With the rise of prediction markets drawing negative attention surrounding problem gambling, Kalshi and other sites are responding. Polymarket issued a response by updating their consumer protections, while a Kalshi spokesperson recently stated that the industry is “healthier” than sportsbooks.
Kalshi spokeswoman Dani Lever said as much in a recent interview, calling a report by NPR a “cherry-picked case”. Lever suggests the platform’s reliance on trade volume instead of traders losing makes prediction markets in general a superior alternative.
NPR Report Sheds Negative Light on Prediction Market Addiction Risk
A recently released NPR report profiles a problem gambler only known as “Thomas”, who struggled with gambling addiction at sportsbooks like DraftKings and FanDuel.
After kicking his gambling addiction, Thomas caught onto Kalshi and eventually lost over $25,000 trading on prediction market platforms.
NPR’s report focuses on the negativity within the prediction market industry, and included quotes from Kalshi spokeswoman Dani Lever, who pointed out the difference between prediction markets and sports betting sites.
Kalshi Says Prediction Markets Are Healthier Than Sportsbooks
Lever’s response is fair, as the prediction market model is very different from a traditional online sportsbook. Put simply, prediction markets do not benefit from problem gamblers losing. They only benefit from volume trading on their platform.
Regular sportsbooks establish odds, enforce a “rake”, and want to keep bettors coming back. Not only do they target losing bettors who can develop addictive tendencies, but they actively restrict or even ban accounts of successful bettors.
Kalshi and other prediction markets have no incentive to conduct either type of behavior.
Prediction Markets Get Public About Their Safeguards
Lever’s comments don’t come without action, and her company’s CEO has loudly proclaimed a similar stance.
Kalshi CEO Tarek Mansour recently appeared on PBS NewsHour and stated that the company is pro-regulation and also has no incentive to target problem gamblers. Mansour revealed that the company actually started back in 2018, but was so concerned with getting out in front of regulatory issues that they didn’t officially launch until 2022.
Kalshi isn’t the only prediction market platform taking regulation and player safety seriously, either. Polymarket made headlines recently by updating consumer protections, which were aimed at protecting current and future traders.
Per reports, Polmarket added new tools to their platform that allow users to restrict account activity, self exclude, and even learn more about protecting themselves from problem gambling.
The Trade Handle Prediction Markets Take
The NPR piece operates as a fair call to attention in regards to the obvious prediction market addiction risks that exist. However, the difference between prediction markets and sportsbooks is painfully obvious.
Kalshi and other prediction market sites do not actively target losing players, while problem gambling is not something these sites inherently benefit from. In fact, the top platforms are taking measured steps to make sure they not only enforce strict guardrails, but that their use bases are protected.
Prediction markets don’t ignore that problem gambling is still a risk. But they are being proactive in trying to stay in front of the regulatory conversation, as well as save users from dangerous behavioral patterns.
Whether the prediction markets can put up the proper safeguards effectively while keeping pace with a growing industry remains to be seen. But the idea that they should be lumped in with sportsbooks in regards to risk, intent, and incentive simply is disingenuous as lawmakers try to do everything they can to get a piece of the prediction market pie.