Prediction markets are exciting, but they are not reliable wealth creators for retail users.
Research by Citizens shows that retail prediction market users lose more money than legal sports bettors, with the sharpest traders and market makers capturing returns on the other side of their feed. The research note also reveals that the platforms attract a younger demographic than traditional sports betting.
The median return for a prediction market user was -8% from July 2025 to mid-March, compared to -5% for sports betting users over the same period, wrote Jordan Bender, an analyst at Citizens JMP Securities, citing transaction data from analytics firm Juice Reel.
Individuals trading more than $500,000 on prediction markets generated a median return on investment of +2.6%, consistent with benchmarks from advanced bettors validated by professional players. Every cohort below this level was negative, sliding to -26.8% for users trading less than $100.
No cohort within legal sports betting was profitable either, but the decline was less severe: the $500,000+ sports betting cohort showed -0.6%, and the smaller accounts saw -29.3%.
One of the major differences between the two platforms is who is on the other side of the market.
Prediction markets do not limit or ban profitable users the way regulated sports betting does, concentrating the flow of information across platforms. This overturns the traditional model. In sports betting, the house manages risks and filters winning players. In prediction markets, retail traders are directly exposed to professionals, market makers, and high-volume participants who consistently take the other side of a less informed flow.
Two professional bettors on a Citizens JMP call last week said prediction markets offer a more attractive path to positive returns precisely because retail users provide the liquidity, the note said.
Are prediction markets a threat to online gaming?
Gaming CEOs have dismissed the threat of prediction markets, according to the Citizens JMP report, which compiled executive comments from 4Q25 earnings calls.
Jason Robins of DraftKings said the prediction markets are not significantly additional for existing customers. Flutter’s Peter Jackson said the company found no evidence of hardware cannibalization. Adam Greenblat of BetMGM estimated a low to mid-single digit percentage impact on betting revenue. Citizens JMP’s own estimate is about 5%.
The biggest problem may not be cannibalization but acquisition. About 24% of Kalshi users are under 25, with a median age of 31, compared to just 7% for DraftKings and FanDuel, where the median age is closer to 35, according to Sensor Tower data cited in the report. About 90% of DraftKings’ revenue comes from users over the age of 30, the report said.
FanDuel and DraftKings downloads fell 18% and 13% year-over-year from September 2025 to February 2026, according to Sensor Tower data cited by Citizens JMP. During the same period, Kalshi recorded 6.3 million downloads.
Prediction markets may not lure away existing sports betting users. They may be intercepting the next generation before they even download DraftKings.
