Nationwide warns Gen Z against prediction markets as financial strategy

Mark Hackett did not mince the arithmetic. Fifty-two percent of Gen Z respondents told Nationwide they had redirected money earmarked for investing into sports betting or prediction market activity. Twenty-six percent described that activity as a long-term financial strategy. Hackett, Nationwide's chief investment strategist, published those numbers alongside a chart and a blunt counter-argument: the S&P 500 has been positive for every rolling sixteen-year period since 1928, and gambling is structured so that the house's edge compounds against you the longer you play.

He is correct about the mathematics of gambling. He may be wrong about what prediction markets actually are.

The distinction matters because Hackett's report folds prediction markets into the same category as sports betting, and the two are not identical instruments. A liquid prediction market on a well-defined question — the kind that attracted institutional attention during the 2024 election cycle — operates closer to a derivatives market than a sportsbook. The house does not hold a position. The exchange takes a fee. The person on the other side of your trade is another participant with a different view. That structure does not guarantee you money; it guarantees that your losses go to someone who disagreed with you rather than to a company with a built-in statistical edge.

None of that makes prediction markets a retirement strategy. And the Nationwide data does not actually prove that Gen Z thinks they are. A respondent who said they moved investing money into prediction market activity may have done so because they had genuine informational edge on a specific event — or because they found it more engaging than a passive index fund. The survey cannot tell us which. Hackett treats both cases as equivalent to throwing money at a roulette wheel, and that framing is too coarse to be useful.

What the data does establish clearly is a behavioral trend that prediction market operators should take seriously. Platforms that have spent the last eighteen months arguing to federal regulators that their products are sophisticated financial instruments — not gambling — are simultaneously attracting a user base that a significant fraction of treats them as gambling. That gap between the legal argument and the actual user behavior is the thing that makes regulators' phones ring.

Kalshi has argued publicly that it provides risk management tools, deposit limits, and partnerships with problem gambling organizations. Those safeguards exist. They are also less visible than the NFL contract sitting on the homepage during a Sunday in October. The question no platform has answered cleanly is whether their onboarding experience conveys the instrument or the excitement.

Hackett's preferred alternative, the S&P 500, has its own uncomfortable reality: it is boring enough that fifty-two percent of young investors apparently found something else to do with their money. That is not an argument against index investing. It is a description of a market that product designers, regulators, and strategists are all trying to address at once, with different motives and different definitions of the problem.