Prediction market traders are losing their stakes at a higher rate than their sports betting counterparts, according to a Citizens analyst.
According to a new report from Citizens analyst Jordan Bender which draws on anonymised wallet data from tracking platform Juice Reel, retail players on prediction market platforms are faring worse than those using legal US sportsbooks.
The note found the median return on investment for a prediction market user was -8% between July 2025 and the time of publication, compared to -5% for sports bettors in the legal US market over the same period and -7% in an earlier version of the report.
Citizens argued the gap reflects the competitive dynamics of prediction markets rather than their structural hold, with the report arguing that sharper, more informed players are disproportionately active on these platforms – squeezing returns for the median retail user.
Unlike sportsbooks, which routinely limit or ban consistently profitable customers, prediction markets are generally open to all participants.
Professional bettors eye market-making opportunities
The note cited a call hosted by Citizens with two professional bettors, who described prediction markets as offering an attractive route to positive returns precisely because retail players are on the other side.
One participant said: “We all want to be on the other side of the public; that’s the dream. Being a market maker is highly attractive. We all want to be DraftKings and FanDuel.”
The analyst note also compared players who used both legal sportsbooks and prediction market platforms simultaneously.
That crossover cohort recorded a median ROI of +1% on sportsbooks against -6% on prediction markets, leading Bender to conclude these users represent lower-quality customers to traditional betting operators.
On the question of cannibalistion, gaming executives on Q4 2025 earnings calls estimated prediction markets were responsible for between 0% and 5% of sports betting volume displacement, broadly in line with Citizens’ own estimate of 5%.
However, the report pointed to a potential drag on new customer acquisition, with FanDuel and DraftKings app downloads falling 18% and 13% respectively between September 2025 and February 2026.
Over the same period, Kalshi recorded 6.3 million downloads, with the demographic skew towards younger players possibly working to partially explain this.
Citing Sensor Tower data, the note found 24% of Kalshi users were under 25, with the company reporting a median user age of 31, against a median age of closer to 35 for DraftKings and FanDuel.
The report noted that approximately 90% of DraftKings’ revenue comes from users aged over 30.
Despite the proliferation of new entrants, the report was sceptical about the competitive threat of prediction markets.
Bender counted more than two dozen platforms licensed or pursuing licences to operate an exchange, drawing a comparison to the initial wave of online gambling operators in the US after 2018, of which 49% subsequently shut down.
The note concluded that DraftKings and FanDuel remained the most credible long-term competitors, and that a substantial marketing push around the start of the 2026 NFL season was likely to reshape market share across the industry.