Warren Buffett used a CNBC interview to put prediction markets, legalized sports betting, and day trading in the same bucket, backing the idea that this kind of state-backed gambling amounts to a “tax on stupidity.” The remark drew fresh attention after being largely overlooked in the first wave of coverage, and it has reopened the argument over whether event contracts should be viewed as derivatives or betting products.
In the transcript published by CNBC, Becky Quick asked Buffett on March 31 whether he disapproved of “prediction markets, of legalized sports gambling, even of day trading.” Buffett did not separate them. He said that when states raise money from people for whom a dollar really matters, the net effect is to ease the tax burden on him and other wealthy people. When Quick linked that view to the old line that the lottery is a tax on the stupid, Buffett agreed and said plainly: “It’s a tax on stupidity.”
Prediction markets are pulled into Buffett’s older anti-gambling view
The position itself is not new. The report notes that Buffett used nearly the same language at Berkshire Hathaway’s 2007 annual meeting, where he called gambling “a tax on ignorance” and described state-sponsored betting as socially revolting. What stands out now is the explicit inclusion of prediction markets. For the past 18 months, platforms in the sector have argued that they should not be treated as gambling businesses. Buffett’s answer did not recognize that distinction.
That matters because firms such as Kalshi, Polymarket, and other operators have pushed a legal theory that event contracts fall under federal derivatives regulation rather than state gambling law. Buffett did not engage with that technical argument. His framing was much simpler: these products are versions of the same wager structure, blessed by the state and drawing money from people least able to absorb losses.
Ignored in early coverage, then revived online
Most mainstream reporting on the interview when it first appeared on March 31 centered on Buffett’s investment views, his comments on Apple, and his retirement transition. The gambling section resurfaced later after The Growth Podcast host Aakash Gupta posted the clip and added a numerical case for Buffett’s argument: 9 US states have no state income tax, 7 of those 9 run state lotteries, and 7 of those 9 have legalized sports betting.
Front Office Sports picked up the angle on April 27, with Yahoo Sports syndicating it the same day. The article says major trade outlets had not highlighted Buffett’s decision to group prediction markets with sports betting, even though that linkage speaks directly to the legal and cultural case against the industry’s preferred framing of event contracts as something other than bets. The Commodity Futures Trading Commission under the Trump administration has shifted closer to the operators’ position, while regulators in Arizona, New Jersey, Romania, and other jurisdictions continue to argue that these platforms amount to unlicensed gambling under a different label.
Market growth continues as the legal fight stays open
The report cites a Bernstein projection that prediction market volume will reach $240 billion in 2026. It also points to figures from the American Gaming Association showing that US sports-betting revenue reached $16.96 billion in 2025, up nearly 23% year over year. State-regulated sportsbooks generated $3.71 billion in tax revenue, a 32.4% increase from 2024. Legal online sports betting is now available in some form across 40 states plus Washington, D.C.
Adam Hoffer, director of excise tax policy at the Tax Foundation, told Front Office Sports that he understood Buffett’s view. He said gambling is generally a losing proposition, and that adding taxes only worsens the return for participants because the house already has the edge. Hoffer also said higher-income Americans spend a smaller share of their income on gambling than lower-income households, and that governments are aware of that pattern.
The article also notes that CNBC has a commercial relationship with Kalshi and holds a minority investment in the company. That disclosure appeared in CNBC’s April 14 prediction-market coverage, but not in the Buffett interview transcript. At the same time, CNBC reported last week that new ETF filings could allow retail investors to gain event-contract exposure inside retirement accounts. The clash between state regulators and the CFTC remains unresolved, and the core question is still open: whether prediction markets belong inside derivatives law or should be treated as gambling.