Study Reveals Most Americans Lose Big in Prediction Market Gambling Boom

Prediction Markets Exploit Casual Gamblers, WSJ Analysis Finds

The United States is grappling with a gambling addiction epidemic, fueled by sports betting ads and smartphone apps. Prediction markets like Kalshi and Polymarket have intensified the trend, enabling bets on everything from weather forecasts to geopolitical events. Despite financial struggles for many Americans, millions are pouring billions into these markets—only to find that their winnings are minimal.

A Wall Street Journal analysis reveals that the vast majority of users are consistently outperformed by a small group of professionals, insiders, and trading firms with superior information and statistical tools. The findings underscore the urgent need for regulatory oversight, especially as over half of Americans live paycheck to paycheck. However, regulatory progress remains unlikely given the Trump family’s ties to the prediction market industry.

How Prediction Markets Favor the Few

The WSJ’s data shows a stark imbalance in profits:

• 67% of Polymarket profits go to just 0.1% of accounts—meaning 2,000 accounts have made nearly $500 million since November 2022.
• Kalshi reports that for every profitable user, there are 2.9 unprofitable ones.
• Betting volume has exploded, rising from $1.8 billion in April 2025 to $24.2 billion in April 2024.

Unlike traditional casinos, prediction markets operate without a "house," meaning users trade directly against each other. This setup often leaves casual bettors at a disadvantage against professionals who use algorithms and bots to execute thousands of trades per day. These high-speed strategies make it nearly impossible for average users to compete.

Certain Markets Are Particularly Treacherous

Some betting categories are especially risky for casual users:

• Sports betting is described by former professional poker player Michael Boss as the "easiest money" for professionals. "Sports has the attention of all the sick young men, I guess," he told the WSJ, referring to gambling addiction trends.
• Viral "mention markets"—where users bet on whether a public figure will say a specific word—have returns worse than most Las Vegas slot machines, according to the WSJ.

Key Differences Between Kalshi and Polymarket

The two platforms take divergent approaches to regulation and market control:

• Kalshi is regulated by the Commodity Futures Trading Commission (CFTC) and has implemented measures to curb insider trading.
• Polymarket, which recently opened to a limited number of U.S.-based users under CFTC oversight, still faces challenges in enforcing geographic restrictions. Circumventing these restrictions remains trivial for determined users.

The analysis paints a grim picture of an industry where the average person is systematically disadvantaged, raising critical questions about fairness, regulation, and consumer protection in the rapidly growing prediction market sector.