John Arnold has pledged $2.6 million to study the dangers of online sports betting

Billionaire philanthropist John Arnold says online sports betting has changed dramatically since it was legalized in the US in 2018, thanks to the rise of online betting market platforms Kalshi and Polymarket and mobile apps like The Kings Are Not Prepared and FanDuel. To better understand the potential dangers, he is awarding $2.6 million to researchers studying the evolving world of sports gambling.

The grants, which have not been reported before, will go to university researchers and researchers to look at the effect of gambling on financial well-being, home building, mental health and consumer behavior.

Arnold, who founded Arnold Ventures with his wife, Laura, told CNBC that 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 greatly increased access and reduced friction,” Arnold told CNBC. “It’s changed what the product is. You can bet on the whole field. You can bet at a speed you’ve never had where you have to call to place a bet.”

Arnold, a former hedge fund owner and Enron power trader whose philanthropy has worked to reform criminal justice and improve higher education, has turned his attention recently to the potential pitfalls of prediction markets and sports gambling apps, meeting with lawmakers and pursuing stricter oversight.

Schools including Princeton University, the University of Pennsylvania and the University of Wisconsin will receive Arnold research grants over the next three years, Arnold Ventures said in a press release.

A 2018 Supreme Court decision paved the way for legal sports betting in the US, with participation growing in the years since. An April study by the Research Institute of Siena University found that 27% of Americans have an active online sports betting account, up from 19% by 2024.

The sports betting industry has reached a record $16.96 billion in revenue by 2025, the American Gaming Association announced earlier this year. And the volume of trading in the two main prediction markets – Kalshi and Polymarket – grew from less than 5 billion dollars in September to almost 24 billion dollars in April, according to the analysis of the Pew Research Center.

Sports are the most popular type of event contract by volume in the speculation markets, which operate differently and are subject to a different regulatory authority than traditional gambling venues. As of February, about 87% of bets placed on Kalshi last year were on sports, according to the Congressional Research Service.

Thirty-nine states, along with the District of Columbia, have legalized sports betting as of 2018.

“A lot of states jumped into legalizing sports betting in 2018. And I think they were really attracted by the tax revenue,” Arnold said. “It is much more desirable for the legislature to raise money through a voluntary tax than through a compulsory tax.”

“But our argument is that both intensity and access have changed significantly, not just with sports betting but with a number of other bad practices,” he continued. “As legislators figure out what to do with this and do it legally, it should be noted that this product has changed.”

Arnold compares the maturation of online sports betting to the legalization of marijuana and the emergence of pornography.

“Marijuana today is a very different product than it was a generation ago. It’s much more potent, and access has increased,” Arnold said. “You’re thinking about porn. The intensity of the product has gone up a lot, the accessibility has gotten a lot easier.

“So for sports betting, obviously the reach has increased a lot, but the product has also changed.”

Arnold Ventures in 2025 funded research grants to study the effects of legal marijuana.

Access and intensity have also increased in sports betting. A user can bet multiple times on one game without leaving the sofa. 46 percent of men between the ages of 18 and 49 gamble, according to a Siena survey this spring, and critics say it could have a negative financial impact on youth.

This issue has attracted the attention of members of Parliament on Capitol Hill, where since the beginning of the year a number of proposals have been presented.

Others, like the bill introduced by Sen. Jeff Merkley, D-Ore., and Rep. Jamie Raskin, D-Md., will ban market events contracts for predicting sports, elections, war and government actions. Another, from Sens. John Curtis, R-Utah, and Adam Schiff, D-Calif., specifically want to block betting markets like Kalshi and Polymarket from allowing sports betting on their platforms.

At that time the law from Sen. Richard Blumenthal, D-Conn., and Rep. Paul Tonko, DN.Y., wants to create stricter restrictions on online sports betting by giving states the power to make their own laws, restrict advertising and ban certain types of bets, such as bets on a specific event or odds against the final game.

Arnold has met with lawmakers on Capitol Hill about the issue, but most of his efforts have been directed at the federal level, where sports betting is regulated. Futures markets, which include peer-to-peer contracts as opposed to house betting, are regulated by the Commodity Futures Trading Commission.

“We’re very busy talking to state legislatures about their decision to legalize, because legalization bills come through state legislatures every year,” Arnold said. “And there are those who are already legal and think about due diligence.”

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a small investment.