A dispute between the leading U.S. prediction market and a small data firm has exposed the friction in the online event betting industry. On Wednesday, Kalshi walked back a serious allegation of “extortion” against Juice Reel, a startup that provided data for a research report showing that prediction market users often face steeper losses than traditional gamblers.
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The Conflict Started with a Report
The conflict began when Jordan Bender, an analyst at Citizens (CFG), released a report comparing prediction markets like Kalshi to established sportsbooks like FanDuel and DraftKings (DKNG). Using data from Juice Reel, Bender found that the bottom 25% of prediction market users lost 28 cents of every dollar bet in their first three months, whereas the same group lost only 11 cents per dollar on traditional gambling sites. Furthermore, the median prediction market wallet lost roughly 7% of the money wagered within 90 days, while traditional gambling showed only a 1% loss.
Kalshi Claims the Report Was Part of an ‘Extortion’ Plot
Kalshi initially reacted with a fierce denial, calling the Juice Reel data “flat-out wrong.” The company’s head of communications, Elisabeth Diana, claimed the analysis was part of an “extortion” plot, alleging that Juice Reel’s founder had offered to “defuse the situation” in exchange for an investment meeting with Kalshi’s CEO.
Ricky Gold, the 32-year-old CEO of Juice Reel, called the accusation a “complete fabrication.” He countered that it was actually Kalshi that had pressured him to retract the data, stating: “They called and messaged us, pressuring us to tell Bloomberg that our data is inaccurate.”
Just hours later, Kalshi softened its stance. In an updated statement, the company said: “After further review, we don’t believe the intention was extortion.” However, they continue to dispute the findings and deny pressuring Gold to change his numbers.
What’s the Difference Between Prediction Markets & Sportsbooks?
This battle for public perception comes as prediction markets try to distance themselves from the gambling label. Unlike sportsbooks, which set the odds and bet against their users, Kalshi is a regulated exchange where users trade against one another.
“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,” noted John Bivona, Kalshi’s head of federal government relations.
Despite these claims of a fairer system, Citizens’ report suggests that professional traders and sophisticated firms may be the ones reaping the rewards, often at the expense of casual bettors who are losing money faster on these financial exchanges than they would on a standard sports bet.
Key Takeaway
In simple terms, Kalshi and its rivals are trying to convince the world that they are exchanges for information, not casinos for gambling. However, the data from Juice Reel serves as a reality check for casual users. While there is no house taking a cut, trading against professional Wall Street-style firms can be just as expensive as betting against a sportsbook.
