Retail participants on prediction markets are faring worse financially than their counterparts on traditional sports betting platforms, according to recent data. The median return for retail prediction market users has sat at -8% since mid-2025, compared with a -5% median return for legal sportsbook bettors. The gap highlights a meaningful difference in outcomes between the two types of wagering environments. Only the highest-volume traders on prediction markets are consistently turning a profit.
A key structural reason for the disparity is that prediction markets do not restrict or limit winning players, a common practice among traditional sportsbooks. This means everyday retail traders are placed in direct competition with professional traders and market makers who operate at a significant informational and strategic advantage. On conventional sportsbooks, operators routinely cap the bet sizes of sharp bettors, offering retail users a degree of indirect protection that prediction markets do not provide.
Despite these user-level losses, gaming industry executives say prediction markets are not meaningfully eating into existing sportsbook revenues. The two products appear, for now, to be drawing from different pools of activity rather than directly substituting for one another. That assessment may evolve as the prediction market sector continues to grow and mature.
Platforms such as Kalshi are nonetheless drawing attention for their ability to attract a younger demographic. Strong download growth figures suggest these services are gaining traction with users who have not yet established loyalty to established operators. This positions prediction market platforms to capture the next generation of bettors before they migrate to incumbents like DraftKings or FanDuel.
The long-term competitive implications for the broader online wagering industry remain an open question. If younger users develop habits and preferences on prediction market platforms first, traditional sportsbook operators could face a more significant challenge to user acquisition down the line. For now, executives appear to be monitoring the trend rather than treating it as an immediate threat to their core business.
Originally reported by CoinDesk.
