Prediction markets are thrilling, however they’re not dependable wealth builders for retail customers.
Analysis by Residents reveals that retail prediction market customers are dropping more cash than authorized sports activities bettors, with the sharpest merchants and market makers capturing returns on the opposite aspect of their circulate which. The analysis notice additionally reveals the platforms are drawing a youthful demographic than conventional sportsbooks.
The median return for a prediction market person was -8% from July 2025 by means of mid-March, in contrast with -5% for sports activities e book customers over the identical interval, Residents JMP Securities analyst Jordan Bender wrote, citing transaction knowledge from analytics firm Juice Reel.
People buying and selling greater than $500,000 on prediction markets generated a median ROI of +2.6%, in step with sharp-bettor benchmarks validated by skilled gamers. Each cohort beneath that stage was adverse, sliding to -26.8% for customers buying and selling lower than $100.
No cohort inside authorized sports activities betting was worthwhile both, however the decay is much less extreme: the $500,000-plus sports activities betting cohort posted -0.6%, and the smallest accounts got here in at -29.3%.
One of many main variations between the 2 platforms is who’s on the opposite aspect of the commerce.
Prediction markets don’t restrict or ban worthwhile customers the best way regulated sportsbooks do, concentrating knowledgeable circulate on the platforms. That flips the normal mannequin. In sportsbooks, the home manages threat and filters out profitable gamers. In prediction markets, retail merchants are instantly uncovered to professionals, market makers, and high-volume individuals who persistently take the opposite aspect of much less knowledgeable circulate.
Two skilled bettors on a Residents JMP name final week mentioned prediction markets supply a extra enticing path to constructive returns exactly as a result of retail customers present the liquidity, the notice reads.
Are prediction markets a risk to on-line playing?
Gaming CEOs have dismissed the specter of prediction markets, in keeping with the Residents JMP report, which compiled government commentary from 4Q25 earnings calls.
DraftKings’ Jason Robins mentioned prediction markets should not materially incremental to present clients. Flutter’s Peter Jackson mentioned the corporate discovered no proof of fabric cannibalization. BetMGM’s Adam Greenblat estimated a low-to-mid-single-digit proportion affect on betting income. Residents JMP’s personal estimate is round 5%.
The larger situation is probably not cannibalization however acquisition. About 24% of Kalshi customers are underneath 25, with a median age of 31, in contrast with simply 7% for DraftKings and FanDuel, the place the median age is nearer to 35, in keeping with Sensor Tower knowledge cited within the report. Roughly 90% of DraftKings income comes from customers over 30, the report mentioned.
FanDuel and DraftKings downloads fell 18% and 13% year-over-year from September 2025 by means of February 2026, per Sensor Tower knowledge cited by Residents JMP. Over the identical stretch, Kalshi logged 6.3 million downloads.
Prediction markets is probably not pulling present sportsbook customers away. They could be intercepting the subsequent era earlier than they ever obtain DraftKings.
