Bank of America warned on the growth of retail prediction markets and sports results, warning that it could lead to consumer debt and bad loans. US-based customers have wider access to prediction platforms, due to legislation allowing platforms to be treated as trading services.
The expansion of prediction markets is creating credit risk, as the predictions can be just as risky as gambling. Platforms like Polymarket incur losses for 84% of users on average, with only a handful of whales making successful trading streaks.
Bank of America analysts warned some users could resort to predictions with consumer debt, as Bloomberg reported.
‘Easy access and gamified interfaces encourage frequent and impulsive wagers,’ warned BofA analysts.
US-based traders have wider access to prediction markets like Kalshi and Polymarket, after the Supreme Court canceled the federal ban on sports gambling.
Kalshi and Polymarket offer a new form of betting, requiring upfront interaction with their pairs or contracts. The financial side of prediction markets may push some users to take up debt, in the hope of a rapid gain.
The risk is even higher for short-term contracts or contentious issues expected to be resolved within minutes or hours.
Prediction markets converge investment with speculative gambling
Prediction markets, with their fast resolution and transparent liquidity, are becoming one of the preferred modes for engaging with crypto projects. Instead of waiting for some form of value, clients seek a mix of entertainment and speculative finance.
According to BofA, the usage of prediction platforms could create more bad credit. Prediction market usage is not banned by banks, and is not directly reflected in the credit score. However, regions with more lenient betting laws also have lower credit scores on average, with an increased likelihood of personal bankruptcy.
The rising popularity of Polymarket and Kalshi, along with marketing efforts, may amplify the effect of bad loans. Mainstream platforms also carry similar risk, not unique to on-chain predictions.
Although Kalshi and Polymarket claim their business model is not gambling, analysts see a similar potential for a rise in bad loans.
Predictions offer easier, gamified access
While crypto investing has required some level of knowledge and was less user-friendly, prediction platforms offer gamified access. The ease of use and popular questions bring a new wave of retail users with more limited research.
Polymarket also expanded its reach by allowing traders to place predictions through their existing brokerages. Shayne Coplan, founder of Polymarket, said this was a tool for the platform to spread throughout the US financial system.
Today Polymarket US was approved by the @CFTC for intermediated trading – aka letting people trade Polymarket through their brokerages. A key milestone for permeating the US financial system.
Much props to our legal and US ops team. This process has historically taken years…… https://t.co/F7vTXngo9Y
— Shayne Coplan 🦅 (@shayne_coplan) November 25, 2025
Currently, Polymarket is mostly available directly or through wallets, still requiring USDC holdings to buy prediction pair tokens.
Polymarket showed an increase in questions, with over 9,300 questions in November to date. The resolution time for prediction pairs is also trending downward, with more dynamic markets pushing traders to move fast, without much research.
Kalshi and Polymarket reached over $8.5B in trading volumes in October, an all-time record, and continued the strong performance in November. Kalshi was the main driver of growth, though Polymarket
