John Arnold argues prediction markets' sports event contracts are harmful for boys and young men.

• John Arnold has expressed his concerns over the proliferation of prediction markets
• He has called for stricter guardrails, particularly focused on protecting young men and boys from gambling-related harm
• Arnold is not specifically opposed to any form of event contract, but he has urged for stricter regulation around consumer protection

John Arnold, a billionaire philanthropist, has become the latest high-profile investor to sound an alarm over the proliferation of prediction markets, cautioning that these financial instruments ought to be regarded with care and could be downright harmful.

His main argument focuses not so much on the existence of prediction markets, but on the lack of what he sees as adequate consumer protection measures.

According to Arnold, young men and boys are particularly susceptible to prediction markets and specifically - sport event contracts, which could already be harming them, the investor argues.

Prediction markets should have better guardrails against potential harm

Arnold echoes the same concerns raised by gaming regulators at the state level, saying that prediction markets allow for much quicker "wagers" (companies operating these products refer to them as "trades" instead) placed seamlessly.

"The sites have, deliberately or not, created a pathway for teenagers to get accounts and start gambling heavily. It’s leading to a lot more irresponsible play," he said, cited by Bloomberg.

Prediction markets are in a fraught state right now, with state gaming regulators launching one legal challenge after another - but some of those are failing. Recently, lawmakers in Minnesota began deliberating a bill that would prohibit prediction markets outright.

Americans are also increasingly skeptical of sports event contracts, likening them to a form of gambling, but the sector argues that it is regulated under the mandate of the Commodity Futures Trading Commission, pushing back against state-level regulatory attempts.

Arnold, however, is looking to strike a conciliatory tone with the sector, rather than call for its outright ban. According to the billionaire, the sector could benefit from further safeguards that protect against young people spiraling into debt or experiencing mental health challenges.

Some have called for the suspension of prediction markets that are tied to crime and geopolitical action, with certain US senators expressing concerns that insiders who obtain information and then trade on those outcomes could tip off foreign adversaries about pending military actions or interventions, endangering American lives.

Prediction markets are here to stay, the billionaire suggests

Arnold, however, is not opposed to the idea of prediction markets operating in all of their current domains, provided that there are stricter rules and more transparency.

He also pointed out that if left unchecked, prediction markets could also lead to lower credit scores and noted that men are more likely than women to run into these problems, likening them to gambling-related harm.

While all of this is true, the crux of the debate is still pivoted around whether prediction markets are indeed any form of gambling.

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