Prediction market traders aren't sports bettors — they're DeFi natives

Data shatters the sports bettor myth

The rise of prediction markets — platforms where users trade contracts on real-world events like election outcomes, sporting results or economic indicators — has led many to assume the customer base is simply sports bettors in a new wrapper. Fresh research suggests otherwise. According to Ian Baer, who created the ELI Report to replace industry hunches with hard data, prediction market traders share far more DNA with decentralised finance enthusiasts than traditional sportsbook customers. The distinction matters for operators trying to understand demand, design products and set responsible gambling guardrails that actually fit user behaviour.

Prediction markets operate differently to conventional betting. Rather than accepting fixed odds from a bookmaker, users buy and sell outcome contracts that fluctuate in price based on collective sentiment. The mechanics resemble stock trading more than a sportsbook slip. That structural difference appears to attract a fundamentally different audience — one comfortable navigating blockchain wallets, on-chain liquidity and permissionless platforms.

Who actually trades prediction contracts

Baer's data collection set out to quantify the profile of prediction market participants with the same rigour applied to DeFi protocols or traditional gambling demographics. The findings revealed a user base driven by crypto-native behaviours rather than sports fandom. Traders on prediction platforms typically hold exposure to multiple digital assets, engage with decentralised applications beyond betting and demonstrate familiarity with concepts like liquidity pools and tokenomics. These are not casual punters placing weekend accumulators — they're participants who arrived at prediction markets via the broader blockchain ecosystem.

The overlap with sports betting exists but remains surprisingly narrow. While some users trade sports-related contracts, the motivation leans toward speculation and yield generation rather than fan engagement or tipster culture. Many prediction market traders show little interest in traditional bookmakers, suggesting the products serve distinct appetites. The ELI Report indicates that operators assuming a seamless crossover between sports betting and prediction markets risk misunderstanding their audience entirely.

What this means for platform design

If prediction market users are DeFi-first customers, platforms must prioritise features that resonate with that mindset. Transparent settlement mechanisms, on-chain verifiability, instant liquidity and low friction matter more than odds boosts or acca insurance. Marketing strategies built around sports narratives or betting promotions may miss the mark entirely when the target customer cares more about impermanent loss and APY than match statistics.

Responsible gambling frameworks designed for traditional bettors may also need rethinking. Prediction market traders often operate across multiple wallets, use pseudonymous identities and engage with smart contracts rather than centralised platforms. Conventional deposit limits or self-exclusion tools struggle to function in decentralised environments. Operators and regulators face the challenge of building safeguards that respect user autonomy while preventing harm — a balance the DeFi community itself continues to navigate.

Where prediction markets go next

Understanding the true customer base gives prediction market operators a clearer roadmap. Rather than competing directly with sportsbooks or chasing recreational bettors, platforms might focus on deeper integration with DeFi protocols, governance tokens and blockchain-native experiences. The ELI Report's findings suggest growth will come from refining the product for crypto users who value transparency, composability and yield — not from converting traditional gambling customers.

For players curious about prediction markets, this data offers a reality check. If you're a sports bettor looking for better odds or more markets, prediction platforms may feel unfamiliar and overcomplicated. If you're already comfortable with MetaMask, liquidity mining and on-chain transactions, these platforms will feel like natural extensions of the DeFi ecosystem you already navigate. Know which camp you fall into before committing funds.

The bigger picture

Baer's work with the ELI Report underscores a broader truth: assumptions in gaming and gambling rarely hold up under scrutiny. Prediction markets emerged as a novel betting format, but the audience they attracted came from an entirely different corner of the internet. Operators who ignore this distinction risk building products for a customer that doesn't exist, while missing the genuine demand sitting in DeFi communities. Data-backed conclusions, as Baer emphasises, replace guesswork with strategy — and in this case, the data says prediction markets belong to the blockchain crowd, not the betting shop regulars.