Majority of users lose money trading on Kalshi and Polymarkets

What This is

• Prediction markets that let users trade contracts on future events have grown quickly but are facing scrutiny over losses, fairness, and regulation.
• Analyses of Polymarket and Kalshi show most users lose money while a small cohort captures most profits.
• These platforms blur the line between gambling and tradable financial contracts, creating uncertainty over whether federal regulators or state gambling laws should apply.
• A U.S. Special Forces soldier was arrested after allegedly using classified information to win a large wager, intensifying concerns about insider trading and enforcement.
• Some prediction-market contracts are written so precisely that participants can dispute outcomes, increasing the need for clear rules on settlement and market integrity.
• Surveys show younger adults are more familiar with and more likely to use prediction markets, often alongside sports betting.
• A poll of U.S. registered voters found most Americans are unfamiliar with prediction markets and 63% have little to no confidence that the platforms can prevent insider trading.
• The same poll found more than 70% of respondents are concerned about betting on elections or military actions, with many favoring regulation under state gambling rules.

Why This Matters

• Concentrated profits and widespread losses raise consumer-protection questions about whether these platforms resemble investing, gambling, or something in between.
• How regulators classify prediction markets determines which agencies can police fraud, market manipulation, and trading on nonpublic information.
• Betting on elections or military actions tests democratic norms by turning civic and security outcomes into financial instruments.
• Generational uptake means any harms or safeguards could scale quickly, shaping how younger adults relate to risk, debt, and “quick-gain” financial behavior.