Casino University: Home of the Gamblers

Think you can predict what a college’s acceptance rate is going to be? Soon, you’ll be able to put money where your mouth is. 

Late last month, Kalshi—one of the nation’s largest and most influential prediction markets—filed with federal regulators to allow “traders” to bet on the final acceptance rates at a number of elite universities around the country. Harvard, Princeton, Columbia, and the University of Chicago all make the cut, as do Duke and UCLA. All told, Kalshi hopes to open a whopping 22 universities for “trading.” Those directly affiliated with these universities’ decision-making, along with their immediate families, would be barred from participating. 

It’s easy to spot the immediate problems with this arrangement. For one, we would be placing considerable faith in university officials’ moral virtue—and, as we know from decades of lawsuits, scandals, and repeated attempts at social engineering, we should be skeptical of that virtue at best. Immediate families may be barred from trading, but what is to stop officials from tipping off their extended families, friends, or associates about final acceptance rates ahead of time? That does not even consider the inherent difficulties of turning highly competitive admissions into prediction-worthy information, or the fact that universities have enough problems preventing student-athletes from manipulating sporting outcomes. 

However, as serious as these logistical concerns are, they are only symptoms of a much greater sickness. Supporters of prediction markets often claim that they are not like casinos. Instead, they are “federally regulated financial derivatives” that “reward participants who can better assess information and probabilities.” In other words, the argument is that because prediction markets are not rigged in the house’s favor, they fill a different niche than a casino or traditional sports betting. Legally speaking, they’re probably right. But as far as I’m concerned, if it walks like a duck and quacks like a duck, it’s a duck. And this particular duck quacks an awful lot like a very seedy gambling house. 

Prediction markets are very intentionally weaving themselves into university life. They already allow users to place bets on whether the University of California will reinstate its testing requirement, whether Yale’s law school will settle with the Department of Justice over its admissions scandal, or whether the U.S. News and World Report will rank a particular university in its top 20. Worst of all, they target students in their advertising and sponsor student organizations and events to build their presence on college campuses.

It is time we recognize this disease for what it is. 

It is difficult to overstate the extent of the problem. Between January and August of this year, college-aged Americans traded more than $5.4 billion on Kalshi alone, with an unknown but similarly staggering sum wagered on Polymarket. Meanwhile, a Clasp survey of more than 1,000 American healthcare students found that 27 percent had used a prediction market. Of those students, 45 percent reported using Kalshi, while 31 percent had used Polymarket. Even more worrying, these students did not necessarily view prediction market earnings as money on the side: 24 percent said they planned to use their winnings to pay tuition, while another 43 percent believed betting could help cover the cost.

An Inside Higher Ed survey of approximately 5,000 college students at two- and four-year universities around the country generated similar results. Fifteen percent of respondents—including a quarter of men—reported that they have spent money on prediction markets. Moreover, three in 10 men and one in four women reported that they knew someone who had gotten themselves into financial trouble due to spending too much money on prediction markets. (Not surprising at all, since as many as 20 percent of students report using their financial aid as gambling money.)

These figures would be alarming enough if student gaming were merely an expensive hobby. But the fact that so many students see gambling as a way to finance their education suggests something far more dangerous—that financial prudence (saving and investing) is being replaced by vice and chance. The former is built with the future in mind. When a student invests responsibly, it is not with the intention of making money quickly, but of building a reservoir that can provide for themselves and their posterity. With a bit of caution, investments can be very safe and reliable. A student might not see the fruits of this labor for decades, but investing is the commonsensical thing to do nonetheless. 

Gambling—whether in a casino or through an online prediction market—is different. It is true that prediction markets do not have a “house,” and it is also true that they reward people who can better assess probabilities. The problem is that most people, especially college students, are really bad at guessing. The Wall Street Journal reported that more than 70 percent of users lose money on prediction markets, with losses generally ranging from $100 to $1,000. 

That may seem modest at face value, but college students are not making one or two trades and then calling it quits. According to the Clasp survey from earlier, nearly three-quarters (73 percent) of healthcare students who used prediction markets placed multiple bets per week, and almost one in five reported betting every single day. An occasional visit to a prediction market, just like a once-in-a-decade weekend in Las Vegas, is not a gateway to debauchery or ruin. But when students bet hundreds of dollars per week, and often lose money doing so, that gateway becomes wider and wider. 

After all, while college students are adults, their brains have still not yet fully developed. They are more prone to poor decisions and risky behavior. The short-term thrill of a successful bet is a delight, and it takes years for students to age out of this frame of mind. As such, college students are far more likely than the typical American to develop a gambling problem, and these addictions are strongly associated with poor academic and mental health outcomes, as well as future addictions to alcohol, nicotine, and narcotics. And while this connection has not been specifically studied in college students, researchers have long linked gambling addictions to domestic violence. 

Keep in mind that much of this research relates to online sports betting in the 2000s and 2010s. It was much easier than going to a casino, but there were still some limiting principles—someone had to be interested in sports and place bets during the season. Now, as Peter Stewart of The Setonian put it, “college students will bet on ‘literally anything.’” The barriers that existed before are gone. Temptation exists all day, every day, and in a multitude of subjects that require little expertise or commitment. Universities have enough trouble keeping order as it is. Adding prediction markets to the mix is like dropping a thermonuclear bomb on a city that has already been pillaged. 

But what is to be done? Universities, especially public ones, do not have the power to completely shield their students from prediction markets. Yet while the prediction-market plague cannot be cured, it can be treated. For example, universities can partner with organizations like Gamblers Anonymous that specialize in managing gambling addictions. Research suggests that these programs are effective, but only when students know that they exist. Some institutions, like Towson University and the University of Albany, have adapted their approaches to other public health issues (like HIV and substance abuse) to gambling, with some success. The latter even trained “student navigators” to obtain information from classmates who might otherwise fall through the cracks.

More importantly, universities should simply stop playing footsie with companies like Kalshi. There is absolutely no good reason for our institutions to give prediction markets anything: no special access to university data (even if it later becomes public information), no special access to campus resources and student organizations, and no institutional endorsements or promotional partnerships (the NCAA has, thankfully, made that very clear). Colleges should also take a page out of West Texas A&M’s book and block prediction markets on university-provided technology—including, but not limited to, computers, laptops, and wireless networks.

Universities should simply stop playing footsie with companies like Kalshi.

This collection of reforms would not only make it more difficult for on-campus students to gamble, but it would also send the message that higher education considers gambling to be a serious public health crisis, that it is ready to help students who need assistance, and that it will no longer allow the gambling industry to prey on its charges. 

Prediction markets are betting that higher education will kowtow to their economic and cultural power—even at students’ expense. It does not have to be this way. If Kalshi, Polymarket, and their lickspittles want to ooze their way into every aspect of American life, that is their business. But universities are under no obligation to help them. 

Garion “Gary” Frankel is editor at the James G. Martin Center for Academic Renewal.