New research released by the American Gaming Association (AGA) finds that gamblers display a higher rate of financial literacy compared to non-gamblers, while prediction market users tend to misjudge their mathematical skillset.
The findings challenge conventional wisdom about gamblers and highlight the dangers of prediction markets misrepresenting gambling as a financial investment, according to the research released Friday.
“This study shows that, contrary to popular belief, gamblers are financially savvy entertainment consumers, especially sports bettors who demonstrate a particularly high level of financial literacy and mathematical capability,” said David Forman, AGA’s vice president of research.
Forman said users of prediction markets tend to overstate their math skills, often thinking they’re better at mathematical reasoning than they are. He stressed that traditional sports bettors have a more accurate self-assessment.
Among the study’s key findings was financial literacy is positively connected to responsible play, with participants with moderate to high financial literacy recording significantly higher Positive Play Score (PPS) than those with low financial literacy. The findings also suggested that financial-literacy education may strengthen responsible-gaming resources by helping consumers better understand risk.
Casino players reported the strongest responsible-gaming behaviors. The AGA’s study found casino players scored significantly higher on the PPS than every other gambling segment, potentially reflecting their longstanding exposure to responsible-gaming resources with mature regulated environments.
The PPS is a 14-item self-report tool used to measure healthy and responsible-gambling beliefs and behaviors from the player’s perspective. Among its core components are gambling literacy, personal responsibility, and early intervention.
The AGA study revealed that 41% of gamblers qualify as highly financially literate, compared with 27% of non-gamblers.
Sports bettors also showed the greatest mathematical confidence and objective capability, while prediction market users expressed nearly as much confidence in their mathematical skills, but performed more in line with non-gamblers when those skills were objectively tested.
The distinction carries direct consumer-protection implications. A consumer who is genuinely strong at mathematics and is aware of that fact is in a better position to evaluate risk accurately and remain within their means, the study’s authors found.
Consumers who feel equally confident, but performs no differently from the average adult, may believe they have identified an analytical or mathematical edge that doesn’t actually exist. High financial literacy combined with overconfidence in numerical ability creates conditions in which prediction market users may take on more risk than their mathematical capabilities justify, the authors wrote.
The study found Kalshi and Polymarket are the most-used platforms, with users purchasing sports and political event contracts. Only 38% of prediction market users reported a single platform, with the majority using multiple platforms, including 31% using two and another 31% using three of more.
“The research highlights the risks of prediction markets marking sports betting as investing against peers and the dangers of misleading consumers into thinking they just have to be smart to win,” Forman added.
The AGA’s commissioned national study of 3,201 U.S. adults included non-gamblers, people who gamble at land-based casinos, sports bettors, those who gamble online, and prediction market users.
Colin López, Ph.D., founder and principal of IN Research & Analytics LLC, and Jackson Sears, Ph.D., founder and principal of Matrix Consulting Group of North Carolina, conducted the research and analysis. Both are co-founders of the Betting, Experience, and Trading in Sports Research Center and an assistant professors at the University of North Carolina at Chapel Hill.
