Prediction Market Users Are Losing More Money Than Sports Bettors, New Data Shows

The pitch has always been that prediction markets are different from gambling. More intellectual. More like trading. A place where informed people can put real money on real outcomes using their superior knowledge of the world. It sounds reasonable enough, until you look at the numbers.

New research from Citizens JMP Securities analyst Jordan Bender, drawing on anonymized wallet data from analytics platform Juice Reel, delivers a finding that undercuts the “it’s just trading” narrative: retail users on prediction markets are losing money at a faster rate than their counterparts at legal sportsbooks. The data covers the period from July 2025 through mid-March 2026, and the gap is not subtle.

The Numbers Are Hard to Argue With

The median return on investment for prediction market users during the study period was -8%. Sports bettors, who are rarely celebrated as savvy financial operators, came in at -5% over the same stretch. That three-point gap does not sound catastrophic in isolation, but context makes it worse.

Bender’s analysis broke users into cohorts by trading volume, and the results at the lower end are striking. Prediction market users trading less than $100 posted a median ROI of -26.8%. The comparable figure for the smallest sports bettors was -29.3%, which is worse, but the trajectory across the spectrum tells a different story. Only prediction market traders with volumes exceeding $500,000 managed to post a positive return, coming in at +2.6%. Every single cohort below that threshold was in the red. In sports betting, even the wealthiest cohort posted -0.6%, but the overall decay curve was less severe and more consistent.

Put plainly: on prediction markets, the recreational user is bleeding faster than they would be at a sportsbook. The smallest accounts, the casual bettors who toss in a few dollars on a football game, are getting hit almost as hard either way, but the mid-tier prediction market user is faring noticeably worse.

Why the Losses Run Deeper

The core issue is structural, and it is baked into what prediction markets actually are. Traditional sportsbooks act as the house. They set lines, manage risk, and crucially, they limit or ban winning players who beat them too consistently. That model filters out sharp money over time and keeps the playing field tilted in favor of the operator.

Prediction markets do not work that way. They are peer-to-peer exchanges, and they do not restrict profitable traders. That design choice, often promoted as a feature, has a consequence: the professional bettors, market makers, and high-volume quantitative traders who are squeezed out of sportsbooks find a comfortable home on prediction platforms. Two professional bettors on a Citizens JMP call confirmed as much, noting that prediction markets offer a more attractive path to positive returns precisely because retail users provide the liquidity.

Retail users, in other words, are not competing against a casino. They are competing against professionals with pricing models, access to official data feeds, and the capital to move markets. The average prediction market bet is $185, more than triple the $55 average wager at a regulated sportsbook. Recreational users are putting up more money per bet and facing sharper opponents, a combination that accelerates losses.

The Crossover Data Makes It Worse

Bender also examined users who were active on both legal sportsbooks and prediction platforms simultaneously, and that cohort adds another uncomfortable data point. The crossover group posted a median ROI of +1% on sportsbooks but -6% on prediction markets. The same people, making decisions with the same information, performed better on the regulated sportsbook than they did on the prediction platform.

Bender concluded that crossover users may actually represent lower-quality customers for traditional sportsbook operators, suggesting these are not the sharpest bettors migrating between platforms. Even so, they did better at the sportsbook. That is a pointed result for an industry that positions itself as the more sophisticated alternative.

The Industry Is Pushing Back

Kalshi, the largest U.S. prediction market by volume, has disputed earlier versions of the Citizens findings. A Kalshi spokesperson declined to provide alternative loss figures, saying they vary and fall somewhere between 1% and 7%. Polymarket founder Shayne Coplan has gone further, calling sportsbooks a “scam” and framing prediction markets as a fairer venue for informed bettors.

That argument is going to become harder to sustain as more data accumulates. A separate blockchain analysis of 1.7 million Polymarket addresses found that 70% of users had lost money, with fewer than 0.04% of profitable users capturing more than 70% of total gains. The winners exist, but they are concentrated in a tiny group with every structural advantage over the retail participant.

None of this means prediction markets lack legitimate use cases or that the category is going away. Kalshi alone generated more than $6 billion in event contract volume in both November and December 2025. The industry is growing fast. But growth and retail-friendly are not the same thing, and the Citizens data is a useful corrective to the narrative that has been building around prediction markets as something more benign than traditional gambling. The losses are real, and for everyday users, they are running ahead of what they would have faced at a sportsbook.