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Is Kalshi Just Gambling? Risks, Legality, And Safety Explained

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This is a consumer-harm advocacy blog post, not an AI safety resource; it is tangentially relevant only if examining prediction markets as AI forecasting or governance tools, but primarily addresses gambling regulation and consumer protection concerns.

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Summary

This blog post argues that prediction markets like Kalshi constitute gambling due to negative expected returns (approximately -22% per study), zero-sum mechanics, and addiction risks. It examines consumer protection gaps, deceptive marketing concerns, and regulatory ambiguity under CFTC oversight, distinguishing prediction markets from genuine investing.

Key Points

  • •Kalshi carries an average expected return of -22% across all contracts per a 2025 University College Dublin study, before accounting for taxes.
  • •Prediction markets are zero-sum: gains come directly from other participants' losses, unlike equities tied to real economic value creation.
  • •Addiction risk is highlighted as significant, especially combined with news doomscrolling habits that prediction markets are designed to encourage.
  • •Regulatory gaps exist: New York State argues the CFTC insufficiently regulates prediction markets, raising consumer data and protection concerns.
  • •Kalshi has been criticized for downplaying responsible gambling features and targeting lower-income demographics through promotional campaigns.

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Is Kalshi Just Gambling? Risks, Legality, And Safety Explained - GamblingHarm.org 
 
 
 
 
 

 

 

 
 
 

 
 
 
 

 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 

 

 

 

 
 
 
 
 Help Guides , Prediction Markets 

 Is Kalshi Just Gambling? Risks, Legality, And Safety Explained

 

 

 February 6, 2026 

 By Brian Pempus 
 Kalshi is gambling because you risk money in the hope of winning more money. When you factor in fees and taxes, you are expected to lose money in the long run . 

 This dynamic is similar to casino games such as sports betting, blackjack, and slot machines, where prolonged participation usually results in losses over time. This is part of the product structure.

 Factoring in Kalshi’s fees, the average return across all contracts is negative 22% , according to a paper published in 2025 from researchers at University College Dublin. The research did not factor in taxes, which vary based on the jurisdiction you live in. 

 Why Kalshi is Different Than Stocks 

 Unlike the stock market, where you invest in a company that creates actual products or services and can hold your shares indefinitely, Kalshi involves markets that close after a specific event, ending all betting. You do not own part of a business or benefit from its growth, as you do with stocks. 

 Prediction markets are zero-sum products, meaning your gain is simply someone else’s loss. 

 Having the ability to “cash out” or sell shares in a Kalshi gambling market does not necessarily make it trading or investing. It is gambling with mechanics similar to those of a stock market.

 In February 2026, the Financial Times reported that Kalshi will offer betting on margin (i.e., credit).

 Due to the controversy around its product, Kalshi has invested in lobbying to peddle its claim that it isn’t gambling.

 What Are The Risks of ‘Trading’ on Kalshi? 

 You might wonder what the risks of betting on Kalshi are. First off, it’s gambling, and the risks of Kalshi gambling include: 

 
 Financial loss: You are likely to lose money in the long run betting on Kalshi, with an expected rate of return of minus 22%, according to one study. 

 Addiction: Gambling apps and websites are habit-forming by design. Coupled with the addiction potential of doomscrolling the news, prediction markets like Kalshi can be especially harmful. 

 Responsible gambling: Some say Kalshi has downplayed responsible gaming , with its safety features being hard to find on the platform. U.S. Senators have sought answers from Kalshi.

 Deceptive marketing: Some users may find Kalshi’s slogans misleading because they overstate the likelihood long-term profit. The company, which is endorsed by an NBA star , has also targeted lower income people with a grocery store promo .

 Identity theft: As with any financial product, data breaches are possible. The state of New York has argued that the CFTC is not regulating prediction markets, which could put your personal information at risk. 

 Opportunity costs: You co

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