A new report by the Roosevelt Institute, a New York City-based think tank, claims that regular people using prediction market Kalshi have lost nearly $600 million since the platform started in 2018. According to the report, everyday users have lost about $583.5 million while betting on different real-world events through Kalshi.
The study says many regular users do not realize they are often betting against professional traders who use advanced tools and trading strategies. The report argues that this gives professional traders a major advantage over casual users. The study was written by Brad Lipton, who is the Roosevelt Institute's Director of Corporate Power and Financial Regulation. After the report was published, Kalshi strongly rejected the findings and said the report misunderstood how its platform works, as stated by Business Insider.
Why Kalshi says the report is wrong
Kalshi said there is no "house" on its platform, unlike a casino where the operator wins from customer losses. The company explained that it simply matches buyers and sellers, just like a financial exchange, instead of taking the opposite side of users' bets.
Kalshi said the report wrongly suggested that a difference in trading skill means there is a problem with the market's structure, as noted by Business Insider. The company added that having experienced traders on the platform does not mean the exchange itself is unfair.
{{/usCountry}}Kalshi said the report wrongly suggested that a difference in trading skill means there is a problem with the market's structure, as noted by Business Insider. The company added that having experienced traders on the platform does not mean the exchange itself is unfair.
{{/usCountry}}Why experts are worried
Brad Lipton disagreed with Kalshi's defence and said regular users still face a disadvantage because they usually do not know who is on the other side of their trade, according to Business Insider. Lipton said many everyday traders could unknowingly be trading against professionals using sophisticated systems and technology. He also questioned whether Kalshi's efforts to stop unfair trading are strong enough.
Lipton said it is not clear how well Kalshi's rules are being enforced to prevent insider trading or unfair advantages. He added that there is very little transparency about who users are betting against on the platform. Lipton also said Kalshi's marketing message that there is "no house" could be misleading because ordinary users may not understand they are facing highly skilled traders, according to Business Insider.
Questions over fair trading
Prediction markets like Kalshi have recently faced criticism over concerns about insider trading and market manipulation. Business Insider reported that researchers studying Polymarket, one of Kalshi's biggest rivals, found that well-informed traders made around $143 million in unusual profits since 2024. Those researchers said some traders appeared to have an unfair information advantage over other users.
Kalshi has said it is taking steps to ban insider trading and other unfair activity on its platform. The Roosevelt Institute's findings also match an earlier Wall Street Journal investigation published in May. That investigation found that most users on Kalshi and Polymarket lose money, while only a small number of accounts receive most of the profits.
Kalshi rejects $600 million loss claim
Despite that, Kalshi said the Roosevelt Institute's report contains a major calculation mistake that affects its conclusion about retail users losing nearly $600 million.
A Kalshi spokesperson told Business Insider that the study mixed up different types of traders in its calculations. According to Kalshi, the report wrongly counted high-frequency institutional market makers as ordinary users, while treating some casual app users as professional traders. Because of this alleged error, Kalshi says the report's estimate that retail traders lost nearly $600 million is inaccurate.
The disagreement highlights the growing debate over whether prediction markets are truly fair for everyday users or mainly benefit experienced professional traders, reported by Business Insider.