‘It’s a loophole’: Shut out from most gambling, 18-to-21 crowd rushes to prediction sites

‘It’s a loophole’: 18-to-21 Group Turns to Prediction Markets Amid Gambling Restrictions

It s a loophole – Young adults between the ages of 18 and 21, often excluded from traditional gambling venues, are increasingly turning to prediction markets like Kalshi to place wagers. This trend has sparked concerns among addiction experts and state regulators, who warn of a potential public health risk. The phenomenon highlights a legal distinction that allows these platforms to operate without the same age restrictions as conventional sportsbooks, creating a unique opportunity for young people to engage in speculative trading.

A Financial Rollercoaster in Starbucks

Andrew, an 18-year-old high school senior, found himself in a situation where his usual sources of income weren’t enough. When he needed money for a summer trip to Greece with friends, he took a $500 cash advance from his credit card company and spent over six hours at a Starbucks, trading on live tennis matches via Kalshi. By the end of the day, he walked away with a $2,200 profit. This success, however, only scratched the surface of his growing fascination with the platform.

Later, Andrew used Kalshi to supplement his part-time job earnings, funding outings with friends and dates with his girlfriend. But the thrill of profit quickly turned into a trap. After a near-miss where he risked losing $1,000 on an NBA game, he deleted the app and vowed to never return. Yet, just days later, he re-downloaded it, and the cycle repeated itself. His second attempt to gamble saw him convert a $1,300 cash advance into $3,000, according to screenshots reviewed by CNN. When he tried to withdraw his winnings at 3 a.m., an error message blocked the transaction, forcing him to keep betting. Within hours, the entire amount was gone.

“I didn’t know what to do. I started spiraling,” Andrew, who asked for his full name to be withheld, told CNN in an interview. “In the moment, you’re just going, going, going. It’s like tunnel vision.”

The Legal Loophole Enabling Young Gamblers

What makes prediction markets distinct from traditional sportsbooks is a legal technicality. In most U.S. states, gambling is restricted to individuals aged 21 or older. However, prediction sites are classified as financial markets rather than gambling platforms. This categorization allows users as young as 18 to participate in speculative trading, offering “event contracts” that mirror the mechanics of futures trading. Instead of betting on soybean prices, users speculate on outcomes like elections, sporting events, and awards shows.

“This is why states put common-sense age restrictions on gambling, drinking and other forms of dangerous behavior,” said Matt Platkin, a former New Jersey Attorney General and Democrat, who led legal action against Kalshi last year. “Without question, it’s a loophole.”

Despite recent efforts by prediction markets to curb problematic behavior, the 18-to-21 demographic remains a vulnerable group. Regulators and lawmakers argue that the absence of strict age verification creates an environment where impulsive betting can thrive. “The gap between emotional and financial maturity is widening,” noted Philip Sullivan, director of the Florida Council on Compulsive Gambling’s helpline. “Young people are exposed to gambling opportunities they might not have had before.”

Expanding Access and Escalating Risks

The accessibility of prediction markets has been further amplified by financial trends affecting young adults. Many college students now have access to significant sums through student loans, which they can use for gambling. Abdullah Mahmood, a representative from a financial institution, highlighted a case involving a 21-year-old who lost “over five figures” on Kalshi and Polymarket. “The availability of funds has created a perfect storm for addictive behaviors,” he said.

Research supports this concern. Studies indicate that the brain’s impulse control mechanisms aren’t fully mature until age 25, making younger individuals more prone to developing gambling addictions. “They are not only wagering on sports outcomes, but also placing bets based on things they hear in the news or online, because they believe it gives them some type of advantage or insight,” Sullivan explained. This belief in predictive power can lead to reckless spending and a cycle of debt.

Kalshi’s Defense and the Debate Over Regulation

Kalshi, which partners with CNN for data coverage, has defended its approach. In response to Andrew’s experience, a spokeswoman for the platform, Elisabeth Diana, stated that the withdrawal error was due to a fraud alert issued by Andrew’s bank. “Kalshi’s withdrawal system did not fail,” Diana said in a statement. “As a regulated financial exchange, we have to work with similarly regulated banks… that means when a bank issues a fraud alert, we have to hold the transaction until we get an OK to move ahead.”

While Diana pointed out that Andrew’s net lifetime losses totaled around $800—well below the threshold for deposit limit notifications—she acknowledged the need for continued evaluation. “We will continue evaluating our approach to ensure people get the appropriate protections and support they need,” she said. This response has fueled further scrutiny, with some arguing that the current system fails to account for the psychological impact of rapid financial gains and losses.

A Growing Public Health Concern

Experts warn that the rise of prediction markets could contribute to a surge in gambling-related issues among young adults. The National Problem Gambling Helpline, which provides resources for those struggling with addiction, has seen increased inquiries from individuals in this age group. “The flexibility of these platforms allows for constant engagement, which can be both a blessing and a curse,” said one addiction specialist. “They provide a sense of control, but that control can quickly dissolve into chaos.”

For Andrew, the story is emblematic of a larger trend. His initial success with Kalshi gave way to a spiraling debt, highlighting the risks of speculative trading. “It’s easy to get caught up in the thrill of predicting outcomes,” he said. “But once you’re in, it’s hard to stop.” The case underscores how the legal classification of prediction markets as financial instruments, rather than gambling activities, has enabled young people to access high-stakes betting without the usual safeguards.

As more young adults experiment with these platforms, the question remains: how can regulators strike a balance between innovation and protection? While Kalshi maintains that its system is sound, the experiences of individuals like Andrew suggest that the current framework may not be sufficient to prevent the pitfalls of gambling addiction. The debate over whether these markets should adopt stricter age checks or other preventive measures continues to intensify, with implications for both the financial and mental health sectors.