Kalshi Faces New Scrutiny After Self-Excluded User Loses Over $25K

Key Highlights

A Pennsylvania bettor found out the hard way that prediction markets are exempt from the state’s self-exclusion program. His Kalshi registration and subsequent losses have sharpened scrutiny over the operator’s responsible gambling protections.

Self-Exclusion Gap & $25K Loss

The Pennsylvania bettor, identified by his middle name Thomas, had blocked himself from regulated gambling sites after accruing debt of around $75,000. Thomas signed up for DraftKings and FanDuel during the pandemic and eventually developed a gambling addiction. He filed for bankruptcy in 2023 before joining Pennsylvania’s self-exclusion program. 

That program stopped him from using licensed casinos and online sportsbooks in the state, but it did not prevent him from accessing the Kalshi prediction market platform. About two years after his bankruptcy, Thomas found the prediction market through an Instagram promotion offering a $20 bonus after spending $10. His activity quickly increased, and he said he sometimes traded for as many as 18 hours in a day.

Thomas focused largely on bitcoin contracts, trading contracts involving whether the price of the crypto would be above or below a certain target. Many of those markets settled every 15 minutes, giving him repeated chances to open new positions after losses: “Betting $10 became a couple hundred, and that became a couple hundred more, then thousands more,” Thomas told NPR. “And before long I was more than $25,000 in the red.”

Kalshi’s Model & Regulatory Questions

Thomas contacted Kalshi and told the company he had a gambling problem. He explained that he had enrolled in a self-exclusion program and asked for his Kalshi account to be closed. Kalshi first pointed him toward tools including trading breaks, voluntary opt-outs, and deposit limits before fully blocking the account after further requests.

The case has renewed questions about how prediction markets should handle customers with gambling problems. Kalshi is regulated at the federal level rather than by state gambling commissions, so state self-exclusion lists do not automatically block users from the platform. That creates a gap for people who have restricted themselves from licensed sportsbooks and casinos.

Kalshi argues that its exchange works differently from a sportsbook because it matches buyers and sellers instead of taking the other side of every trade. The company points to responsible-trading tools and partnerships designed to help users who may be at risk.

Prediction Markets & Gambling Risks

Critics say some prediction contracts can create gambling-like risks, especially when markets settle quickly. Counselors who work with problem gamblers warn that short-term contracts can encourage repeated activity because users can immediately enter another market after losing. Thomas’s experience provides a personal example to that concern as Kalshi continues expanding across sports and cryptocurrency markets.

Sports contracts now make up a major share of activity on the platform, while cryptocurrency also draws heavy interest. At the same time, Kalshi has tried to separate its image from traditional gambling, including by describing its products as event contracts in recent trademark filings. 

The company challenged a July 2026 Roosevelt Institute study that revealed retail users lost a combined $500 million on the platform. Another paper published around the same time highlighted a massive discrepancy in trading success among users. Study authors found that the top 1% of users on Polymarket accounted for 76.5% of all trading profits from 2022 to 2026.

The dispute is likely to keep attention on prediction markets as regulators and researchers study how people use them. Thomas’s case highlights the tension between Kalshi’s financial-market identity and concerns about gambling harm.