Prediction markets and digital sports wagering have expanded at a pace that is beginning to worry major U.S. financial analysts. Bank of America is cautioning that the surge in these products—ranging from sports betting to event-based financial contracts—is creating measurable strains on consumers and may introduce unfamiliar risks for lenders. The bank’s researchers highlighted that the current environment blends entertainment with speculation in ways that can intensify debt exposure, with young men and low-income users appearing most vulnerable.
Gambling Expansion Creates New Pressures on Borrowers
Bank of America strategists repeatedly point to the same behavioral driver: platforms designed for constant engagement. As one note described it, “easy access and gamified interfaces encourage frequent and impulsive wagers,” contributing to spending patterns that can “lead to overextension of credit and rising loan defaults.” The bank frames the rise of prediction markets and online sportsbooks as a merging of amusement and finance, suggesting this shift could “pressure credit quality, increase delinquencies, and impact earnings for issuers and subprime lenders.”
The increase in wagering activity has been substantial. According to Forbes, legal sports bets in the U.S. reached $99 billion in the first eight months of the year, a 12.4% annual increase. Online sports gambling has seen its strongest participation among men aged 18 to 49, with nearly half reporting they maintain an account with at least one sportsbook. A Siena College poll found that 22% of Americans overall use an online sportsbook.
Platforms such as Kalshi and Polymarket have added another dimension by allowing customers to trade binary “yes or no” contracts tied to politics, economics, sports, and public-health events. Strategists say these markets are “creating a new form of speculative engagement,” while CasinoBeats emphasized that their financial contracts are tied to “sports games and other events.”
Data Shows Long-Term Credit Impact
Bank of America pointed to multiple indicators that the broader gambling boom is affecting household finances. The Forbes report noted that credit scores fall by an average of 2.75 points when mobile sports wagering becomes available. Findings from UCLA Anderson and USC show that in states with legal online betting, credit scores decline by nearly 1% after four years, bankruptcy risk rises 28%, and the volume of debt sent to collections increases by 8%.
The bank also referenced consumer-reported stress. A U.S. News survey found that one in four bettors said they had missed bill payments, and 45% said they lacked enough savings to cover three to six months of basic expenses.
A recurring theme is the disproportionate impact on certain demographic groups. Forbes quoted the bank’s view that young men in low-income areas “could exhibit limited financial literacy and constrained liquidity making them highly susceptible to compulsive wagering and credit stress.”
The negative effects “may be most pronounced for low-income consumers and especially for young men.”
Lender Exposure and Industry Response
Several lenders face heightened exposure, according to Bank of America. Bread Financial, Upstart, and OneMain were identified as especially at risk because their customer bases include more individuals with subprime or credit-stressed profiles. The strategists stressed that “online betting markets introduce a new risk for lenders, one that they have not had to deal with historically and underwriting models may need to be adapted.”
Prediction-market operators, meanwhile, disputed the idea that they increase financial harm. As Bloomberg reported, Kalshi spokesperson Jack Such stated: “As a federally regulated financial exchange, Kalshi’s model provides fairer, more transparent pricing and doesn’t extort consumers like casinos do. Since we aren’t a ‘house,’ our revenue doesn’t come from customer losses.”
Polymarket recently “cleared one of the final regulatory hurdles to reopen in the US” following an earlier settlement.
Despite this pushback, Bank of America notes that prediction-market trading volume has accelerated rapidly. Dune Analytics data showing Kalshi and Polymarket surpassing US$8.5 billion in monthly notional trading volume for the first time.
With billions now being wagered each month and sports-related contracts driving much of the growth, Bank of America suggests that lenders may soon need to incorporate betting behavior directly into their credit-risk tools. The bank emphasized that the most intense effects cluster among young men and borrowers with limited financial resilience.
Source:
Sports Gambling, Prediction Markets Could Lead To New Credit Risks For Young Men And Low Earners, Bank Warns, forbes.com, November 25, 2025.
The post BoA Cautions on New Credit Risks From Gambling Growth first appeared on RealMoneyAction.com.