Exclusive: Kalshi joins National Council on Problem Gambling
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Kalshi is joining the National Council on Problem Gambling, becoming the first prediction market to do so.
Why it matters: The move is an acknowledgment that certain users may be engaging in troubling financial behavior on the platform, even as the company continues to refer to user activity as "trading," not gambling.
Driving the news: Kalshi plans to announce Monday that it will provide the NCPG $2 million over two years to support "trader health and safety."
- Kalshi will also become a member of the group's recently formed subcategory for financial services and trading companies.
- "We have a responsibility here," Kalshi head of government relations John Bivona tells Axios. "We want to set the standard. We hope others in the industry follow suit."
Threat level: 17% of U.S. adults are currently using sportsbooks or prediction markets, but that number is 32% for Gen Z and 24% for millennials, according to a Northwestern Mutual study.
- Kalshi acknowledges that the majority of users on its platform lose money.
Zoom in: The investment will help NCPG conduct a "needs assessment" about prediction market users, says Cole Wogoman, NCPG's director of policy and partnerships.
- "They're showing leadership here right now by recognizing that harm can be caused" on the prediction market, and "they need to work with folks like us, which I think speaks volumes," Wogoman tells Axios.
- "As part of the grant, they're also going to work toward getting accredited through us, through our responsible gambling standards. We are actually updating the document to be a little bit more applicable to prediction markets — but I will stress it is already very applicable to prediction markets, and with that will come certain requirements that we expect for them to have."
Yes, but: Kalshi and NCPG haven't agreed on details regarding the promotion of the nonprofit's helpline, 1-800-MY-RESET.
- "This is a discussion that I'd say is ongoing with them," Wogoman says.
- He adds: "We want to see 1-800-MY-RESET promoted on these apps, and that's what we are working on: Is there language we could use, rather than calling it the National Problem Gambling Helpline? Is there something we could use that would make traders or customers more comfortable calling if they're feeling that they are running into problems?"
The big question: Is Kalshi's decision to join NCPG an admission that prediction markets fuel unhealthy behavior and addictions in some users in the same way that conventional sportsbooks do?
- "We're always looking for the right balance of how do you allow for some individual responsibility, while also making sure that there are some good consumer protections in place as well?" Kalshi's Bivona says. "On any financial exchange, there is that risk that you need to balance, and I think that this is a good opportunity for us to be an industry leader."
What to watch: Whether other prediction markets sign on.
- "This is a tremendous investment to get this started, but we would like others to come on board and help us build the ecosystem for traders and investors who are experiencing gambling-related harm," Wogoman says.
