TLDR
- A self-excluded Pennsylvania bettor lost more than $25,000 trading on Kalshi.
- He had gone bankrupt in 2023 after building up about $75,000 in gambling debt.
- Most of his losses came from short-term bitcoin price contracts, some lasting only 15 minutes.
- Kalshi is federally regulated, so state self-exclusion programs do not apply to it.
- Kalshi says it is a financial exchange, not a sportsbook, and blocked his account after repeated requests.
A Pennsylvania man who had banned himself from gambling sites lost more than $25,000 trading on Kalshi. His case is raising new questions about prediction markets and gambling harm.
The man, who goes by his middle name, Thomas, shared his story with NPR. He said he sometimes traded for up to 18 hours a day.
From Sportsbooks to Bitcoin Contracts
Thomas first developed a gambling problem during the pandemic. He placed bets on DraftKings and FanDuel.
His gambling left him owing about $75,000. More than $50,000 of that debt was tied to online sportsbooks.
He went bankrupt in 2023. He then signed up for Pennsylvania’s self-exclusion program, which barred him from casinos and licensed online betting services in the state.
About two years after his bankruptcy, he saw an Instagram ad for Kalshi. The promotion offered a $20 bonus to users who spent $10 on the platform.
His activity grew quickly. His main focus became bitcoin contracts, where traders bet on whether the cryptocurrency will rise above or fall below set price levels.
Some of these contracts expired in just 15 minutes. That gave him many chances to open new positions throughout the day.
Thomas later contacted Kalshi. He told the company he had a gambling problem and had already self-excluded from regulated betting sites. He asked for his account to be closed.
Kalshi first pointed him to tools such as trading breaks, voluntary opt-outs and deposit limits. The company blocked his account after he made repeated requests.
A Gap in Gambling Protections
Kalshi is regulated at the federal level. It is not licensed by any state gambling commission.
Because of this, people enrolled in state self-exclusion programs are not automatically blocked from the site. Thomas’s case shows how that gap can affect users.
Kalshi says its exchange is different from a sportsbook. The company matches buyers and sellers instead of taking the other side of customer bets.
The company also points to its responsible trading features. It has partnerships aimed at helping users who struggle with gambling.
Counselors who work with problem gamblers disagree. They say short-term contracts can encourage repeated betting because users can jump into a new market right after a loss.
Sports contracts make up a large share of activity on Kalshi. Cryptocurrency markets form another large category.
The company has also tried to separate its brand from traditional gambling. In June, Kalshi removed gambling-related descriptions from recent trademark filings and described its products as event contracts.
Kalshi has also pushed back on research that found retail users lost a combined $500 million on the platform. The company challenged the study’s methods and said it wrongly compared its exchange to casino-style gambling.
Kalshi continues to call itself a financial marketplace. Regulators, researchers and gambling experts are still trying to understand how people use its products.
