Jonathan D. Cohen: American Institute for Boys and Men Gambling Policy Lead on the rise of prediction markets and sports betting

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What are prediction markets and how do they differ from traditional sports betting?

Mike Hosking 0:00
To the big business of sport, no, not the rugby, betting and prediction markets. LeBron James signed this fifteen million dollar a year endorsement deal with Polymarket we told you about the other day. Prediction market business is massive and it's growing. Now Jonathan D. Cohen is the author of Losing Big. He's also a gambling policy lead at the American Institute for Boys and Men, so we thought it was worth a discussion. He's with us morning. Thanks, Mike. These prediction markets, are they different to what you would call good old fashioned Or are they essentially the same thing?
Jonathan D. Cohen 0:27
Uh under the hood they're different, but as far as a user, uh you know, as someone sitting down, opening up their laptop and and and firing some bets away, they basically work the same way.
Mike Hosking 0:36
Is it trouble, do you think?

Why are young men especially attracted to prediction markets and sports betting?

Jonathan D. Cohen 0:38
Uh, I I would say it's it's it's as troubling as many of the other sort of forms of gambling in that it is we've erased what I would call friction, right? Which is the it used to be, at least here in the States, you had to you know to get your butt up and you have to go to a casino and you have to have cash in your hand and that was the only way you could place a bet. And now you're sitting on your phone, you wanna bet on Malaysian doubles badminton or Nigerian ping pong or whatever, and there's sort of nothing stopping you.
Mike Hosking 1:03
What's happened here? Uh am I betting on the sports because I think I know the sports and I'm good at it, or am I betting on this because I can bet on anything?
Jonathan D. Cohen 1:12
Uh I I think a little of both. I I think that's a it's a really good question, but but it it depends on the person. I think certainly actually a lot of what the companies are trying to inculcate, uh particularly among young men, is this sense of overconfidence, this belief that you know sports, that you know ball, and that you can put that to the test. I mean, I don't know how many times you've watched the Sydney Sweeney ad uh that she did for a prediction market company here, but she's completely naked. Yeah. Think you think you know sports? Prove it.

How are prediction markets blurring the line between gambling and investing?

Jonathan D. Cohen 1:41
Uh what what better intoxicant for for a young man who wants to gamble than a naked Sydney Sweeney beckoning them to bet?
Mike Hosking 1:47
And this is all about young men.
Jonathan D. Cohen 1:49
N not entirely, of course, but but our our polling shows young men are three times as likely to have heard of of prediction markets, twice as likely to have in the last six months either used a prediction market or a gambling platform or a day trading platform or a crypto platform. Uh and uh I you you don't sound so surprised. So for the most part, uh yes, that this is about young men.
Mike Hosking 2:09
See, I well I've read a couple of articles. One said young adults under twenty one traded five billion on Kelchis so far this year. Another one said fifty two percent of Gen Z investors redirected investing money to sports bets. What's that about?
Jonathan D. Cohen 2:23
Yeah, this is this is part of the problem and this is why prediction markets I would argue might actually be more dangerous in some respects than traditional gambling platforms, which is the complete blurring of the line between gambling and investing. In some countries, including here in the United States, uh prediction markets are legally not gambling, they are legally a form of trading or investing. So someone, let's say a nineteen year old who's starting to build wealth, could easily

What risks do 19‑year‑olds face when treating prediction markets as financial investments?

Jonathan D. Cohen 2:48
Delude themselves into thinking that this is a sound financial investment, that it is as wise to bet on the Philadelphia Eagles uh minus six and a half as it is to buy an Apple stock or whatever the case may be. And that is is really dangerous for the long term uh financial well being of young
Mike Hosking 3:05
I've also follow uh Congress gonna get on top of this? Can they get on top of this or not?
Jonathan D. Cohen 3:10
Can they get on top of anything? I don't I don't know. Uh I I I'm so despondent about about Washington. I would say this th I this this is this is heading, it seems like, at least in the US, to the Supreme Court, where there there's going to be a decision to decide the relationship w basically whether these violate state and travel gaming law, whether they constitute gambling, or whether they constitute investing.

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