Retail Traders Lose More in Prediction Markets Than Sportsbooks

• Retail traders in prediction markets saw a median return of -8% between July 2025 and mid-March, performing worse than the -5% median return for traditional sportsbook users.
• Only high-volume traders with over $500,000 in volume were profitable on prediction markets, posting a median ROI of +2.6%, while the smallest accounts (under $100) lost 26.8%.
• Prediction markets are attracting a younger demographic, with a median age of 31 compared to 35 for legacy sportsbooks like DraftKings and FanDuel.

Performance Disparity Between Platforms

New research from Citizens JMP Securities reveals that prediction markets, while growing in popularity, are proving to be more difficult for retail users to navigate than traditional sports betting. Analyst Jordan Bender, utilizing transaction data from Juice Reel, found that the median retail user on these platforms lost 8% of their capital during the study period ending in mid-March. In contrast, legal sports betting users saw a slightly less severe median loss of 5%. The data highlights a significant divide based on account size: while high-net-worth traders saw positive returns, every other tier of retail participant experienced negative results.

Structural Differences and Professional Influence

A primary reason for the steeper losses in prediction markets is the structural nature of the platforms. Unlike regulated sportsbooks, which often limit or ban consistently profitable bettors to manage risk, prediction markets allow successful traders to operate without restriction. This creates an environment where retail users are directly trading against market makers and professional high-volume participants. These "sharp" traders effectively capture the flow of less informed retail users. According to professional bettors, the presence of retail liquidity makes these markets highly attractive to experts who consistently take the profitable side of the trade.

Generational Shifts and Market Outlook

Despite the risks for retail users, prediction markets are successfully capturing a younger audience. Data from Sensor Tower indicates that 24% of Kalshi users are under the age of 25, whereas only 7% of DraftKings and FanDuel users fall into that age bracket. Between September 2025 and February 2026, Kalshi reached 6.3 million downloads, while traditional sportsbook apps saw double-digit declines. While CEOs from companies like Flutter and BetMGM have downplayed the immediate revenue impact—estimating it at roughly 5%—the trend suggests that prediction markets are intercepting the next generation of users before they ever join traditional betting platforms.