drinks are far higher than on burgers.

Cross-selling becomes a problem when the product being pushed is addictive and dangerous, which online casinos, particularly slots, are. The patent application for virtual reel mapping, the technology behind most modern slots, literally says the goal is to “make a machine that is perceived to present greater chances of payoff than it actually has within the legal limitations that games of chance must operate.”2 In layman’s terms, that means the whole point is to trick you. In fact, the UK gambling commission banned cross-selling last month because “evidence shows consumers are more at risk of harm when they gamble on multiple products.”

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This is a particularly salient topic for me. I make my living betting on sports. I don’t like online casino games. And yet, like many online sports bettors, I have often found myself at the tables as the result of targeted promos, boredom, or loss chasing. In fact, I almost never even click the casino tab on the app; I get sucked in by the mini blackjack icon at the bottom of the sports betting home screen, which is the default on many sites including Draftkings.3

Last year I played roughly $140,000 worth of online casino games on Draftkings, despite never downloading the casino app and never once actually wanting to play online casino.4

There is a simple solution that would protect me and millions of Americans who want to bet on sports: get rid of casino games on sports betting apps.

Draftkings and Fanduel already have dedicated casino apps, and multi-players could still seamlessly transfer their balances across products.5 But by requiring separate apps for sports betting and iGaming, regulators would insulate sports bettors from casino promos and products, which study after study have shown to be far more dangerous.

If you go to a drug store with a headache looking for Aspirin, the pharmacist isn’t allowed to try and get you to take Oxycodone instead. And they definitely aren’t allowed to give you a voucher for 10 free pills when you walk in. Yet as iGaming and sports betting have spread across the country we’ve allowed operators to normalize this type of behavior, leading to skyrocketing rates of addiction and a worse gambling experience for average bettors.

I believe online casino gambling shouldn't be legal at all, and I hope the seven states where it's currently permitted eventually ban it. But in the meantime, the least regulators can do is mandate separate apps. I’m a professional, accustomed to thinking more rationally about my bets than your average casual gambler. And sometimes, even I can’t resist the temptation.

Sportsbooks need their customers to make bets. Usually this takes very little convincing. If a guy (and it’s usually a guy) wants to bet on the Yankees, all the book needs to do is offer that bet and he’ll go place it.

But sometimes it’s not that simple. Some gamblers aren’t sure whether to bet, or what to bet on, and it’s the sportsbook’s job to nudge them into a decision. Sportsbooks also want to encourage users to place more bets. More bets means more profit, and their goal is to maximize profits.

Modern sportsbooks nudge their customers in various ways. They add new and exciting markets, allow gamblers to watch live streams only for games they’ve wagered on, and send push notifications to promote upcoming bets.

They also sometimes alter the odds to make certain wagers more appealing. One of the most common ways they do this is via odds boosts, which increase the odds of a specific bet chosen by the sportsbook.1 These boosts are often large enough to render the wager profitable for the bettor. Sometimes they’re literally free money: last year, when launching in Vermont, Fanduel offered users an even money bet of up to $50 that the Bucks/Celtics game would have more than 0 points.

Even when a boost isn’t big enough to make a wager profitable, it’s usually enough to make it more appealing than most other wagers in a sportsbook. Betting on odds boosts is kind of like shopping in the sale section: usually it’s stuff you don’t want, but sometimes there are great deals. And it’s usually cheaper.2

Unfortunately, too many modern sportsbooks are operating like JCPenney. They advertise sales based on original prices that never existed, with the intent of tricking customers into thinking they got a deal when all they really got was an overpriced piece of garbage.

Here’s one recent example, from last Tuesday on Hard Rock sportsbook:

At halftime in the Magic/Cavaliers game they offered an odds boost on each team’s star player, Donovan Mitchell and Franz Wagner, to score 13 or more points in the second half. This is an appealing wager: you get to root for the best players on both teams, and 13 points isn’t that many, especially for them. Plus, the odds are “boosted”: Hard Rock is telling you that the odds were +150, meaning a $10 bet would profit $15, but now they’re +225, meaning that same $10 bet will profit $22.50. Sounds like a good bet!

But Hard Rock is lying. That wager never had odds of +150. They’re just saying it did to encourage you to bet the +225, which is still an absolutely awful deal.

How do I know? At halftime, Mitchell had 5 points. Hard Rock had his projected point total at 17.5, meaning to go “over” he would need 13 or more points. Wagner, meanwhile, had 8 points and a projected total of 18.5, meaning to go over he would need 11 or more points.

Hard Rock allowed users to combine these two bets—Mitchell scoring 13+ points and Wagner scoring 11+ points in the second half—for odds of +220.

In other words, Hard Rock’s listed odds for one player scoring 13+ points and the other scoring 11+ points were nearly identical to the “boosted” odds for both of them to get 13+. That +150 was simply made up.

Moreover, those 2 points matter a lot. The “boosted” odds bet was significantly worse than the bet users could have created by clicking the overs themselves.

Calculating exact probabilities for bets like these is hard. So I asked Kirk Evans, a professional basketball bettor specializing in NBA player props, for some help.

He told me the “true” odds for Mitchell 11+ and Wagner 13+ were around +255. Hard Rock was offering +220, meaning that bet had an expected return of roughly -10%.

The true odds for both players getting 13+ points, meanwhile, was around +330. Hard Rock was advertising +225, meaning the bet—which any reasonable person looking at the promotional banner would’ve thought was pretty good, if not super profitable—had an expected return of roughly -24%.3

What Hard Rock did isn’t rare. It’s also not illegal, and ensuring the accuracy of odds boost promotions shouldn’t be a priority for regulators.

But it is, like so many other marketing practices modern sportsbooks engage in, scummy.4

Gambling has and always will be a pretty scummy industry. The interests of the casino and the gambler are diametrically opposed—one winning more means the other losing more—and operators will necessarily tend towards doing things that screw over their customers.

But there's a difference between a business that profits from mathematical advantage and one that profits from lies. Hard Rock and others want us to believe they're the former while acting like the latter. Offering horrible bets is fair game. Falsely advertising your horrible bets to make them seem like great deals is not.

To adapt an old saying: modern sportsbooks are pissing all over their users and telling them it’s raining. And millions of Americans are so dazzled by the rainbow they can’t tell the difference.

Update: here’s an informative exchange I had about this post/bogus odds boosts more generally with a former trader at a major US sportsbook, highlighting the disconnect between trading and marketing teams and the predatory nature of promotional practices