Sports betting and prediction markets have driven a surge in gambling disorder, a behavioral addiction most insurers were never required to cover.
Key Takeaways
- The diagnosis is climbing where betting is legal: Gambling disorder diagnoses rose about 61 percent in states that legalized sports betting between 2018 and 2026, and fell in states that did not. The phone did what the casino never could.
- It is an addiction with a coverage gap: Gambling disorder sits in the same diagnostic category as substance use disorders, but it was left off the list of guaranteed benefits, so coverage is inconsistent and often absent. Advocates are now raising a parity question.
- The clinical stakes are high: Roughly three in ten people with gambling disorder report suicidal thoughts and about one in six attempt suicide, among the highest rates in behavioral health. Co-occurring substance use is common.
- A market is forming ahead of the payers: Venture-backed providers are building gambling-specific treatment while a few states route coverage through their SUD systems. Prediction markets are widening the exposure faster than the response can keep up.
There was a time when a gambling problem required a certain amount of logistics, a drive to a casino or a call to a bookie, friction that at least slowed the descent. That friction is gone. A gambler no longer has to go anywhere.
The sportsbook lives in the phone now, open at three in the morning, offering a wager on a tennis match in Australia or the outcome of a single pitch, and it arrives wrapped in the same push notifications and promotional credits as every other app competing for attention. Since the Supreme Court cleared the way for legal sports betting in 2018, the country has run an enormous uncontrolled experiment in making gambling frictionless, and the results are starting to show up where such things eventually surface, in the diagnostic codes of the behavioral health system.
Gambling disorder is the only behavioral addiction formally recognized in the psychiatric diagnostic manual, the one non-substance condition that sits alongside alcohol and opioids in the chapter on addiction, and it is now the fastest-growing diagnosis in the field.
It is also among the least prepared for, because the American coverage system was built around a list of conditions it must pay for, and when that list was written, gambling was left off it. The result is an addiction that is expanding quickly, carries one of the highest suicide risks in medicine, and lives in a coverage gray zone that the industry is only beginning to confront.
How Sports Betting Drove the Gambling Disorder Surge
The clearest evidence that something has shifted in the winds comes from the diagnostic data itself. An analysis of electronic health records by Epic Research found that in states that legalized sports betting, the rate of diagnosed gambling disorder rose about 61 percent between the first quarter of 2018 and the first quarter of 2026. In states that did not legalize it, the rate moved the other way, falling by nearly a third over the same period. The largest proportional increase landed among adults aged eighteen to twenty-nine, whose rate more than doubled, the demographic most fluent in the phone and most courted by the apps.
Those figures almost certainly understate the true scope, because gambling disorder is chronically underdiagnosed. Clinicians rarely screen for it, patients rarely volunteer it, and the condition carries a stigma that keeps it hidden even from providers treating its consequences. Clinical estimates put roughly two and a half million American adults at the threshold of a severe gambling problem, and another five to eight million have milder but still meaningful trouble. And yet, the diagnosed cases are a fraction of that.
Why Gambling Disorder Coverage Falls Through the Cracks
The National Council on Problem Gambling has called the expansion of legal betting the fastest such growth in the country’s history, and the treatment system never scaled to match it.
This coverage problem traces to a drafting decision made years ago. When the Affordable Care Act established ten essential health benefits that most plans must cover, it guaranteed treatment for mental health and substance use disorders, but gambling disorder was not explicitly named, and it has lived in the ambiguity ever since.
Because it is neither clearly a mental health condition in the traditional sense nor a substance use disorder, plans have been free to treat it as optional, and many simply do not cover it at all. Advocates have begun to press the obvious question, which is whether covering substance addictions while excluding a behavioral addiction recognized in the same diagnostic manual can be squared with parity law. In 2024, a member of Congress asked the Department of Health and Human Services to clarify that gambling treatment should be covered under the ACA, but the clarification has not come.
What results is a patchwork, to put it lightly. A handful of states have built gambling treatment into their public systems, often funding it through a small carve-out of gambling tax revenue, on the theory that the activity should pay for its own damage. Missouri, for instance, covers gambling disorder treatment through its substance use disorder provider system, a sensible piece of plumbing because the two conditions travel together and respond to overlapping treatments.
