Kalshi and Polymarket retail users report rapid losses

Prediction markets are busy rebranding gambling as “information”—and some users are discovering the house edge the hard way.

Business Insider reports that retail traders on Kalshi and Polymarket have lost thousands of dollars in short periods, describing patterns that look less like sober forecasting and more like casino compulsion dressed in market microstructure. One 24-year-old engineer told BI he lost more than $10,000 on Kalshi over eight days, escalating from small esports wagers to four-figure bets on NBA games and tennis, then borrowing to chase losses. Another user, Lorenzo Miro San Diego, said he lost more than $1,700 on Polymarket after starting with a winning sports bet he discovered via a “South Park” episode; he later filed a lawsuit seeking to recover losses.

The platforms’ core product is simple: binary event contracts priced between 0 and 1 (or $0 and $1), with an implied probability. The dopamine engineering is not simple. Order books, rapidly shifting odds, and constant new markets create the sensation of trading skill—even when the underlying activity is indistinguishable from betting on sports scores or crypto price ticks.

Problem-gambling experts cited by BI argue the risk is amplified by a lack of “guardrails” common in regulated sportsbooks: deposit limits, self-exclusion tools, clearer loss tracking, and friction that slows binge behavior. Users told BI they could not set meaningful limits. That is not a bug; it is a growth strategy.

There is also a structural asymmetry. In thin markets, slippage and spreads punish impulsive entrants. Fees, funding costs, and the simple fact that many contracts resolve rarely (or after long delays) further tilt outcomes against the casual user who treats the interface like a slot machine with charts.

Two things can be acknowledged at once: adults should be free to bet, and the state’s typical response—blanket prohibition or heavy-handed compliance regimes—tends to entrench incumbents. If regulators force prediction markets into the same compliance stack as banks and sportsbooks, the result will not be consumer empowerment; it will be a moat. KYC vendors, licensing lawyers, and a handful of well-capitalized platforms will survive. The small, experimental, open alternatives will not.

Prediction markets were once sold as a decentralized corrective to bureaucratic forecasting. Now they are being discovered by retail users as a high-frequency distraction machine—one that will almost certainly be “fixed” by the very regulatory apparatus the product was supposed to route around.