Prediction markets are exciting, but they are not reliable wealth builders for retail users.
Research by Citizens shows that users of retail predictions lose more money than legitimate sports bettors, with the sharpest traders and market makers capturing returns on the other side of their flow. The research note also reveals that the platforms draw a younger demographic than traditional sportsbooks.
The median return for a prediction market user was -8% from July 2025 through mid-March, compared with -5% for sportsbook users over the same period, Citizens JMP Securities analyst Jordan Bender wrote, citing transaction data from research firm Juice Reel.
Individuals who traded more than $500,000 on prediction markets generated a median ROI of +2.6%, which is in line with benchmarks for sharp bettors validated by professional players. Each cohort below this level was negative, falling to -26.8% for users trading below $100.
No cohort in legal sports betting was profitable either, but the decline is less severe: the $500,000 plus sports betting cohort was -0.6%, and the smallest accounts came in at -29.3%.
One of the big differences between the two platforms is who is on the other side of the deal.
Prediction markets do not limit or ban profitable users, as regulated sportsbooks do, and concentrate informed flow on the platforms. It reverses the traditional model. In sportsbooks, the house manages risk and filters out winning players. In prediction markets, retailers are directly exposed to professionals, market makers and high volume participants who consistently take the other side of a less informed flow.
Two professional players on a Citizens JMP call last week said that 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 gambling?
Gaming CEOs have dismissed the threat of prediction markets, according to the Citizens JMP report, which compiled executive comments from 4Q25 earnings calls.
DraftKings’ Jason Robins said the prediction markets are not significantly incremental to existing customers. Flutter’s Peter Jackson said the company found no evidence of material cannibalization. BetMGM’s Adam Greenblat estimated a low-to-mid single-digit percentage impact on betting revenue. Citizens JMP’s own estimate is around 5%.
The bigger 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 DraftKing’s revenue comes from users over 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. Over the same stretch, Kalshi logged 6.3 million downloads.
Prediction markets may not pull away existing sportsbook users. They may intercept the next generation before they ever download DraftKings.
