Prediction Market Reality Check: 79% of Traders Report Losses, Half Used Debt to Gamble

TLDR

Table of Contents

A recent US study shows 79% of participants in prediction markets reported financial losses over the past year
27% experienced losses exceeding $500, with 9% losing more than $1,000
51% of users relied on borrowed money including credit cards and personal loans for their bets
Loss rates among those who borrowed reached 88% compared to 69% for those using their own funds
Over half (53%) joined these platforms seeking additional income rather than entertainment

A striking 79% of people who participated in prediction markets experienced financial losses over the past year, with more than half relying on borrowed funds to place their bets, according to new survey data.

BadCredit.org conducted the research, polling 1,000 American adults. Results showed that 15% had engaged with platforms like Kalshi, Polymarket, or PredictIt.

Within this participant group, 79% acknowledged experiencing losses throughout the year. Over a quarter saw losses surpassing $500, while 9% reported losses exceeding the $1,000 threshold. Just 21% managed to avoid losses entirely.

Debt-Funded Trading Shows Higher Failure Rates

Users who financed their trading activity through borrowing experienced significantly worse outcomes. Among the 51% who utilized credit cards, personal loans, or other debt instruments, 88% ended up losing money.

This contrasts sharply with the 69% loss rate observed among those who traded with their own capital.

Erica Sandberg, a consumer finance specialist, cautioned that using borrowed funds for betting compounds risk by adding interest obligations to inherently unpredictable outcomes. Those who borrow face the prospect of paying back loans with interest even after their initial investment is lost.

“Although tempting, borrowing money to place a bet is a universally bad idea,” Sandberg said.

The research methodology relied on participant self-reporting without cross-referencing actual platform transaction data.

Income Generation Drives Platform Adoption

Economic motivations emerged as the primary driver behind prediction market participation.

Forty-four percent indicated they joined to generate supplemental income, with an additional 9% citing financial hardship. Combined, 53% pointed to money-making objectives as their reason for participating.

This figure was roughly twice the 27% who cited entertainment value or simple curiosity.

Looking at the complete survey population, 30% expressed belief that prediction markets could meaningfully enhance their financial standing. This optimism was notably gender-skewed, with 37% of men sharing this view versus 25% of women.

Participation rates also showed gender disparities. Approximately 24% of male respondents had experimented with prediction market platforms, while only 9% of women had done so.

Independent academic analysis has demonstrated that winnings cluster heavily among a tiny fraction of users. Research examining 1.72 million Polymarket accounts revealed that under 3.5% of all accounts captured over 30% of total profits.

Industry Hits Record Trading Amid Increased Regulatory Attention

The loss statistics emerge during a period of unprecedented trading activity for the sector.

Kalshi, Polymarket, and Polymarket US collectively processed $50.59 billion in trading volume during July, representing a 7.8% increase from June’s figures.

Kalshi dominated with $37.7 billion in volume. Polymarket’s domestic and international platforms together accounted for $12.9 billion.

These numbers represent notional trading volume rather than actual customer deposits or confirmed losses.

The sector’s expansion has attracted regulatory interest. While the Commodity Futures Trading Commission provides oversight for federally registered platforms, multiple state governments contend that sports-related contracts fall under state gambling regulations and require appropriate licenses.

The US House Agriculture Committee convened a July hearing examining customer safeguards and market integrity issues.

The CFTC has additionally cautioned platforms against displaying contracts using American-style gambling odds formats.