John Arnold commits $2.6 million to study online sports betting risk

Billionaire philanthropist John Arnold says online sports betting has changed immeasurably since it became legal in the US in 2018, thanks to online prediction marketplace platforms Kalshi and Polymarket and the rise of mobile apps. DraftKings and FanDuel. It is offering a $2.6 million reward to researchers who study the evolving world of sports gambling to better understand potential risks.

The previously unreported grants will go to researchers at universities and think tanks to study the impact of gambling on financial well-being, household structure, mental health and consumer behavior.

co-founder Arnold Arnold Initiatives He and his wife, Laura, told CNBC that they want lawmakers and regulators to wake up to the new reality of the evolving sports betting market.

“Being able to place bets over the phone has significantly increased access and reduced disputes,” Arnold told CNBC. “It changed what the product is. You can bet on any course. You can bet with a speed that was never possible when you had to call to place a bet.”

Arnold, a former hedge fund owner and Enron energy trader whose philanthropy works on criminal justice reform and improving higher education, has recently turned his attention to the potential pitfalls of prediction markets and sports gambling apps, meeting with lawmakers and pushing for stronger barriers.

Schools including Princeton University, the University of Pennsylvania and the University of Wisconsin will receive Arnold’s research grants over the next three years, Arnold Ventures said in a press release.

A 2018 Supreme Court decision paved the way for the legalization of sports betting in the United States, and participation has steadily increased since then. April Fool’s Day Survey conducted by the Research Institute of the University of Siena 27% of Americans were found to have an active online sports betting account; this rate was 19% in 2024.

Sports betting industry broke a record $16.96 billion in revenue in 2025The American Gaming Association announced earlier this year. Trading volume on the two largest prediction markets (Kalshi and Polymarket) rose from less than $5 billion in September to roughly $24 billion in April. Analysis by Pew Research Center.

Sports is the most popular type of event contract in terms of volume in prediction markets, which operate differently than traditional gambling sites and are subject to a different regulatory authority. As of February, nearly 87% of bets on Kalshi last year were on sports. Congressional Research Service.

Thirty-nine statesand the District of Columbia have legalized sports betting since 2018.

“A lot of states started legalizing sports betting in 2018. And I think they were very impressed with the potential tax revenue,” Arnold said. “It’s very attractive for a state legislature to raise money from a voluntary tax rather than a mandatory tax.”

“But our contention is that both intensity and reach vary significantly not only for sports betting but also for some other vices,” he continued. “There needs to be recognition that this product is changing as legislators think about what to do with it and whether to legalize it.”

Arnold compares the maturation of online sports betting to the legalization of marijuana and the development of pornography.

“Cannabis today is a very different product than it was a generation ago. It’s just a much stronger concentration and increased access,” Arnold said. he said. “You think of pornography. The intensity of the product has increased dramatically, the ease of access has become dramatically easier.

“So access to sports betting has increased significantly, but the product has also changed.”

Arnold Ventures in 2025 funded research grants Examining the effects of legalized marijuana.

Access to and density of sports betting has also increased. A given user can place multiple bets on a single game without ever leaving their seat. According to the survey conducted in Siena this spring, 46 percent of men between the ages of 18 and 49 are bettors and critics argue It can have negative financial impacts for young men.

The issue has captured the attention of lawmakers on Capitol Hill, where a number of proposals have been introduced since the beginning of the year.

Sen. Jeff Merkley, D-Ore. and Rep. Jamie Raskin, D-Md. Some, such as a bill filed by , would ban prediction market activity contracts on sports, elections, war and government actions. Another, from Sens. John Curtis, R-Utah, and Adam Schiff, D-Calif., specifically aims to block prediction markets like Kalshi and Polymarket from allowing sports betting on their platforms.

Meanwhile, Sen. Richard Blumenthal, D-Conn. and Rep. Paul Tonko, D-Y.’s legislation aims to create stronger protections for online sports betting by giving states the authority to create their own laws, restrict advertising and ban certain types of specialty bets, which are bets on a specific event or statistic within a game as opposed to the final outcome.

Arnold has met with lawmakers on Capitol Hill on the issue, but most of his efforts have been focused at the state level, where sports betting is regulated. Prediction markets, which involve peer-to-peer contracts as opposed to bets against the house, are federally regulated by the Commodity Futures Trading Commission.

“We are very actively talking to state legislators about legalization resolutions because legalization bills come through state legislatures every year,” Arnold said. he said. “There are also some who have already legalized and are thinking about the right guardrails.”

Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and minority investment.