Expect changes in investor behavior in 2026 as prediction markets expand

Prediction markets and sports betting moved further into the mainstream in 2025. And while saving for retirement may not be a game, many advisors see the gamification of investing – like it or not - as a trend that will continue in the coming year.

Platforms like Robinhood accelerated into the space this past year, adding new features that make prediction markets function more like traditional sportsbooks. The retail brokerage's customers traded 2.5 billion prediction-market contracts in October alone, primarily on sports.

Robinhood is aiming to go even bigger in the prediction markets business, announcing plans last month to launch a futures and derivatives exchange with market maker Susquehanna as a means to expand its events contracts around sports, elections, and other events.

Meanwhile, prediction markets have gained explosive traction beyond Robinhood, with competing platforms Kalshi and Polymarket seeing monthly notional trading volume exceed $8.5 billion for the first time in October.

For their part, advisors are closely watching how this kind of “game-like” market access is influencing clients expectations regarding risk, speed, and outcomes.

Rob Wolfe, wealth management advisor at Apollon Wealth Management, for one, says he is seeing a clear shift toward gamified risk behavior even among otherwise disciplined, ultra-high net worth and high net worth clients. In his view, prediction markets, real time trading apps, and sports adjacent financial products are conditioning investors to expect immediacy, frequent feedback, and binary outcomes. That psychology has increasingly and unfortunately been bleeding into traditional portfolio behavior, according to Wolfe.

“What is most notable is that clients who also invest in professional sports franchises, sports media rights, and sports data platforms already understand that sports is a cash flow asset class with real enterprise valuation mechanics. But prediction markets blur that distinction by framing events as tradable micro wagers rather than long-term ownership stakes. This often creates confusion between true alternative investing and event speculation,” Wolfe said.

Overly short-term focused investors tend to confuse the availability of constant price updates with real control and real liquidity, Wolfe said. In reality, he says prediction markets encourage rapid, repetitive decisions that feel manageable in the moment but are often structurally stacked against the participant. He also believes that even sophisticated investors overweight recent outcomes, narratives and headlines, and personal conviction while underweighting true statistical odds.

“In sports-based markets, emotion and confidence routinely overpower disciplined probability thinking,” Wolfe said, adding that clients also often underestimate how quickly small, repeated losses add up over time.

Elsewhere, Taylor Knopf, managing director at Prime Capital Financial, says he too has witnessed clients who were generally conservative become increasingly interested in taking on higher levels of risk with very reasonable percentages of their portfolio.

“For one thing, trading and paying attention to the markets is fun and exciting! They have the wealth to participate without hurting themselves, and a lot of my clients are entering higher levels of wealth that they can afford to move back up the risk spectrum. The opposite is also holding true; my clients who were hyper-aggressive have suddenly become much more conservative than I would have anticipated,” Knopf said.

Emphasized Knopf: “As a result of gamification, the culture has shifted, and I see people as likely to talk about this (beating the market) as they are the football game.”

THE ROLE OF SPECULATION IN A PORTFOLIO

Apollon’s Wolfe says most of his clients have some type of “entertainment” investment that captures their attention, even just for a brief time, that fits in the “entertainment capital” bucket of their portfolio. In addition to prediction markets, this could include more traditional day-trading, collectibles, crypto and other more speculative activities.

“Our goal is to coach our clients to label it correctly so they understand that prediction markets should be treated like discretionary spending, not as a portfolio driver. It can be engaging and even intellectually interesting, but it should never be confused with the type of asymmetric, enterprise driven upside we pursue through institutional grade sports investments,” Wolfe said.

If even after his coaching, the client still wants to proceed, his next line of defense is sizing minimization to the smallest percentage possible.

“Ironically, we often find that the more successful a client becomes in true professional sports investing, the less interest they tend to have in prediction markets. Ownership and platform exposure reframes sports as a business. Speculation reframes it as a game,” Wolfe said.

Prime Capital’s Knopf, meanwhile, tells clients that if they have a thesis and trade rationale that makes sense and fits their portfolio, 15% or less into those positions can make a lot of sense. Ideally, he believes there are fundamentals or technicals at play that support their trading rationale.

“If you are here for the casino, please keep it within 5% or less, and please call it a day if you happen to get lucky and end up 200% or more in a short amount of time!” Knopf said.