Northwestern Mutual: ‘Financially behind’ young investors turn to prediction markets, sports betting

Young investors who feel financially behind are turning to prediction markets, sports betting and other speculative assets in an effort to reach their financial goals, according to a new study from Northwestern Mutual.

Among respondents who say they feel financially behind, one-third (32%) of Gen Z and 24% of Millennials are currently invested or considering to partake in prediction markets or sports betting this year, according to the 2026 Northwestern Mutual Planning & Progress study. About 80% of surveyed Gen Z and Millennials who feel financially behind said high-risk speculative investments will help them reach financial goals more effectively than traditional models recommended by financial advisors.

In addition to sports betting and prediction markets, the study defined speculative assets to include cryptocurrency, options trading, and meme stocks. Northwestern says Gen Z is leading signs of “financial nihilism” emerging among the 73% of U.S. adults across all generations who say they’re investing in speculative assets because they feel financially behind. Bank of America has flagged prediction markets as an emerging credit risk.

“Among those that are active in cryptocurrency, prediction markets and in sports betting, 73% say I'm active in those markets because I'm behind on my potential plan and this is a way for me to catch up,” said Northwestern Mutual’s chief field officer John Roberts. “This is the Nihilism point they're effectively saying—I haven't saved enough, I'm not earning the returns I want in a long-term focused portfolio—I might as well just swing for the fences and bet on things like, literally if Jesus could return before the end of 2026.”

The Harris Poll conducted Northwestern’s study in January 2026 among 4,357 U.S. adults aged 18 and older with findings divided into answers from Gen Z, Millennials, Gen X and Boomers. Despite concerns around speculative asset investing, the study found 50% of U.S. adults feel financially secure in 2026 compared to 44% in 2025, with each generation feeling more optimistic about their financial security this year over last year.

“What we hear is the number one source of financial advice in this country right now is TikTok, which is unfortunate because there's no credentialization. There's really no expertise, it's opinion,” said Roberts.

Kalshi, the leading U.S. prediction market regulated by the Commodity Futures Trading Commission, recently imposed fines related to insider trading on its platform. Donald Trump Jr. is an advisor to both Kalshi and Polymarket, which have faced recent criticism over their markets tied to the Iran war and whether supreme leader Ali Khamenei would be ousted. 

“One of the big differences for me in crypto and prediction markets is the asymmetry of information,” said Roberts. “There is asymmetry in the prediction markets for sure, you can't prove it, but it's there, and that for me is a big distinction between regulated securities and betting.”

Roberts added that Northwestern’s study found women were half as likely than men to be using speculative assets. Schwab CEO Rick Wurster said in November, “I hope as an industry, we're able to tell the story to clients about the difference between gambling and investing,” as he voiced concerns over sports betting and predictions markets overlapping with financial services. 

“We'll leave the sports gambling, which constitutes 95% of the prediction markets volume, we'll leave that to the gambling houses— the FanDuels, the DraftKings and the Robinhood's,” Wurster said in a January interview with Bloomberg. He added “I think at some point in the future we will have true prediction markets,” that Schwab can offer to clients for inflation reports, unemployment and other economic indicators. 

“To me, prediction markets and the way they started were about being able to forecast things like employment or inflation, and being able to take a point of view or position on those and that could somehow hedge or accentuate the positions in your investment portfolio,” said Wurster. “I think that makes sense within the context of an investment portfolio, and we're absolutely open to having that on our platform, those types of prediction markets.”

Brokerages such as Robinhood, Coinbase, and Webull have partnered with Kalshi to offer prediction markets. Wall Street icons such as Schwab founder Charles Schwab and KKR co-founder Henry Kravis have invested in Kalshi, who Northwestern positions as being more likely to integrate prediction markets to asset managers opposed to wealth management firms.

“My guess is the wealth management firms are far less likely to offer prediction market related services anytime in the foreseeable future. The asset management firms, or firms that tend to drive more of their value tied to the overnight sweep of the dollars that are on their platform, on the margin are less focused on where those assets are held and what securities and whether the assets are housed in their ecosystem” said Roberts.

“Robinhood isn't making money off of the ticket charges, the fees for trades, they're making money on the fact that the assets are embedded in their ecosystem. They have more incentive to just make sure they're gathering the assets than a wealth management firm like a Merrill Lynch, that is a more diversified revenue stream is focused more on making money on the actual fees on the service,” Roberts added.