Prediction Markets Are Arriving in Investing Apps, Raising Serious Concerns
NerdWallet will penalize brokerage platforms that integrate speculative event contracts into standard investment accounts.
1New Editorial Stance
NerdWallet has officially updated its 2027 brokerage review rubric to penalize platforms offering easy access to prediction markets. The editorial team concluded that integrating sports and entertainment event contracts alongside traditional stocks undermines long-term wealth building. This decision marks a significant shift in how the organization evaluates modern mobile-first financial applications.
2The Accessibility Problem
Unlike complex options or futures trading, which require financial proficiency and broker approval, prediction markets are designed for mass appeal. These binary, yes-or-no contracts use everyday language, making them highly accessible. NerdWallet argues that this low barrier to entry, combined with minimal in-app guardrails, creates a dangerous environment for inexperienced retail investors.
3Conflation of Services
Investing apps often house prediction markets alongside IRAs and robo-managed portfolios, creating a blurred line between saving and gambling. Users can easily dip into funds intended for long-term growth to bet on pop culture events. This seamless integration makes it difficult for retail users to distinguish between legitimate investing and speculative betting.
4Robinhood Revenue Surge
The financial incentive for brokers to adopt these markets is substantial. In Q3 2026, Robinhood’s revenue from event contracts grew over 600% year over year to $173 million. With 16.4 billion contracts traded, it became their second-highest source of transaction revenue, trailing only options trading, according to recent company financial reports.
5Industry-Wide Growth
Other major platforms are seeing similar trends. Coinbase identified prediction markets as one of its fastest-scaling products in Q1 2026. Meanwhile, Webull reported a 70% quarter-over-quarter increase in trading volume during Q2, and Gemini saw a 93% rise in the same period, highlighting a broad industry push toward these speculative event-based assets.
6High Failure Rates
Data indicates that the vast majority of participants in prediction markets lose money. A study covering 2.4 million Polymarket accounts found that 69% of users suffered losses. Furthermore, the top 1% of profitable users captured 76% of all gains, suggesting that the average retail trader is consistently disadvantaged against more sophisticated market participants.
7Zero-Sum Market Dynamics
Event contracts are inherently zero-sum, meaning one trader's gain is another's loss. Unlike equity markets, these instruments lack dividends, the equity premium, or passive investment potential. Because they have short maturities, they encourage short-horizon trading, which behavioral finance literature consistently identifies as a destructive practice for individual long-term wealth accumulation and stability.
8Evidence of Losses
Bloomberg analysis revealed that between January 2025 and April 2026, over 100,000 Polymarket accounts lost at least $1,000. Additionally, a Wall Street Journal report noted that 67% of profits were concentrated in just 0.1% of accounts. These findings reinforce the argument that prediction markets are not viable long-term investment strategies for most individuals.
9Proposed Path Forward
NerdWallet suggests that prediction markets should be separated into standalone applications to prevent the conflation of gambling with investing. While acknowledging legitimate use cases like hedging or forecasting, the firm maintains that these products do not belong in standard brokerage apps. Future reviews will reflect this stance to protect retail investor welfare.