Sharks Need Food
By 
Kalshi and its competitor Polymarket advertise themselves as life-changing tools for regular people—implying everyone has a fair chance to score. “I was about to be unable to pay my rent, but I got two years of rent through Kalshi’s predictions,” gushed one woman in a Kalshi ad on TikTok.
But for most users the reality is nothing like that.
Instead, casual traders are bleeding cash while a small number of sophisticated pros—including trading firms with access to vast streams of data—eat their lunch, according to a Journal analysis of platform data and interviews with traders.
On Polymarket, the Journal found, 67% of profits go to just 0.1% of accounts. That means less than 2,000 accounts netted a total of nearly half a billion dollars. The Journal analyzed 1.6 million Polymarket accounts that have traded since November 2022. There are at least 2.3 million total accounts on the site.
Kalshi and Polymarket have effectively zero interest or capacity in regulating the infiltration of private knowledge into the public market, meaning that the sharks feast upon the fish. This is also a problem in sports gambling but that market is sufficiently large and sophisticated that there are limits to the leverage of private knowledge; the market is very liquid and responds rapidly to signals that someone knows something about something, the regulators have an incentive to crack down, etc. As I’ve told my students, Kalshi and Polymarket basically exist to take the money of people with Dunning-Kruger Syndrome.
That said… I am sometimes tempted to invest $250 dollars just as a personal psychological experiment. What kinds of things would I feel super tempted to bet on because of misplaced confidence that I understood the situation better than the market? I’m really not sure and it would be fascinating to find out. I am, generally speaking, a terrible gambler. I lose money on everything except, ironically enough, Washington Huskies football. What props would I find irresistible on my journey to bankruptcy and scandal?
If I do this I will turn it into a blog post, or possibly series of blog posts.