Kalshi Claims ‘Extortion,’ Then Recants in Feud Over User Losses

It began innocuously enough. A stock analyst pulled data on betting results to argue that users of booming prediction markets were losing money faster than on traditional gambling apps.

Then it spiraled. Kalshi Inc., the biggest US prediction market, told Bloomberg the analysis wasn’t just wrong. It was part of an “extortion” plot by the startup behind the data.

The founder of Juice Reel, the small data outfit, stood by the numbers and said Kalshi’s allegations were a “complete fabrication.” It was Kalshi that had tried to pressure him to say the data was inaccurate, he said. Kalshi changed its tone hours later and said that while it continued to dispute the findings, “after further review, we don’t believe the intention was extortion.” Kalshi denied it pressured Juice Reel to repudiate the data.

Welcome to the new wild west of online betting, with fortunes at stake for scrappy startups vying for a piece of the $200 billion American gambling market. It’s a fight for users, market share and capital — and, increasingly, for the public perception of these new financial exchanges that blur the line between investing and raw speculation, exposing users to risks that are only beginning to come into focus.

The report was always likely to touch a nerve. The analysis from Jordan Bender, an equity research analyst at Citizens, found that in their first three months, users on sites like Kalshi were losing more money than on established gambling sites like FanDuel and DraftKings, at least in proportion to the amount wagered. This cuts against Kalshi’s claims that it offers a customer-friendly way to bet on real-world events.

Prediction markets like Kalshi operate federally regulated exchanges that allow customers to bet on the outcome of a wide range of future events, from presidential elections to the Super Bowl. In their marketing, they promise a more level playing field than sportsbooks, saying they match bettors against each other rather than taking the other side of trades.

Data Dispute

Bender’s analysis showed losses on prediction markets were particularly high among the weakest performers. The bottom quarter of users lost about 28 cents of every dollar they bet on prediction markets in the first three months of adoption, compared with about 11 cents per dollar on other online gambling sites. For the bottom decile, the losses in the first 90 days climbed to 44%.

The source of his research: transaction-level data from Juice Reel, an app that allows gamblers to track their performance on different platforms.

Kalshi initially said, in a statement sent to Bloomberg, that the data was “flat-out wrong” and born of a conflict of interest.

Elisabeth Diana, the firm’s head of communications, said that Juice Reel had previously sought “investment support” from Kalshi. She alleged that Juice Reel’s founder offered to “defuse the situation” created by the Citizens report if he was given a meeting with Kalshi’s CEO.

“Please consider the source and its motives,” she said in an emailed statement. “This is extortion.”

Kalshi’s allegations of “extortion” came as a surprise to Ricky Gold, the 32-year-old CEO of Juice Reel, when contacted by Bloomberg. He said that it was Kalshi that reached out to him in a bid to quash the findings.

“They called and messaged us, pressuring us to tell Bloomberg that our data is inaccurate,” Gold said. “We stand for transparency, we stand for helping bettors, traders understand their activity across the platform, and we stand behind our data.”

After Gold pushed back, Kalshi continued to dispute the findings in the Citizens report — and said that it had not pressured Gold to repudiate the data. But the company’s spokesperson, Diana, backed away from the allegation of extortion.

“We are in ongoing discussions about Juice Reel’s legal ability to obtain our data, but after further review, we don’t believe the intention was extortion,” the company said in an updated statement last week.

“Every bettor and trader is entitled to access their transaction history,” Gold said about his data collection.

Bender, the gambling industry analyst at Citizens, said: “We are confident in our analysis of the available data.”

Citizens declined to comment further.

Sports Betting

Bender has used Juice Reel’s data for previous research. In 2024, he told the gaming outlet Sports Handle that the data was useful for industry experts, but not always popular with gambling companies.

The dispute comes as Kalshi continues to experience skyrocketing demand ahead of the upcoming Super Bowl, which is expected to be a busy time for both sportsbooks and prediction markets.

Weekly trading volumes on Kalshi surpassed $2 billion for the first time this January, up from $1 billion in October, according to user-compiled data on Dune Analytics. The recent growth has been driven largely by the popularity of contracts tied to sports, though users can bet on anything from geopolitics to music charts.

This growth, though, is creating a heated debate about the social consequences of the rise of prediction markets. Sports gambling is known to exact a heavy financial toll on users, and both Kalshi and its main rival, Polymarket, have been eager to distance themselves from the gambling industry. The founder of Polymarket has called sportsbooks a “scam.”

But Citizens’ analysis found that in the Juice Reel data set, the median prediction market wallet lost about 7% of the money wagered in the first 90 days of activity, compared with a 1% loss on other forms of gambling.

Kalshi did not provide any data to dispute the Citizens analysis but said the company’s “internal data directly contradicts” the report’s findings. The losses of its average user were “significantly lower than 7%,” Kalshi said.

In its statement, Kalshi said that the report “defies logic,” because a recent study from economists at the University of Chicago and Stanford found that sports gamblers lose around 7.5% for every dollar wagered.

Gold, at Juice Reel, said that he re-examined the underlying data used in the Citizens analysis and found no inaccuracies.

Professional Traders

Bender has said in the past that Juice Reel customers tend to be more experienced gamblers, but they likely do not include the Wall Street trading firms and professional gamblers that have begun to operate on prediction markets and that are positioned to be among the most profitable users.

In his recent report, Bender wrote that the presence of those sophisticated players — and the worse pricing on prediction markets — may explain why ordinary bettors are doing worse than they do on gambling sites, where the sportsbooks sit on the other side of every trade.

“Prediction markets are creating worse losses for the worst users, while more educated bettors are winning more,” he wrote.

Kalshi said its pricing is more competitive than that of gambling companies.

Kalshi has been amping up its efforts to argue that prediction markets are an improvement on previous forms of betting. The company recently hired John Bivona, a former congressional staffer, as the company’s first head of federal government relations. He wrote in a post on LinkedIn last week that “Kalshi has built a platform where there is no system: no algorithm, no house, no Wall Street. People decide the price and compete fairly against each other.”

But a growing number of state regulators have tried to stop prediction markets, arguing that they are a form of illegal gambling with inadequate protections for customers. The companies have fought back and continued operating nationwide.