A new survey revealed that nearly four out of five traders lost money using prediction markets last year.
BadCredit.org, a personal finance site, reported the results after polling 1,000 U.S. adults. 15% of them had used Kalshi, Polymarket, Underdog, or a different prediction operator.
Prediction markets created more losses than wins
Of all respondents who indicated they had used prediction markets, 79% reported losing money. 27% said they lost more than $500, and 9% said they’d lost over $1,000.
In simpler terms, about four out of five were negative, more than one-in-four had lost at least $500, and roughly one-in-10 had lost at least $1,000. That was key to Erica Sandberg, a consumer finance expert at BadCredit.org.
“I would recommend that everybody keep this statistic in mind. Our study found that nearly 4 out of five prediction market users lose money, and more than a quarter experience losses of at least $500,” said Erica Sandberg, consumer finance expert at BadCredit.org. “If you’re like many Americans living within a tight budget, this kind of loss can make paying essential bills very difficult.”
In addition to analyzing wins and losses, the survey focused on how traders funded their prediction market activity.
Just over half (51%) of users financed their contract purchases by using credit cards, kicking the burden to pay for their positions down the road. 88% of people who paid for predictions in this manner reported losing money, compared to 69% of individuals who paid by other means.
The takeaway there is that users displaying riskier financial behavior were also more likely to lose while trading in prediction markets.
It’s important to note that the survey aggregated individually-reported data not backed up by verified trading records from various prediction platforms.
“Although tempting, borrowing money to place a bet is a universally bad idea,” Sandberg said.
Traders wanted to win money
According to the survey’s findings, the desire to win money was the top motivation for the use of prediction markets. A leading 44% cited this as their primary goal, while another 9% said they were struggling financially and needed additional income.
That’s 53% of users whose participation was tied to financial reasons. That bested the 27% that joined for entertainment or curiosity, 10% influenced by social media, 7% recommended by friends or family, and 3% who said that conventional investing didn’t seem tenable.
“There is nothing wrong with using these prediction markets as a form of entertainment,” said Sandberg. “Only use cash you can afford to lose, and that won’t end up hurting your overall circumstances and end up as debt.”
Men (37%) were more likely to indicate that prediction markets could improve their financial power than women (25%). That lined up with the difference in use, as 24% of men and 9% of women said they had visited a prediction platform.
Prediction markets regularly generate tons of trading interest. Kalshi, Polymarket and Polymarket produced a record combined notional trading volume of $50.6 billion during July, ahead of the upcoming NFL season and midterm elections.
The heavy interest has poured gasoline on state-level legal disputes. Several recent fights were escalated to federal courts, which reversed a previous trend and ended in favor of state officials and regulators. That includes cases in Maryland, Nevada, New York, Ohio, Utah and Wisconsin.
The Trade Handle Prediction Markets Take
Although prediction markets maintain that they are different from sports betting platforms, they should operate under the same basic understanding that they are not a guaranteed medium for users to earn extra income. Men were more likely to use prediction markets, but the most troubling part of the report was that the majority of traders used credit to pay for their positions.