Bank of America Flags Risks in Retail Prediction Markets Amid Debt Concerns

Bank of America has issued a stark warning about the rapid expansion of retail prediction markets, citing potential risks to consumer credit health. The proliferation of platforms like Polymarket and Kalshi—fueled by regulatory shifts allowing them to operate as trading services—has created a breeding ground for speculative behavior akin to gambling.

Data reveals 84% of users on these platforms lose money, with profitability concentrated among a small group of high-volume traders. Analysts highlight the dangerous intersection of gamified interfaces and easy access, which may drive impulsive wagering using borrowed funds. The Supreme Court's repeal of the federal sports betting ban has further accelerated adoption among US-based participants.

Short-term contracts on contentious events pose particular danger, combining the immediacy of resolution with heightened volatility. While these markets offer transparent liquidity and fast settlement, their financialization of speculation raises systemic concerns about debt-fueled participation.