Prediction markets are interesting, but they are not reliable wealth generators for retail users.
Citizens research shows that retail prediction market users are losing more money than legal sports bettors, and the most astute traders and market makers are making profits on the other side of their flow. The research note also reveals that the platforms are attracting a younger demographic than traditional bookmakers.
The average return for a prediction market user was -8% from July 2025 to mid-March, compared to -5% for sports betting users during the same period, Citizens JMP Securities analyst Jordan Bender wrote, citing transaction data from analytics firm Juice Reel.
People who traded more than $500,000 in prediction markets generated an average ROI of +2.6%, in line with high roller benchmarks validated by professional players. Every cohort below that level was negative, falling to -26.8% for users who traded less than $100.
No cohort within legal sports betting was also profitable, but the drop is less severe: the $500,000+ sports betting cohort posted -0.6%, and smaller accounts came in at -29.3%.
One of the main differences between the two platforms is who is on the other side of the trade.
Prediction markets do not limit or ban profitable users like regulated bookmakers do, concentrating reported flow on the platforms. That reverses the traditional model. In betting houses, the house manages the risk and filters out the 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 the less-informed stream.
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 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 prediction markets are not materially incremental for 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%.
Perhaps the most important problem is not cannibalization but acquisition. About 24% of Kalshi users are under 25, with an average age of 31, compared to just 7% for DraftKings and FanDuel, where the average age is closer to 35, according to Sensor Tower data cited in the report. About 90% of DraftKings’ revenue comes from users over 30, according to the report.
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 stretch, Kalshi recorded 6.3 million downloads.
Prediction markets may not be driving away existing sports betting users. They may be intercepting the next generation before they download DraftKings.
