A new analysis from Citizens Financial Group suggests that users of prediction markets are experiencing higher losses compared to traditional sports bettors in the U.S. market.
The findings, compiled by analyst Jordan Bender and based on anonymised wallet data from Juice Reel, indicate that retail participants on prediction platforms are underperforming relative to users of regulated sportsbooks.
Lower Returns for Prediction Market Users
According to the report, the median return on investment (ROI) for prediction market users stood at -8% between July 2025 and the time of publication. In comparison, sports bettors in the regulated U.S. market recorded a median ROI of -5% over the same period.
Citizens noted that the difference reflects the competitive nature of prediction markets. These platforms tend to attract more experienced and informed participants, which can reduce returns for average retail users.
Unlike traditional sportsbooks, which often limit or restrict successful bettors, prediction markets generally allow open participation, creating a more competitive environment.
Market Dynamics and Professional Players
The report also highlighted insights from professional bettors, who view prediction markets as an opportunity to profit by competing against less experienced users.
Some described the appeal of acting as market makers—taking the opposite side of public bets—similar to how major operators like DraftKings and FanDuel operate within the traditional sportsbook space.
Users Across Both Platforms
The analysis examined users active on both prediction markets and sports betting platforms. This crossover group recorded a median ROI of +1% on sportsbooks but -6% on prediction markets, suggesting they may represent lower-quality customers for traditional operators.
Impact on Sports Betting Market
On the question of whether prediction markets are cannibalizing sportsbook activity, industry estimates suggest limited impact. Executives from major operators have indicated that prediction markets account for roughly 0% to 5% of sports betting volume displacement, aligning with Citizens’ own estimates.
However, the report points to potential challenges in customer acquisition. Between September 2025 and February 2026, app downloads for DraftKings and FanDuel declined by 18% and 13% respectively, while prediction platform Kalshi recorded 6.3 million downloads over the same period.
Younger User Base Driving Growth
Data from Sensor Tower indicates that 24% of Kalshi users are under 25, with the platform reporting a median user age of 31—compared to around 35 for DraftKings and FanDuel.
This younger demographic may be contributing to growth in prediction markets, although traditional sportsbooks still rely heavily on older users, with approximately 90% of DraftKings’ revenue coming from individuals over 30.
Outlook on Competition
Despite the growth of prediction platforms, the report remains cautious about their long-term competitive threat. It highlights that more than two dozen platforms are currently licensed or seeking licences in the space, drawing parallels to the early wave of U.S. online gambling operators, many of which failed to survive.
Citizens concludes that established operators like DraftKings and FanDuel are likely to remain the dominant players, particularly as competition intensifies ahead of major sporting events such as the 2026 NFL season.
