In the midst of a public argument over data indicating new users lose money more quickly on prediction markets than at regular sportsbooks, Kalshi was compelled to retract his accusation of "extortion."
In contrast to users of authorized sportsbooks and other gambling apps, the median prediction-market user lost around 7% of the amount risked within their first 90 days, according to an equities research analysis by Citizens analysts.
The worst quarter of prediction-market users lost roughly 28 cents of every dollar placed in their first three months, and the bottom 10% lost about 44%, compared to 11% on traditional betting platforms. These losses were particularly noticeable among those who performed worse.
Data Quarrel
Kalshi, which contends that prediction markets provide a more user-friendly substitute for conventional sports betting, finds the results to be devastating. Elisabeth Diana, Kalshi's head of communications, said the data was "flat-out wrong" after being shown the results by Bloomberg.
She also mentioned that the betting data startup Juice Reel, which supplied the data for the Citizens report, had previously asked Kalshi for "investment support," suggesting that this was a case of resentment.
Diana claimed that Ricky Gold, the CEO and founder of Juice Reel, offered to "defuse the situation" around the data in exchange for a meeting with Tarek Mansour, CEO of Kalshi.
"Please consider the source and its motives,” Diana told Bloomberg. “This is extortion.”
However, Gold presents an alternative narrative. He said he was under pressure from Kalshi to inform Bloomberg that the data was false. The Juice Reel app compiles transaction-level data from connected accounts and allows users to monitor and evaluate their own betting activity.
“We stand for transparency, we stand for helping bettors, traders understand their activity across the platform, and we stand behind our data,” Gold said.
The Kalshi Climbdown
Later, Diana told Bloomberg that she wanted to take back the "extortion" accusation, implying that a lawyer had entered the conversation. However, she insisted that Kalshi's internal data refuted the conclusions. Kalshi has not disclosed any data to back up that assertion.
Kalshi and competitors such as Polymarket are keen to be perceived as information markets and financial exchanges instead as sportsbooks. They can claim that their event contracts are governed by federal commodities regulation rather than state gambling laws because they are categorized as derivatives rather than wagers.
Their business strategy and attempts to avoid challenges from state regulators who contend that prediction markets are just sportsbooks in disguise depend heavily on this distinction.
Regulators in a number of states, including Nevada, have attempted to limit prediction markets' operations on the grounds that they constitute unregulated gambling.
