Buffett Lumps Prediction Markets With Sports Betting in ‘Tax on Stupidity’ Rebuke

Key Takeaways:

• Warren Buffett groups prediction markets with sports betting in a CNBC interview.
• Buffett says state gambling revenue “relieves the taxes on me or other rich people.”
• Bernstein projects prediction market volume will hit $240 billion in 2026.

Trade Press Has Skipped the Prediction-Markets Line

The 95-year-old investor sat with CNBC’s Becky Quick on March 31 in his first major interview since handing the Berkshire Hathaway CEO role to Greg Abel at the start of the year. The transcript, published by CNBC, shows Quick asking Buffett directly whether he disapproved of “ prediction markets, of legalized sports gambling, even of day trading.”

Buffett did not separate the categories. “To the extent that the states raise money from people who [think] the dollar really means something to them, actually relieves the taxes on me or other rich people. I mean, it’s not direct, but it’s the net effect.” Asked by Quick whether the framing matched her father’s old line that the lottery was a tax on the stupid, Buffett agreed, stating:

“It’s a tax on stupidity.”

The position is not new for Buffett. He used nearly identical language at Berkshire’s 2007 annual meeting, calling gambling in general “a tax on ignorance” and describing state-sponsored betting as socially revolting. What is new is the explicit mention of prediction markets, which have spent the past 18 months arguing they are not gambling – alongside legal sports betting and retail day trading. Buffett accepted the framing without modification.

Mainstream coverage of the interview ran on March 31 and focused on Buffett’s investment views, his comments on Apple, and his retirement framing. The sports-betting angle resurfaced this past weekend after The Growth Podcast host Aakash Gupta pulled the gambling clip and laid out the math behind Buffett’s argument: nine US states have no state income tax, seven of those nine run state lotteries, and seven of those nine have legalized sports betting.

Front Office Sports picked up the angle on April 27, with Yahoo Sports syndicating the same day. None of the major trade press coverage has flagged the prediction-markets bundling, but it’s an important insight into coherent legal and cultural arguments against the framing Kalshi, Polymarket, and the federal-lane operators are pushing, namely that event contracts are derivatives, not bets. The CFTC under the Trump administration has moved sharply toward the operators’ position, while state regulators in Arizona, New Jersey, Romania, and others continue to argue that the platforms are running unlicensed gambling under different branding.

CNBC has its own commercial relationship with Kalshi and a minority investment in the company, disclosed in its April 14 prediction-markets coverage but not in the Buffett interview transcript.

Adam Hoffer, director of excise tax policy at the Tax Foundation, told Front Office Sports that he understood Buffett’s position. “Gambling, in general, is a losing proposition,” Hoffer said. “The house always wins. Piling on taxes only makes the return on investment even worse for gamblers.” Hoffer added that wealthier Americans spend a smaller share of income on gambling than lower-income households – a pattern, he said, “governments know.”

US sports-betting revenue alone hit $16.96 billion in 2025, up nearly 23% year-over-year, according to the American Gaming Association. State-regulated sportsbooks generated $3.71 billion in taxes, up 32.4% from 2024. Forty US states plus Washington, D.C. now offer some form of legal online sports betting.

Prediction-markets advocates argue the regulatory framework around event contracts is fundamentally different – federally regulated derivatives rather than state-licensed gambling. Buffett’s interview does not engage with that argument. He treats the categories as variations on the same underlying mechanic: a state-blessed wager that disproportionately extracts wealth from people who can least afford to lose it.

Whether the negative framing breaks through ultimately depends on what regulators and courts do next. New ETF filings reported by CNBC last week would let retail investors buy event-contract exposure inside retirement accounts — pushing the products further into the mainstream financial system. The state-versus-CFTC fight continues. And Buffett, now retired but still the most quoted living investor in American business, has placed prediction markets squarely on the wrong side of his sucker-game test.