John Arnold, founder and co-chair of Arnold Ventures, speaks during a session at CERAWeek by S&P Global at George R. Brown Convention Center in Houston, March 20, 2024.
Yi-Chin Lee | Houston Chronicle | Hearst Newspapers | Getty Images
Billionaire philanthropist and former energy trader John Arnold says online sports betting has changed immeasurably since it became legal in the U.S. in 2018, thanks to the rise of online prediction market platforms Kalshi and Polymarket and mobile apps like DraftKings and FanDuel. To better understand the potential risks, he and his wife Laura are awarding $2.6 million to researchers studying the evolving world of gambling on sports.
The grants, which have not been previously reported, will go to researchers at universities and think tanks to look at the effect of gambling on financial well-being, household formation, mental health and consumer behavior.
Arnold, who co-founded Arnold Ventures with Laura, told CNBC he wants lawmakers and regulators to wake up to the new reality of the booming sports betting market.
“Being able to bet over the phone has dramatically increased access and lowered friction,” Arnold told CNBC. “It has changed what the product is. You can bet on every pitch. You can bet with a speed that was never possible when you had to place a call to put a bet down.”
Arnold, a former hedge fund owner and Enron energy trader whose philanthropy has worked on criminal justice reform and improving higher education, has turned his attention more recently to the potential pitfalls of prediction markets and sports gambling apps, meeting with lawmakers and pushing for stronger guardrails.
While Arnold said he views sports betting on online apps and on prediction markets as “almost indistinguishable,” the research will look specifically at the effects of online gaming platforms. This is in part because access to data from prediction market platforms is more limited, an Arnold Ventures spokesperson explained.
The studies being funded examine the “causal impact of sports betting legalization” timing in different states, the spokesperson said. Prediction markets have a different regulatory structure than online betting sites, which are overseen by states. The Commodity Futures Trading Commission, a federal regulator, oversees prediction markets, and Arnold Ventures said that means there’s not state-by-state data to compare as there are for sites like DraftKings and FanDuel.
Schools including Princeton University, the University of Pennsylvania and the University of Wisconsin will receive Arnold’s grants for research over the next three years, Arnold Ventures said in a press release.
A 2018 Supreme Court decision paved the way for legalized sports betting in the U.S., with participation growing in the years since. An April survey by the Research Institute of Siena University found that 27% of Americans have an active online sports betting account, up from 19% in 2024.
The sports betting industry hit a record $16.96 billion in revenue in 2025, the American Gaming Association announced earlier this year. Thirty-nine states, plus the District of Columbia, have legalized sports betting since 2018.
“A lot of states jumped into legalizing sports betting in 2018. And I think that they were very attracted to the potential tax revenue,” Arnold said. “It’s very appealing for a state legislature to get money from a voluntary tax rather than a mandatory tax.”
Meanwhile trading volume on the top two prediction markets — Kalshi and Polymarket — has grown from less than $5 billion in September to roughly $24 billion in April, according to an analysis by Pew Research Center.
Prediction markets have argued they are different than their online sports gambling peers, in part because of their customer-to-customer structure.
“Polymarket is neutral market infrastructure and has no economic stake in any market outcome. We do not take positions or make money based on results,” a Polymarket spokesperson said on Tuesday.
Spokespeople for Kalshi, DraftKings and FanDuel did not immediately respond to requests for comment Tuesday.
Sports are the most popular type of event contract by volume on prediction markets, which operate distinctly and are subject to a different regulatory authority than traditional gambling sites. As of February, about 87% of bets made on Kalshi in the last year were on sports, according to the Congressional Research Service.
“Our argument is that both the intensity and the access has changed dramatically, for not only sports betting but for a number of other vices,” he continued. “As legislators are thinking about what we do with this and do we legalize, there needs to be the realization that this product has changed.”
Arnold compares the maturation of online sports betting to marijuana legalization and the evolution of pornography.
“Marijuana today is a very different product than what it was a generation ago. It’s just a much stronger intensity, and the access has increased.,” Arnold said. “You think about pornography. The intensity of the product has increased dramatically, the ease of access has eased dramatically.”
Arnold Ventures in 2025 funded research grants to study the effects of legalized marijuana.
“So sports betting, obviously the access has increased dramatically, but the product has changed as well,” Arnold said.
A given user can place multiple bets on a single game without ever leaving the couch. Forty-six percent of men between 18 and 49 are bettors, according to the Siena survey from this spring, and critics argue it could be driving negative financial impacts for young men.
The issue has caught the attention of lawmakers on Capitol Hill, where a flurry of proposals have been introduced since the start of the year.
Some, like a bill introduced by Sen. Jeff Merkley, D-Ore., and Rep. Jamie Raskin, D-Md., would ban prediction market event contracts on sports, elections, war and government actions. Another, from Sens. John Curtis, R-Utah, and Adam Schiff, D-Calif., specifically seeks to bar prediction markets like Kalshi and Polymarket from allowing sports bets on their platforms.
Meanwhile legislation from Sen. Richard Blumenthal, D-Conn., and Rep. Paul Tonko, D-N.Y., seeks to create stronger guardrails for online sports betting by empowering states to create their own laws, restrict advertising and prohibit certain kinds of prop bets, which are wagers on a specific event or statistic within a game, as opposed to the final outcome.
Arnold has met with lawmakers on Capitol Hill about the issue, but most of his effort is directed at the state level, where sports betting is regulated.
“We are very actively talking to state legislators about their decision to legalize, because bills to legalize are coming through state legislatures every year,” Arnold said. “And there are also the ones who have already legalized and are thinking about the right guardrails.”
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.