Long Islanders are betting big on prediction markets — and some are spiraling into debt

Ben K. downloaded Kalshi in August after the betting app’s turquoise logo captured his attention in an ad aired while watching sports. 

That was the start of a short but destructive cycle for the 21-year-old college student from Melville, who consistently blew nearly $2,000 paychecks on bets through apps that included prediction market platforms like Kalshi and Polymarket.

His bedroom looked like a kind of trading floor: three monitors and a television set up while he worked from home, with tabs related to his job tasks open beside tabs for Kalshi and Polymarket, while sports streamed in the background. When payday hit toward the end of the week, he’d refresh the Chase app over and over, often using paycheck-advance apps to get the money a few days early.

One night in late November, he was watching the Tottenham Hotspur Football Club, a soccer team in the U.K., against Fulham F.C. Tottenham was heavily favored — then went down early, and the payout spiked as their victory became less likely. Ben saw that as an opportunity. He kept upping his bet on their win until he had around $700 riding on the match.

They lost.

He shifted focus to an NHL game — Seattle Kraken against Edmonton Oilers — and lost again. But there was still money left, so he put it on another hockey match, the New Jersey Devils against Philadelphia Flyers but fell asleep before the game ended.

When he woke up the next day, everything was gone.

That’s when "extreme guilt and rage would hit,” he recalled. “You start to realize what you’ve done and it’s the worst feeling.”

Over 2½ years, Ben estimates he lost around $50,000 on gambling apps, including prediction markets. By January, he said, “Not only were all my credit cards maxed out, and I had loans, but I would be taking out an advance on my paycheck from nine different apps and then depositing that into Kalshi, into Polymarket."

"I literally could not access a dollar anymore,” he said.

As Ben watched his paychecks disappear, prediction markets were exploding into a multibillion-dollar business.

Prediction markets allow users to buy and sell contracts tied to real-world outcomes, from elections to sports. More than $60 billion was traded on the platforms last year, an increase of 400%, according to blockchain security firm CertiK. Supporters argue they function like financial markets, rewarding informed bets. New York officials counter that many of those contracts amount to unlicensed gambling, setting off a legal fight over who controls the fast-growing industry — and how tightly it is regulated.

Impact on Long Island

Some Long Islanders have turned prediction markets into full-time careers. Others, like Ben, have fallen into debt, prompting advocates to push for tighter oversight.

The companies argue they are federally regulated financial exchanges under the Commodity Futures Trading Commission, not gambling platforms subject to state law — a dispute now playing out in court. Neither immediately responded to a request for comment. 

Billions of dollars ride on that outcome. Nearly 175,000 New Yorkers use Kalshi, and the state collected $1.32 billion in online sports betting tax revenue last year. At the same time, high-profile political figures have financial ties to the industry, including Donald Trump Jr. He sits on advisory boards for both Kalshi and Polymarket, and has invested in the former through his venture capital firm.

The two companies have racked up a roster of other notable people as well, including FiveThirtyEight founder Nate Silver and former CFTC chairman James Christopher Giancarlo on the Polymarket advisory board, and NBA player Giannis Antetokounmpo recently announced he'd become a Kalshi shareholder. Kalshi's board of directors includes former CFTC Commissioner Brian Quintenz and former Nadex CEO Timothy McDermott.

Advocates argue prediction markets lack the addiction safeguards required of state-licensed sportsbooks, a concern now driving multiple class-action lawsuits against Kalshi and Polymarket.

On Long Island, counselors say they’re seeing the impact of online wagering firsthand. The Family & Children’s Association in Garden City has had “lines out the door” for problem-gambling services, said Jeffrey Reynolds, the nonprofit’s president and CEO, citing a steady rise in younger clients as betting apps become easier to access.

“Five years ago, this was not a problem,” he said.

Reynolds said the nonprofit has seen about a 10% year-over-year increase in people seeking help for problem gambling, with clients trending younger as teens and young adults turn to betting apps, including prediction markets that allow users as young as 18.

“As the sportsbooks and predictive market operators laugh all the way to the bank,” Reynolds said, “there’s a lot of families who are struggling.”

The rise of prediction markets

Ben K., who asked to remain anonymous to protect future job prospects, holds around $15,000 in debt, around $3,000 of which came from betting on sports games through prediction markets. He’s since joined Long Island Gamblers Anonymous, where many of his peers similarly struggled with prediction markets and other gambling apps.

LIGA member Victor S., 33, of Massapequa lost around $100,000 over the course of seven months to prediction markets. He has two personal loans totaling around $20,000 and nearly $50,000 in credit card debt. He often bet on sports and cryptocurrency values.

Victor asked to keep his last name private to protect his professional life, citing societal taboos surrounding addiction. 

