The data: Gen Z is taking the riskiest, most novel path to investment gains, per a study by Northwestern Mutual. Indeed, 32% of Gen Zers have invested in or are considering investing in sports betting or prediction markets in 2026.

Prediction markets trade event contracts, which are derivatives that let traders bet on the outcome of any specific significant event.

Digging into the data: Gen Zers and millennials are more likely than US adults overall to put money in crypto or prediction markets.

Prediction markets, of which sports betting is a subset, is the nontraditional, risky investment category where Gen Zers (32%) stand out from millennials (24%). At the same time, a similar proportion of Gen Zers and millennials are or plan to be exposed to crypto (32% versus 35%, respectively), options (17% versus 18%), and meme stocks (14% versus 13%).

Zoom out: Prediction market companies were valued at billions of dollars in 2025: Polymarket raised $2 billion in October, valuing it at $9 billion, and Kalshi raised $1 billion in December, valuing it at $11 billion. Robinhood has also aggressively jumped into the business. But banks have steered clear of products that are complex, untested, and not directly regulated.

Implications for banks: Gen Zers are broadly interested in alternative assets, per our September 2025 report Winning the Great Wealth Transfer: These preferences are a lesson for banks in what products and services to offer via retail channels. And event contracts expand that category. But most financial institutions’ participation in prediction markets would be premature.

It is a matter of time—possibly years—until events contract trading goes mainstream. Institutions with retail derivatives trading—big banks and brokerage first—would be the most likely places to start. Smaller institutions that tried their hand, which some did during the crypto bubble peak, would be plugging crypto trading into a business model not designed to support it.