Prediction markets continue to surge behind heavy volume, but a recent Bloomberg study may have revealed a big reason why.
While Kalshi and other prediction market platforms are offering a versatile array of event contracts to work with, it’s actually been the longshot bets that have garnered the most attention from traders.
Per the study, these longshot bets are producing massive losses on major platforms, with roughly half of Kalshi’s trading volume consisting of contracts offering returns of at least 1,000%.
What the Data Reveals About Prediction Market Longshot Bets
Per the study, trading behavior was analyzed across two major prediction platforms, with Kalshi and Polymarket trades providing the findings.
The research revealed that approximately 50% of Kalshi’s trade volume consisted of longshot trades. In addition, more than 65% of the contracts came in recent weeks after the 2026 NFL season started, and “yes” longshot losses had 15% of the money staked.
Kalshi’s numbers also revealed that 58% of the contracts traded in September of 2026 involved sports parlays.
For Polymarket, 52% of the trade volume over the past 21 months was of the longshot bet variety, while “yes” longshot losses made up 27% of the cash staked. September longshot stakes also reached over $600 million across both sites.
Why Are Traders Chasing Massive Payouts?
Both sites displayed two common themes: high-level sports event contract trading and chasing low-probability outcomes for a high potential return.
The obvious incentive for traders is to risk a little to get a lot. The problem is the likelihood of hitting parlays or low probability wagers (longshot bets) simply isn’t very good.
This type of trading behavior does drive up volume and makes prediction market platforms active and profitable. However, it can play into problem gambling and creates a chaotic trading environment where unreliable volume may work against these sites operating as a source of unbiased truth.
Do Longshot Losses Actually Hurt Prediction Markets?
This isn’t to say every single longshot bet is a bad investment, though. Some low-probability trades do make sense, after all. However, this trading behavior does demonstrate how the purchasing of unlikely outcomes at less than favorable prices can generate large losses.
On top of that, there’s an argument to be made that over-aggressive pursuit of longshot bets can both contribute to exaggerated trade volume and also deflate the overall impact prediction markets can have.
Low-probability event contracts can still be useful in hedging or as YOLO bets, but they also raise fair questions regarding market efficiency, accurate data, and responsible trading practices.
The Trade Handle Prediction Markets Take
This is a slightly troubling development, as it does play directly into the hands of some regulators who say prediction markets aren’t regulated (well) enough.
The activity both on sports-centric event contracts and low-probability outcomes is concerning in the name of problem gambling. The good news? Kalshi has been pro-regulation from its inception, and Polymarket recently upgraded their safeguards and protocols to protect its user base from addictive and impulse behavior.
Prediction markets need to worry about this data from an aesthetics perspective, but it’s not just about people betting too frequently or losing too much. It’s also about undermining another key component of what prediction markets offer; transparency, accuracy, and reliability.
Ultimately, these findings deserve attention, but they shouldn’t sound the alarm. If anything, prediction markets can use this data to adjust, improve regulation, and inform users about probability and loss prevention.