Kalshi’s Growth Puts Prediction-Market Safeguards Under Scrutiny
Kalshi safeguards face scrutiny after a Pennsylvania man lost over $25,000 despite self-excluding from major sportsbooks, NPR reports. The post Kalshi’s Growth Puts Prediction-Market Safeguards Under Scrutiny appeared first on ReadWrite .
A Pennsylvania man, Thomas, who self-excluded from DraftKings and FanDuel due to bankruptcy, discovered Kalshi through an Instagram advertisement and subsequently lost over $25,000, NPR reported. Initially, his online sports betting involved DraftKings, FanDuel, and other platforms, leading to credit-card and personal-loan debt totaling more than $75,000.
After filing for bankruptcy in late 2023, Thomas banned himself from DraftKings and FanDuel, but two years later, an Instagram promotion inspired him to try Kalshi. His bets grew from $10 to hundreds, eventually exceeding $25,000 in losses. Despite requesting account closure through live agent and email, Kalshi barred him from betting.
The incident underscores the differences in state gambling protections for prediction markets, which are federally supervised as financial instruments rather than regulated as gambling businesses. Kalshi and Polymarket have not sought state approval and do not follow state-mandated safeguards for people with gambling addictions, a factor that affects individuals already on state self-exclusion lists.
While Pennsylvania's list blocks Thomas from casinos, mobile sports betting, and direct marketing, it does not automatically exclude him from prediction markets. Kalshi maintains that its exchange model is healthier than sportsbook models, citing account limits, breaks, and voluntary opt-outs as responsible-trading features. However, this raises broader concerns about the comparison of safeguards between Kalshi and gambling operators.
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