John Arnold, founder and co-chair of Arnold Ventures, speaks throughout a session at CERAWeek by S&P International at George R. Brown Conference Heart in Houston, March 20, 2024.
Yi-Chin Lee | Houston Chronicle | Hearst Newspapers | Getty Photographs
Billionaire philanthropist and former vitality dealer John Arnold says on-line sports activities betting has modified immeasurably because it turned authorized within the U.S. in 2018, due to the rise of on-line prediction market platforms Kalshi and Polymarket and cell apps like DraftKings and FanDuel. To raised perceive the potential dangers, he and his spouse Laura are awarding $2.6 million to researchers finding out the evolving world of playing on sports activities.
The grants, which haven’t been beforehand reported, will go to researchers at universities and suppose tanks to have a look at the impact of playing on monetary well-being, family formation, psychological well being and shopper conduct.
Arnold, who co-founded Arnold Ventures with Laura, informed CNBC he desires lawmakers and regulators to get up to the brand new actuality of the booming sports activities betting market.
“With the ability to wager over the cellphone has dramatically elevated entry and lowered friction,” Arnold informed CNBC. “It has modified what the product is. You possibly can wager on each pitch. You possibly can wager with a pace that was by no means potential whenever you needed to place a name to place a wager down.”
Arnold, a former hedge fund proprietor and Enron vitality dealer whose philanthropy has labored on prison justice reform and enhancing greater schooling, has turned his consideration extra just lately to the potential pitfalls of prediction markets and sports activities playing apps, assembly with lawmakers and pushing for stronger guardrails.
Whereas Arnold stated he views sports activities betting on on-line apps and on prediction markets as “nearly indistinguishable,” the analysis will look particularly on the results of on-line gaming platforms. That is partly as a result of entry to information from prediction market platforms is extra restricted, an Arnold Ventures spokesperson defined.
The research being funded study the “causal influence of sports activities betting legalization” timing in numerous states, the spokesperson stated. Prediction markets have a unique regulatory construction than on-line betting websites, that are overseen by states. The Commodity Futures Buying and selling Fee, a federal regulator, oversees prediction markets, and Arnold Ventures stated meaning there’s not state-by-state information to match as there are for websites like DraftKings and FanDuel.
Faculties together with Princeton College, the College of Pennsylvania and the College of Wisconsin will obtain Arnold’s grants for analysis over the subsequent three years, Arnold Ventures stated in a press launch.
A 2018 Supreme Court docket choice paved the way in which for legalized sports activities betting within the U.S., with participation rising within the years since. An April survey by the Analysis Institute of Siena College discovered that 27% of People have an lively on-line sports activities betting account, up from 19% in 2024.
The sports activities betting trade hit a document $16.96 billion in income in 2025, the American Gaming Affiliation introduced earlier this yr. Thirty-nine states, plus the District of Columbia, have legalized sports activities betting since 2018.
“A number of states jumped into legalizing sports activities betting in 2018. And I feel that they had been very drawn to the potential tax income,” Arnold stated. “It’s totally interesting for a state legislature to get cash from a voluntary tax fairly than a compulsory tax.”
In the meantime buying and selling quantity on the highest two prediction markets — Kalshi and Polymarket — has grown from lower than $5 billion in September to roughly $24 billion in April, in response to an evaluation by Pew Analysis Heart.
Prediction markets have argued they’re completely different than their on-line sports activities playing friends, partly due to their customer-to-customer construction.
“Polymarket is impartial market infrastructure and has no financial stake in any market end result. We don’t take positions or earn money primarily based on outcomes,” a Polymarket spokesperson stated on Tuesday.
Spokespeople for Kalshi, DraftKings and FanDuel didn’t instantly reply to requests for remark Tuesday.
Sports activities are the most well-liked kind of occasion contract by quantity on prediction markets, which function distinctly and are topic to a unique regulatory authority than conventional playing websites. As of February, about 87% of bets made on Kalshi within the final yr had been on sports activities, in response to the Congressional Analysis Service.
“Our argument is that each the depth and the entry has modified dramatically, for not solely sports activities betting however for various different vices,” he continued. “As legislators are interested by what we do with this and will we legalize, there must be the belief that this product has modified.”
Arnold compares the maturation of on-line sports activities betting to marijuana legalization and the evolution of pornography.
“Marijuana in the present day is a really completely different product than what it was a technology in the past. It is only a a lot stronger depth, and the entry has elevated.,” Arnold stated. “You consider pornography. The depth of the product has elevated dramatically, the benefit of entry has eased dramatically.”
Arnold Ventures in 2025 funded analysis grants to review the consequences of legalized marijuana.
“So sports activities betting, clearly the entry has elevated dramatically, however the product has modified as nicely,” Arnold stated.
A given consumer can place a number of bets on a single recreation with out ever leaving the sofa. Forty-six p.c of males between 18 and 49 are bettors, in response to the Siena survey from this spring, and critics argue it might be driving destructive monetary impacts for younger males.
The problem has caught the eye of lawmakers on Capitol Hill, the place a flurry of proposals have been launched because the begin of the yr.
Some, like a invoice launched by Sen. Jeff Merkley, D-Ore., and Rep. Jamie Raskin, D-Md., would ban prediction market occasion contracts on sports activities, elections, battle and authorities actions. One other, from Sens. John Curtis, R-Utah, and Adam Schiff, D-Calif., particularly seeks to bar prediction markets like Kalshi and Polymarket from permitting sports activities bets on their platforms.
In the meantime laws from Sen. Richard Blumenthal, D-Conn., and Rep. Paul Tonko, D-N.Y., seeks to create stronger guardrails for on-line sports activities betting by empowering states to create their very own legal guidelines, prohibit promoting and prohibit sure sorts of prop bets, that are wagers on a particular occasion or statistic inside a recreation, versus the ultimate end result.
Arnold has met with lawmakers on Capitol Hill in regards to the challenge, however most of his effort is directed on the state stage, the place sports activities betting is regulated.
“We’re very actively speaking to state legislators about their choice to legalize, as a result of payments to legalize are coming via state legislatures yearly,” Arnold stated. “And there are additionally those who’ve already legalized and are interested by the appropriate guardrails.”
Disclosure: CNBC and Kalshi have a industrial relationship that features buyer acquisition and a minority funding.
