Why making Americans bet with cash could protect people from gambling problems

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U.S. Army Special Forces soldier Gannon Ken Van Dyke, left, was indicted for making wagers on the arrest of Nicolás Maduro while being part of the military operation that captured the Venezuelan leader. Edna Leshowitz/Getty Images

Gambling has exploded in the United States. American casinos and sportsbooks earned US$79 billion in 2025, up nearly 20% from the $66.5 billion just two years earlier. That doesn’t include the enormous sums earned by prediction market companies, which are technically not considered gambling but instead help forecast future events.

Regrettably, but not unexpectedly, the widespread ability to gamble is also causing major scandals.

For example, the chief of police in New Haven, Connecticut, allegedly embezzled government funds to bet almost $4.5 million on sports.

And major basketball stars are accused of betting on their own games. Even politicians are betting on election outcomes.

I’m an economist who has been studying gambling since before there was an internet. While I support people having the ability to gamble legally, betting today is too easy, in my view, and it is now time to make it harder. I think there’s a relatively simple way to reduce its spread: making gamblers bet with cash.

3 big problems

What caused this major increase in gambling?

In 2018, the Supreme Court ruled in Murphy v. National Collegiate Athletic Association that individual states have the power to decide whether to legalize sports betting inside their borders.

More recently, companies like Kalshi and Polymarket have exploded in popularity. They offer customers the ability to bet in prediction markets, which have opened the door to a form of gambling on events beyond sports.

These markets operate outside of state control, bypassing gaming regulations because they are regulated at the federal level by the Commodity Futures Trading Commission.

For example, those prediction markets aren’t subjected to Montana’s and Nebraska’s rules that all sports betting is done in person. Age restrictions, such as those on the books in Massachusetts, and blanket prohibitions on sports betting like those currently in California, Texas, and some other states, don’t apply.

Three of the biggest problems with gambling are addiction, insider trading and anonymous big bettors called whales.

For a small number of people, gambling is highly addictive, often leading to financial ruin. While most people see gambling as a fun, occasional event, there are others who gamble all the time.

The World Health Organization estimates about 1.2% of the world has a gambling problem. U.S. estimates suggest around 20 million Americans are problem gamblers – about 6% of the population. Given that both the “house” and the government take a cut of all gambled money, in the long run the odds are not in any gambler’s favor.

Second, prediction markets are prone to insider trading. If you have knowledge of if or when an event will happen, then prediction markets are a simple method of illegally cashing in.

For example, a Special Forces soldier was arrested and charged on April 23, 2026, for winning more than $400,000 on bets based on classified information of when the military would take out Venezuelan strongman Nicolás Maduro.

Third, sporting events and prediction markets are prone to manipulation. One way is by people betting on their own actions, like sports stars shaving points. Another is by people anonymously making very large bets compared to the size of the market.

These “whales” can influence outcomes simply by changing the odds, which shifts the narrative about an event, like the French gambler who bet heavily on Donald Trump winning the 2024 presidential election.

Probably here to stay

Gaming proponents claim that the industry creates jobs. But its employment gains don’t appear to be benefiting the economy enough to offset all the other problems.

The U.S. Census Bureau tracks the number of people employed in online gambling and also includes lottery, high-stakes bingo and poker room workers in this group. The number of those jobs peaked in 2007, over a decade before the pivotal Supreme Court decision, at almost 70,000 workers.

The number fell to less than 47,000 during the COVID-19 pandemic and subsequently rebounded to 67,000 in 2024 – slightly below the 2007 peak.

But I highly doubt that gambling will be outlawed or restricted the way it once was.

Many states have become dependent on gambling taxes, making politicians reluctant to kill this golden goose no matter how many bad eggs it lays. The media is addicted to the billions in advertising dollars spent by gambling companies. Plus, professional sports leagues love gambling because it keeps fans watching, even in lopsided games.

Cash-only betting

People have been gambling for thousands of years, making its abolition an impossible goal. However, I think there’s a way to reduce gambling-related problems and boost employment: Force gamblers to use paper money when making bets or funding their accounts.

Cash betting is not a new idea. Walk into a casino and sit down at a table. The dealer always wants paper money before sliding over chips. Cash also rules at racetracks.

Elsewhere, gambling has become a frictionless experience. Placing a bet or buying a contract in a prediction market happens instantly by pulling out a phone, opening an app and tapping or clicking.

When actions are frictionless, people do them more often. More importantly, they may do them without thinking about it. E-commerce websites understand this; the easier they make it to order items online, the more we buy.

As I point out in my latest book, requiring the use of cash puts barriers in the way of making a bet. Since the highest-denomination U.S. bill is $100, it publicly reveals anyone making big wagers by forcing them to pull out many Benjamins.

In other words, requiring cash, instead of debit or credit cards, introduces friction. Gamblers have to get paper money and then physically go somewhere to make a bet. This takes time, energy and scheduling, which gives people a moment to think about what they are doing.

Because handing over your own cold hard cash…