Prediction Markets Are Arriving in Your Investing App, and That Makes Us Nervous

Around this time every year, we conduct NerdWallet’s annual broker review process. We assess what’s changed in the industry, discuss which brokerage features matter most (and which ones now matter less), and finally, we do the work by opening accounts to test them.Prediction markets, which have made their way into some of the most popular investing apps, came up more than we expected in testing this year. At first, we decided to simply collect information on who does and doesn’t offer access to them, without intending to reward or penalize a broker either way. It would be a neutral presentation of facts, not something that would factor into how we scored a broker.But one afternoon, all together in the office, we confronted an uncomfortable question: “Do prediction markets, and such easy access to them within an investment app, go against NerdWallet’s editorial house views?”After careful consideration, we all agreed: they do. So we started to configure our 2027 rubric with a firmer stance against this trendy feature, penalizing brokers that actively market sports and entertainment event contracts, and whose prediction markets come with few, if any, guardrails.We’ve distilled our discussion down to three main points:There aren’t enough guardrails.These products are being marketed alongside investments.We fear they could be discouraging long-term investing.The first reason: There aren’t enough guardrailsLet’s start here: Many aspects of trading could be seen as gambling-adjacent. Options, futures, highly leveraged single-day equity bets and even crypto can all easily fall into the “highly speculative” category. So why are we picking on prediction markets in particular?In our view, a key differentiator is a much lower barrier to entry with few in-app guardrails in place.Most of the products we mentioned above require some level of fluency — and at times even permission from the broker — to dabble in. To trade options, for example, you need to answer questions about your investing proficiency, your finances and more. And even after approval, the terminology required to trade can be so intimidating that the language itself can become an indirect deterrent.Event contracts, which form the backbone of prediction markets, are largely presented in the vernacular, and our testing showed approval to trade them is completed with a few taps from the home screen. Moreover, their content is often unrelated to finance — according to a May 2026 report by the Pew Research Center, around 80% of volume on the prediction market platform Kalshi was for sports events. Answering a binary question (yes/no; this/that), posed in everyday language about a familiar topic — something like, “Will the Knicks beat the Spurs on Sunday?” — can be far less daunting than figuring out what an options chain is or understanding forex pairs.In other words, what makes prediction markets accessible to a wider audience is also what makes them problematic, especially when housed within an investing account. Which brings us to our next point.The second reason: These products are being marketed alongside investmentsOn the platforms that feature them, we found that prediction markets almost always appear alongside stock and ETF trading. We think this is a mistake. What has made these mobile-first investing apps so good for so long (making it easy to move, manage and invest money through a beautiful interface) is what’s now making us nervous.For example, most investing platforms let users do any number of smart things with idle cash. They could open an Individual Retirement Account (IRA), a custodial account or a robo-managed portfolio all through a single app. But now, they can dip into that same pot of money to bet on whether Beyoncé or Alicia Keys will play the Super Bowl halftime show.But is anyone actually trading these event contracts? Let’s use data from publicly traded brokers that offer prediction markets to explore this.In Q3 2026, Robinhood’s revenue from event contracts rose more than 600% year over year to $173 million, while the number of event contracts traded grew more than sevenfold to 16.4 billion. This was the second-highest source of transaction revenue behind options trading. In a forecast reported on by Cointelegraph, Bernstein analysts projected Robinhood’s prediction markets could drive $1.7 billion in annual revenue by 2028. Let’s keep going.Coinbase's Q1 2026 quarterly report called prediction markets “one of its fastest-scaling products ever, driven by strong retail interest." In a call discussing Webull’s Q2 results, U.S. CEO Anthony Denier noted trading volume in Webull’s nascent prediction market product grew about 70% quarter over quarter.Gemini’s Q2 report shows