Part of the problem, he said, is that prediction markets offer a workaround for self-exclusion. New York offers gamblers the ability to voluntarily self-exclude themselves from all gaming opportunities in the state, but that doesn't include prediction markets. Victor also pointed out how easy it is to access betting apps through his phone.

“The phone’s always in my pocket,” he said. "If I wanted to, I could just theoretically open up another Kalshi account, or a Polymarket account.”

In the United States, political wagering dates back to the first presidential election, said Koleman Strumpf, chair of political economy at Wake Forest University.

In more recent history, Congress granted the CTFC authority over swaps marketplaces after the 2008 financial crisis. Kalshi was founded in 2018 and Polymarket launched in 2020 as digital platforms where individuals can buy and sell event contracts betting on predictions ranging from when the United States might strike Iran to whether the federal government will confirm that aliens exist before 2027.

Some have billed prediction markets as a form of crowdsourcing information that can provide useful information. Proponents have also argued that betting on platforms like Kalshi and Polymarket is more akin to trading on the stock market than gambling.

Jonathan Zubkoff, 34, trades from his home in Nassau County. The former pharmaceuticals professional started working full-time placing bets on Kalshi in 2021 after finding financial success on the app.

He reads politics newsletters everyday, follows prominent people on X and closely reads the news to inform his trades. He’s also active in multiple chat groups with successful traders. He avoids betting on sports because, as a sports fan, it makes watching games less enjoyable.

At first, he saw it as a fun hobby. Then a way to earn some extra money. But, after earning $100,000 in just a few months, he decided: “This is captivating my brain. I’m going to do this full time.”

But Zubkoff’s success isn’t the rule.

“Don't assume you're the person who's going to win money because everybody must be assuming that in order to bet,” said Erik Snowberg, professor for the division of quantitative analysis of markets and organizations at the University of Utah.

“That’s true of every sort of market, like speculating in housing, speculating stocks,” he added. “Somebody’s making money and somebody’s losing money.”

Regulation debate

Days before the Super Bowl, state Attorney General Letitia James issued a consumer alert warning that “unregulated prediction markets” lack consumer protections and put users at "significant financial risk.”

Unlicensed sports wagering is illegal in New York and “could be subject to civil and criminal liability,” James said.

New York has maintained that sports event contracts fall under state jurisdiction and is considering legislation to allow stricter oversight of prediction markets. The state Gaming Commission sent Kalshi a cease-and-desist letter in October, prompting the company to sue in defense of its operations.

The federal government, though, has taken decisive action to assert authority over prediction markets, with a filing earlier this month supporting Kalshi and Polymarket in a Nevada lawsuit that alleges the companies are running unlicensed sports betting operations in the state.

“The CFTC has regulated these markets for over two decades,” said CFTC Chairman Michael Selig in a departure from previous assertions that the agency would defer to the judicial system. “To those who seek to challenge our authority in this space, let me be clear. We will see you in court.”

In the meantime, unclear regulations have left “consumers in a very unclear position as they’re trying to decide what they can and can’t do,” said Stephen Piepgrass, a partner at legal firm Troutman Pepper Locke.

“Unfortunately for New Yorkers, they’re just going to have to live in a gray area for a while as they consider whether to participate in these marketplaces,” he said. Piepgrass’ legal firm has offices around the country, including Manhattan.

But, even without the rise of prediction markets, people looking to gamble have other options, including those that aren’t legal, Strumpf said.

“To me, it's always important to remember,” Strumpf said, that we don’t “live in a perfect world where we can snap our fingers and say, you know, let's get rid of this activity and then it'll stop.”

‘I can’t do this anymore.’

People knew something was going on with Ben. He was out of money, he said, and the cracks were starting to show at his job, where he was not keeping his word on assignments.

As he drove to work, he’d slam his steering wheel in rage over his losses. He was hiding mail at home so that his parents wouldn’t see him signing up for cash apps and credit cards. It was getting harder to force a smile. Nobody knew he was in debt from gambling.  

“I came to a point where I truly was like, I can’t do this anymore,” he said. “I tried to quit a million times. I really tried to quit. And to be honest with you, it really came down to faith for me."

It was a normal day in mid-January when Ben finally decided to pull the plug.

“I drove with my best friend to the diner and I told him everything,” he said. That was the start of his recovery.  

He went back to the Catholic Church and found Long Island Gamblers Anonymous. He met older members who had lost their families and homes to their gambling habits and saw what his future could look like.  

“Six months ago, I would have said, these prediction markets are amazing. You can bet on anything,” Ben said.

But now, he views them as “a serious issue.”

“The reality of it is, if you have any addictive tendencies or compulsive tendencies, you’re at a major risk for it to destroy your life,” he said. “It will take hold of you and it will run you into the ground.”

By Brianne Ledda

brianne.ledda@newsday.com@brianne_ledda

Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.