Bank of America is sounding the alarm over the explosive growth of prediction markets and sports gambling, warning it could lead consumers to take on too much debt and default on loans.
The rapid expansion of such bets is creating a new credit risk for lenders as gambling losses create financial stress for consumers, BofA strategists including Mihir Bhatia wrote in a note.
The strategists point to the rising popularity of online betting since the Supreme Court struck down a federal ban on sports gambling. More recently, prediction market platforms like Kalshi Inc. and Polymarket are “creating a new form of speculative engagement,” with their financial contracts tied to sports games and other events, the strategists said.
