New research from Citizens JMP Securities reveals that retail traders using prediction markets are experiencing significantly steeper financial losses compared to users of regulated sportsbooks. The analysis, based on transaction data from analytics firm Juice Reel covering July 2025 through mid-March 2026, shows a median return of -8% for prediction market users, versus a median return of -5% for sportsbook users over the same period.
The report, authored by analyst Jordan Bender, highlights a stark disparity in outcomes based on trading volume. On prediction markets, users trading more than $500,000 achieved a median positive return of +2.6%, a figure consistent with professional "sharp bettor" benchmarks. However, every cohort below that threshold was negative, with losses sliding to -26.8% for users trading less than $100.
The structure of prediction markets fundamentally changes the risk dynamic for retail participants. Unlike sportsbooks, which manage risk internally and often limit or ban consistently profitable users, prediction markets concentrate informed flow. This exposes retail traders directly to professional bettors, market makers, and high-volume participants who consistently take the other side of less-informed retail flow. Two professional bettors on a recent Citizens JMP call noted that prediction markets offer a more attractive path to positive returns precisely because retail users provide the liquidity.
While no cohort in legal sports betting was profitable either, the decay was less severe. The $500,000-plus sports betting cohort posted -0.6%, and the smallest accounts came in at -29.3%.
Gaming industry executives have largely downplayed the competitive threat of prediction markets to their core sportsbook revenue. During Q4 2025 earnings calls, DraftKings CEO Jason Robins said prediction markets are "not materially incremental to existing customers." Flutter CEO Peter Jackson reported no evidence of material cannibalization, and BetMGM CEO Adam Greenblat estimated a low-to-mid-single-digit percentage impact on betting revenue. Citizens JMP's own estimate aligns at around 5%.
The more significant long-term issue may be user acquisition, not cannibalization. Data from Sensor Tower cited in the report shows prediction markets like Kalshi are drawing a younger demographic. About 24% of Kalshi users are under 25, with a median age of 31. In contrast, only 7% of DraftKings and FanDuel users are under 25, with a median age closer to 35. Roughly 90% of DraftKings' revenue comes from users over 30.
Download trends from September 2025 through February 2026 further illustrate the shift. FanDuel downloads fell 18% year-over-year, and DraftKings declined 13%. Over the same period, Kalshi logged 6.3 million downloads. The data suggests prediction markets may be intercepting the next generation of users before they ever engage with traditional sports betting apps.