However, coverage of this kind is the exception. For most people who develop a gambling problem, whether treatment is covered depends less on clinical need than on the accident of which state they live in and which plan they happen to hold, the same fragmentation that has long shaped what behavioral health the payment system will and will not fund.
The Clinical Severity Behind a Behavioral Addiction
It would be a mistake to treat gambling disorder as a lesser addiction simply because no “substance” changes hands, especially when the current clinical picture is so severe. By the estimates most often cited in the literature, about 31 percent of people with gambling disorder report suicidal thoughts and roughly 16 percent attempt suicide, figures that put it among the deadliest conditions in behavioral health, driven by the specific catastrophe of gambling, which is financial ruin arriving suddenly and in secret.
The disorder also rarely travels alone. Co-occurring substance use disorders are common, as are mood and anxiety disorders, so that a gambling problem is frequently the visible edge of a more complicated clinical situation, and one that the billing silos separating mental health and substance use treatment are poorly built to address.
Meanwhile, mechanics of the modern product make the severity worse. Betting on a phone app has been found to roughly triple the odds of problem-gambling symptoms compared with other ways to bet, because the design removes every natural stopping point: the app is always open, the next wager is always one tap away, and the promotional credits are engineered to pull a lapsing user back.
This is not the occasional lottery ticket or the annual trip to a casino. It is a continuous, individualized stream of opportunities to bet, delivered to the most vulnerable users with unusual precision, and its psychological logic has more in common with the engineered pull of the slot machine than with the older forms of gambling the culture learned to live alongside.
Prediction Markets Widen the Exposure
Just as the field was beginning to grasp the scale of the sports-betting problem, a new channel opened that is arguably harder to contain. Prediction markets (online platforms such as Kalshi and Polymarket where users trade contracts on the outcome of events) have grown rapidly, and because they are federally regulated as financial exchanges rather than gambling, they sit outside the state rules that govern sportsbooks.
That distinction carries risk, as a user can trade event contracts regardless of the betting laws in their state, and on at least some platforms a person as young as eighteen can participate where the sports-betting age is twenty-one. For someone in recovery, this is an alarming clinical hazard, because a person who has carefully self-excluded from every sportsbook and casino can still reach a prediction market, and clinicians are being warned not to assume that a patient’s self-exclusion actually closes every door.
That said, a response is beginning, albeit unevenly. The National Council on Problem Gambling has extended its responsible-gambling standards to cover prediction markets and called on the platforms to promote the national problem-gambling helpline, and at least one major operator has signed a partnership with the council. Still, the regulatory questions are unsettled and moving through the courts and the federal commodities regulator rather than the state gambling authorities, which means the guardrails that took years to build for sportsbooks do not yet exist here. In other words, the exposure is widening faster than the response.
What Gambling Disorder Means for Behavioral Health Operators
For behavioral health operators, gambling disorder is the rare thing in this field: a fast-expanding population of need that most of the system is not yet organized to serve, the condition under which early movers tend to build durable positions. Venture-backed providers such as Birches Health and Kindbridge have already built gambling-specific telehealth treatment and have begun assembling the payer relationships that the coverage gray zone makes difficult, betting that the coverage question resolves in their favor as the diagnosis becomes impossible to ignore.
Their wager is certainly a reasonable one. The clinical need is well documented, the tools that work are familiar ones (cognitive behavioral therapy, motivational interviewing, and peer support), and the population is young, online, and reachable through exactly the channels a modern provider is built around.
One strategic caution is that the reimbursement foundation remains unsettled, and a business built on the assumption that coverage will arrive is exposed until it does. Operators who treat gambling disorder well will need to be fluent in the funding sources that actually pay for it today, the state gambling-revenue carve-outs, the SUD systems that will accept it, the commercial plans that have started to cover it, rather than waiting for a federal clarification that may be slow in coming.
Operators who serve this population are also positioned to be credible voices in the coverage fight, the ones with the data on who is being harmed and what treatment costs, which is likely to matter as the parity question moves. For now, the demand is real, the reimbursement is in flux, and the providers willing to build against that uncertainty will have the field largely to themselves while it lasts.
