Key Moments:
- A research report indicated new prediction market users incurred faster and larger losses than users on traditional sportsbooks.
- Kalshi challenged the accuracy and impartiality of the data, retracting an initial “extortion” allegation against the data provider.
- Regulatory scrutiny has intensified as prediction market operators assert they fall under federal commodities rules, not state gambling laws.
User Losses Exceed Those on Sportsbooks, Report Claims
An equity research analysis by Citizens analysts found that typical users of prediction markets lost about 7% of their staked funds within 90 days, compared to approximately 1% for users of regulated sportsbooks and other gambling platforms.
Losses were especially acute among less successful users; the bottom 25% of prediction market participants reportedly lost about $0.28 per dollar wagered over three months. For the bottom 10%, losses reached 44% – a stark contrast to the 11% loss figure reported for the same segment on conventional betting platforms.
| User Group | Prediction Markets (90 Days) | Sportsbooks (90 Days) |
|---|---|---|
| Median User | 7% loss | 1% loss |
| Bottom 25% | 28% loss | Not specified |
| Bottom 10% | 44% loss | 11% loss |
Kalshi Disputes Report and Issues, Then Withdraws, “Extortion” Claim
Kalshi, which operates under federal regulation and positions its markets as financial products, pushed back against the validity of these findings. Elisabeth Diana, Kalshi’s head of communications, told Bloomberg the statistics were “flat-out wrong.” She also noted that Juice Reel, the startup supplying data for the Citizens report, had previously sought “investment support” from Kalshi.
Diana further claimed that Ricky Gold, Juice Reel’s founder and CEO, had proposed to “defuse the situation” if he were given a meeting with Kalshi CEO Tarek Mansour. Diana stated to Bloomberg, “Please consider the source and its motives,” adding, “This is extortion.”
Gold disputed that account, asserting that Kalshi had pressured him to declare the data inaccurate. He emphasized Juice Reel’s focus on transparency and its support for users understanding their activity across platforms. “We stand for transparency, we stand for helping bettors, traders understand their activity across the platform, and we stand behind our data,” Gold said.
Diana later rescinded the claim of “extortion” but maintained Kalshi’s position that its internal analytics contradicted the report – although Kalshi did not publish any supporting figures.
Regulatory Definitions at Stake
Kalshi and other prediction market companies, including Polymarket, have stressed that they are not sportsbooks, classifying their offerings as derivative contracts regulated under federal commodities law rather than as state-governed gambling. This classification is critical to their business models and their continued operation in the face of growing regulatory pressure.
Authorities in several states, such as Nevada, have alleged that prediction markets engage in unlicensed gambling and have taken steps to curtail these platforms.
- Author
Daniel Williams
