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A new study from the American Gaming Association (AGA) suggests that how sports prediction platforms brand themselves significantly alters user perception of risk. When sports event contracts are framed as investments rather than gambling, many users misunderstand both the financial hazards and the regulatory protections involved.
Comparing user perceptions of prediction markets
The research found a stark contrast in user mindsets: 28% of prediction market users viewed their activity as investing, compared with just 9% of traditional sportsbook users.
While 58% of prediction market users still recognize the activity as gambling, the “investment” framing creates a distinct psychological shift in how the remaining demographic approaches their capital.
Widespread confusion over regulatory dispute resolution
The study also revealed significant confusion regarding consumer protection. Nearly 78% of prediction market users incorrectly believed state gaming regulators could resolve disputes on their platform.
In reality, these markets primarily operate under financial regulatory frameworks rather than traditional gaming oversight. This distinction means that the dispute processes and safeguards users expect from a sportsbook may not exist.
Disparity in responsible gaming tools visibility
Visibility of safety features remains another point of divergence. Only 28% of prediction market users reported that responsible gaming tools—such as deposit limits and self-exclusion options—were easy to find. In contrast, 58% of sportsbook users reported easy access.
Furthermore, only 34% of prediction market users recalled seeing any responsible gaming messaging, while 78% of sportsbook users reported high exposure to such tools.
Financial exhange positioning and consumer impact
As prediction markets expand, they are increasingly positioning themselves as financial exchanges. In the Jan. 30 study, AGA CEO Bill Miller noted that this shift can lead users to risk larger sums of money or use funds intended for long-term savings.
“The study’s findings highlight the importance of clear regulation and consumer protections,” Miller said, emphasizing that state-regulated sportsbooks are held to specific oversight standards that may not apply to prediction platforms.
Future implications for industry transparency standards
While supporters argue prediction markets provide valuable tools for forecasting and hedging, critics—including traditional gaming operators—contend that sports event contracts are functionally equivalent to betting and should be regulated as such.
Regardless of the legal outcome, the AGA research indicates that transparency and clear risk communication will remain the primary challenges for regulators as these platforms attract new users.
