Most retail traders lose on prediction markets. Using transaction data from analytics provider Juice Reel, Citizens JMP Securities found median returns of -8% from July 2025 through mid‑March 2026 — compared with -5% for legal sportsbooks — and only accounts trading more than $500,000 posted positive median returns.

Retail losses outpace sportsbooks

Citizens JMP Securities calculated a median -8% return for prediction market users between July 2025 and mid‑March 2026, using transaction records from Juice Reel. By contrast, users of legal sportsbooks had a median return of -5% over the same span. While the headline gap is modest, return distributions differ sharply by account size.

  • Accounts trading more than $500,000 on prediction platforms generated a median return of +2.6%.
  • Every cohort below $500,000 posted negative returns; the smallest accounts (trading under $100) had a median loss of -26.8%.
  • No sportsbook cohort was profitable either, but losses were shallower: the $500,000+ sportsbook cohort posted a median -0.6%, while the smallest sportsbook accounts lost 29.3%.

Who is taking the other side?

Citizens JMP explains that regulated sportsbooks manage risk and use rules to limit or ban winning players, while prediction markets generally do not. That leaves retail flow facing market makers, professional bettors and high‑volume participants who can take the other side of less informed trades.

In effect, prediction markets let competitive liquidity providers absorb risk and extract profit when retail users are wrong, rather than the operator pricing around a built‑in customer edge. Citizens JMP cited comments from professional bettors on a firm call that framed this as a structural advantage for sharp players and market makers, who can scale positions without house‑imposed limits.

Commercial stakes: acquisition and demographics

  • Sensor Tower data cited in the Citizens JMP note shows about 24% of Kalshi users are under 25, with a median age of 31; DraftKings and FanDuel users skew older (7% under 25; median age ~35).
  • From Sep 2025 through Feb 2026, DraftKings and FanDuel downloads fell 18% and 13% year‑over‑year, respectively, while Kalshi recorded 6.3 million downloads in the same period, per the report.
  • Executives at major gaming firms downplayed immediate disruption in 4Q25 earnings calls. DraftKings’ Jason Robins said prediction markets were not materially incremental; Flutter’s Peter Jackson saw no material cannibalization; BetMGM’s Adam Greenblatt estimated a low‑to‑mid‑single‑digit percentage impact on betting revenue. Citizens JMP estimated an approximate 5% effect on incumbent revenue.

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Citizens JMP’s analysis found median returns of -8% for prediction market users (July 2025–mid‑March 2026); only accounts trading more than $500,000 posted a positive median return (+2.6%).

This article was created with AI assistance.