Citizens JMP Securities released comprehensive research indicating retail traders lose more capital on prediction markets than on legal sportsbooks. The analysis covers extensive trading data from July 2025 through mid-March 2026 across multiple jurisdictions globally. The report was published online on March 25, 2026. Jordan Bender, a senior analyst at the firm, cited detailed transaction data from analytics company Juice Reel. The findings suggest prediction platforms are not reliable wealth builders for the average retail user in the current market environment.
The median return for a user on a prediction market was negative eight% during the specific study period reported. This figure compares unfavorably to a negative five% median return for sports book users over the same timeline. Individuals trading more than 500,000 dollars on prediction markets generated a median return on investment of positive 2.6%. Every cohort below that level was negative, sliding to negative 26.8% for users trading less than 100 dollars.
One major structural difference explains the significant disparity in user returns between the two distinct platforms analyzed. Prediction markets do not limit or ban profitable users the way regulated sportsbooks do within their operational frameworks. This practice concentrates informed flow directly on the platforms rather than filtering it out to protect the house edge. This fundamental shift challenges the historical relationship between the house and the bettor. Consequently, retail traders are exposed to professionals and market makers consistently taking the other side of their flow.
Professional bettors told Citizens JMP that prediction markets offer a viable path to positive returns specifically because retail users provide necessary liquidity. Gaming executives have largely dismissed the immediate threat of cannibalization from these emerging digital markets in recent statements. DraftKings CEO Jason Robins stated prediction markets are not materially incremental to existing customers on their platforms. Flutter and BetMGM executives echoed similar sentiments regarding revenue impact during recent earnings calls.
Citizens JMP estimates the potential impact on traditional betting revenue sits around five% based on current models. The bigger industry concern may involve long-term customer acquisition rather than immediate revenue theft from the incumbent players. About 24% of Kalshi users are under age 25, compared to just seven% for DraftKings and FanDuel. Sensor Tower data cited in the report highlights this demographic shift clearly for industry analysts.
Roughly 90% of DraftKings revenue comes from users over age 30 according to the compiled metrics. Download numbers for FanDuel and DraftKings fell 18% and 13% year over year from September 2025 through February 2026. In contrast, Kalshi logged 6.3 million downloads during the same period despite broader market headwinds. This suggests prediction markets may be intercepting the next generation of bettors before they ever download traditional apps.
The platform covers 400 tokens and is aimed at banks, family offices, and high-net-worth individuals according to recent filings. This expansion comes as digital assets face growing institutional demand across the broader financial sector globally. The structural changes indicate a shift toward more sophisticated trading environments that cater to diverse investor profiles. Retail participants must navigate these markets with greater caution moving forward to protect their capital.
Market makers profit from the spread created by uninformed retail participants in these volatile environments daily. The data indicates that the sharpest traders consistently capture returns on the other side of retail flow within the system. This dynamic creates a challenging ecosystem for individuals without significant capital or deep experience in trading mechanics. The regulatory environment remains distinct from traditional gambling jurisdictions in many key areas. Regulatory bodies must consider how to protect uninformed participants in such open systems.
Investors should monitor how these platforms evolve as institutional capital enters the space over the next fiscal year. The intersection of prediction markets and digital assets presents new opportunities for financial innovation and product diversification. Industry observers will watch for further consolidation or regulatory changes in the coming months affecting the sector. The long-term viability of these markets depends on balancing liquidity with user protection standards. Future product design will determine long-term success or failure in this evolving sector.