prediction market volume rose 93% quarter over quarter.So, now that we’ve established that these markets are growing in popularity — and investing platforms appear to have a large incentive to lean into them — how are all those event contract traders faring? That brings us to our final point.Make sense of the markets with The Nerdy InvestorA weekly newsletter on what's moving markets, plus two deep dives a month on how to improve your investing.The final reason: They can be unprofitable and may impact long-term investingIs all this even worth it? Several studies show how hard it is to actually turn a profit in prediction markets. Here are a few:One study, conducted by researchers at ESSEC Business School, HEC Montréal and the University of Toronto's Rotman School of Management, covered 2.4 million Polymarket accounts across $67 billion in trading volume between November 2022 and March 2026, and found that 69% of users lost money. Moreover, the top 1% of users who made a profit accounted for about 76% of all gains. Translation: Even if you did turn a profit, there’s a good chance you didn’t make much. A Bloomberg analysis supports this: From January 2025 to April 2026, more than 100,000 Polymarket accounts lost at least $1,000. Of the 2 million active wallets studied, almost half made or lost less than $10 during the period, while far fewer accounts collected larger profits.A separate Wall Street Journal analysis echoed the same trend: 67% of Polymarket profits go to 0.1% of accounts, and more than 70% of Polymarket users lost money. While there is far less data available on Kalshi trades (Polymarket runs on a public blockchain, making it easy to extract and analyze data), a Kalshi spokesperson confirmed in the Wall Street Journal analysis above that one month of data in 2026 showed there were 2.9 unprofitable users to each profitable user.The first study above discusses how event contract trading is binary and zero-sum: If one trader wins, another loses. This means traders allocating money to these instruments could be missing out on aspects of equity markets that have helped create long-term wealth for previous generations.The study authors put it thusly:“Unlike equity markets, there is no equity premium, no dividends, and no passive investment options. Their short maturities naturally encourage short-horizon trading, which is precisely what the behavioral finance literature has suggested is most destructive to wealth accumulation. Given the rapid growth of these platforms and their role as a potential entry point for young investors, understanding who bears the losses has direct implications for investor welfare and market regulation.”As a reminder, the vast majority of Polymarket users bore the losses. Our closing thoughtsAt NerdWallet, our mission has always been to help people make smarter financial decisions, so we’re sticking by that. Starting with our 2027 ratings, brokers that offer easy access to sports and entertainment contracts will lose points in our scoring system because we believe this new product has the potential to harm long-term wealth building and doesn’t belong in investing platforms.So, what’s a better way forward? Bring back the friction and make prediction markets a separate app. Financial institutions, businesses and individuals can still explore legitimate use cases for prediction markets, such as forecasting and hedging. And we’re not here to stop anyone from trading event contracts for entertainment with extra money. We just don’t want these markets so easily conflated with the legitimate investing vehicles these apps already offer. And our reviews will reflect that.Article sourcesArticle sourcesNerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.1.Pew Research Center. Trading Volume on Prediction Markets Has Soared in Recent Months. Accessed Nov 2, 2026.2.Robinhood. Robinhood Reports Third Quarter 2026 Results. Accessed Nov 2, 2026.3.Yahoo Finance. Bernstein Sees Robinhood Prediction Markets Reaching $1.7 Billion in Revenue by 2028, Topping Crypto. Accessed Nov 2, 2026.4.Coinbase. Coinbase Q1 Financial Results Show Resilient Financial Performance Driven by New All-Time High Crypto Trading Volume Market Share. Accessed Nov 2, 2026.5.Gloom. Webull (BULL) Q2 2026 earnings call transcript. Accessed Nov 3, 2026.6.Gemini. Shareholder Update Q2 2026. Accessed Nov 2, 2026.7.SSRN. Who Wins and Who Loses In Prediction Markets? Evidence from Polymarket. Accessed Nov 2, 2026.8.Bloomberg. Most Prediction Market Traders Are Losing Money While Bots Rack Up Gains. Accessed Nov 3, 2026.9.The Wall Street Journal. Why Almost Everyone Loses—Except a Few Sharks—on Prediction Markets. Accessed Nov 3, 2026.10.Wall Street Journal. Why Almost Everyone Loses—Except a Few Sharks—on Prediction Markets. Accessed Nov 10, 2026.