If you think the stock market is the only game in town for retail traders, think again. At the Bloomberg Markets Summit in New York on April 15, 2025, Kalshi co-founder and CEO Tarek Mansour dropped a bombshell: prediction markets will one day surpass traditional stock exchanges in total volume. And he doesn’t care if you lose money doing it.
“We’re building a new asset class that will be bigger than equities, bigger than bonds, and bigger than crypto,” Mansour told a packed room of institutional investors and retail advocates. “The fact that many traders will lose money on individual event contracts doesn’t matter—it’s the sheer liquidity and democratization of risk that will drive growth.”
For the average American, this isn’t just a soundbite—it’s a potential reshaping of personal finance. Prediction markets like Kalshi allow users to bet on everything from Federal Reserve rate decisions to the winner of the Super Bowl, all under the regulatory umbrella of the Commodity Futures Trading Commission (CFTC). But with high reward comes high risk: Kalshi’s own data shows that 72% of retail accounts lose money on event contracts, a figure that mirrors futures and options trading.
The Bold Prediction: A New Asset Class
Mansour’s claim rests on one core thesis: prediction markets are the ultimate expression of the “wisdom of crowds.” Unlike stocks, which reflect corporate earnings and macroeconomic factors, event contracts distill specific outcomes into binary or multi‑state bets. Kalshi’s platform has already handled over $500 million in notional volume since its CFTC approval in 2021, with the 2024 U.S. presidential election contracts alone accounting for $120 million.
“To compare that to the New York Stock Exchange’s $40 trillion in annual trading volume is laughable today,” says Dr. Amelia Torres, a fintech analyst at Cornell University. “But the growth rate is exponential. In 2023, Kalshi had $12 million in volume. In 2024, they hit $200 million. If that trajectory holds, prediction markets could rival mid‑cap equities within five years.”
The comparison goes beyond raw numbers. Prediction markets offer leverage—typically 10x to 50x through margin—meaning a small wager can produce outsized returns or wipeouts. “It’s like options on steroids, but with transparent probabilities,” notes John Radford, a former Goldman Sachs derivatives trader now running a retail education platform. “A 60% contract at $0.60 on the dollar is effectively a 40% expected loss if it doesn’t hit. That’s brutal, but it attracts speculators who think they’re smarter than the crowd.”
Retail Traders: The Underlying Fuel
Mansour’s frank admission that retail traders will lose money is not a bug—it’s a feature. The same dynamic powers sports betting, where the house edge ensures long‑term profits for operators. Kalshi takes a commission of 0.5% to 2% per trade, and with rapid turnover, the platform can generate revenue even as accounts bleed red.
“The co‑founder is being honest, which I respect,” says Sarah Velez, a longtime retail trader from Chicago who uses Kalshi for inflation hedges. “I lost $2,000 on a ‘Fed hikes 50 bps’ contract in 2023. But I’ve made $4,000 on other calls. The house always wins, but I’m ahead so far.”
Data from Kalshi’s transparency dashboard shows that the top 1% of traders account for 40% of profits, while the bottom 50% consistently lose. This mirrors the pattern on Robinhood, where meme‑stock gamblers often get squeezed. The difference? Event contracts resolve quickly—sometimes within days—creating a dopamine‑driven cycle that keeps users engaged.
“Prediction markets are not investing—they’re pure speculation,” warns Michael Chen, a regulatory partner at Sullivan & Cromwell. “The CFTC got sued by Kalshi over election contracts, but they approved them anyway. Now the agency is watching for manipulation. If retail losses skyrocket, expect a regulatory crackdown that could dwarf Dodd‑Frank.”
Regulatory Hurdles and the Path Forward
Kalshi’s journey has been anything but smooth. In 2022, the CFTC initially blocked election contracts, arguing they could undermine public confidence. Kalshi sued and won a partial victory in 2023, allowing contracts on political outcomes as long as they don’t involve individual candidates. The result? A flood of “control of Congress” and “Fed rate decision” contracts that now dominate volume.
“The irony is that the same regulators who fear election gambling have no problem with people taking 50‑to‑1 leverage on a jobs report,” Mansour quipped at the summit. “We’re more transparent than any exchange. Every contract’s price is market‑driven, not manipulated by dark pools.”
Still, the elephant in the room is retail losses. A 2025 study by the Federal Reserve Bank of Boston found that active traders on prediction markets earn returns 15% below passive investors in stocks. Worse, the study noted a correlation between heavy prediction‑market usage and overall portfolio underperformance.
“This is frontier finance, and it’s dangerous,” says Dr. Torres. “If Kalshi does eclipse stock exchanges in volume, it will be because billions of dollars in speculative capital migrated from boring index funds to bet on short‑term outcomes. That’s not financial inclusion—it’s a casino on Main Street.”
What This Means for Your Portfolio
For the BullpenBrief reader, the takeaway is simple: don’t confuse a prediction market with a savings plan. Event contracts can hedge specific risks—like a layoff or a rate hike—but they aren’t building long‑term wealth. Kalshi’s own FAQ warns that “past performance does not guarantee future results,” and that’s especially true when you’re wagering on binary outcomes.
Yet the platform’s growth cannot be ignored. In Q1 2025, Kalshi added 300,000 new users, bringing its total to 1.2 million. If those users treat event contracts as a core asset class—like they do stocks or crypto—then Mansour’s vision will become reality. Already, institutional players like Citadel Securities and Jane Street are testing algorithms to arbitrage Kalshi prices against futures markets.
“The real power is in the data,” says Radford. “Every contract creates a high‑frequency economic indicator. If prediction markets get big enough, they could replace surveys, NGDP estimates, and even traditional forecasting. That’s why Wall Street is paying attention.”
But the question remains: can Kalshi sustain growth without risking regulatory backlash? With the CFTC already eyeing stricter oversight, the next 12 months will determine whether prediction markets truly eclipse their older cousins—or whether they remain a niche bet for the brave.
In the meantime, remember Mansour’s own words: you will lose money. The only question is whether you lose it faster than the stock market can make it.
