Kalshi is gambling because you risk money in the hope of winning more money. When you factor in fees and taxes, you are expected to lose money in the long run.
This dynamic is similar to casino games such as sports betting, blackjack, and slot machines, where prolonged participation usually results in losses over time. This is part of the product structure.
Factoring in Kalshi’s fees, the average return across all contracts is negative 22%, according to a paper published in 2025 from researchers at University College Dublin. The research did not factor in taxes, which vary based on the jurisdiction you live in.
Why Kalshi is Different Than Stocks
Unlike the stock market, where you invest in a company that creates actual products or services and can hold your shares indefinitely, Kalshi involves markets that close after a specific event, ending all betting. You do not own part of a business or benefit from its growth, as you do with stocks.
Prediction markets are zero-sum products, meaning your gain is simply someone else’s loss.
Having the ability to “cash out” or sell shares in a Kalshi gambling market does not necessarily make it trading or investing. It is gambling with mechanics similar to those of a stock market.
In February 2026, the Financial Times reported that Kalshi will offer betting on margin (i.e., credit).
Due to the controversy around its product, Kalshi has invested in lobbying to peddle its claim that it isn’t gambling.
What Are The Risks of ‘Trading’ on Kalshi?
You might wonder what the risks of betting on Kalshi are. First off, it’s gambling, and the risks of Kalshi gambling include:
- Financial loss: You are likely to lose money in the long run betting on Kalshi, with an expected rate of return of minus 22%, according to one study.
- Addiction: Gambling apps and websites are habit-forming by design. Coupled with the addiction potential of doomscrolling the news, prediction markets like Kalshi can be especially harmful.
- Responsible gambling: Some say Kalshi has downplayed responsible gaming, with its safety features being hard to find on the platform. U.S. Senators have sought answers from Kalshi.
- Deceptive marketing: Some users may find Kalshi’s slogans misleading because they overstate the likelihood long-term profit. The company, which is endorsed by an NBA star, has also targeted lower income people with a grocery store promo.
- Identity theft: As with any financial product, data breaches are possible. The state of New York has argued that the CFTC is not regulating prediction markets, which could put your personal information at risk.
- Opportunity costs: You could be doing something more meaningful with your time than on the hamster wheel of a prediction market betting site. You’re not going to get rich gambling.
Is Kalshi Skill or Luck?
Kalshi is a mix of skill and luck, but it’s fundamentally a form of gambling. Despite a strategy component, gambling on Kalshi is not a recommended way to attempt to make a living.
Mechanics and psychological features that can make Kalshi addictive include the fear of missing out (FOMO), chasing losses, 24/7 access, push notifications, and compulsive checking.
Dr. Rani Hoff, Emeritus Professor of Psychiatry at the Yale School of Medicine, told GamblingHarm.org in an interview that “strategic” peer-to-peer gambling can be especially dangerous.
“In some ways, ‘strategic’ gambling is potentially more addictive because if you know what you are doing, you get that intermittent reinforcement more frequently,” Dr. Hoff said. “In poker, for example, you win more if you know what you’re doing. Intermittent reinforcement is the most powerful reinforcer for any living organism, for humans particularly.”
How Legal is Kalshi?
As of 2025, Kalshi’s gambling product is legally dubious in the United States, as many states and government agencies are challenging its legality. Courts will ultimately decide whether Kalshi is legal.
In the meantime, states like Massachusetts have moved to block Kalshi from operating within state borders.
The Commodity Futures Trading Commission (CFTC) granted Kalshi, advised by Donald Trump Jr., a certification to operate a so-called contract market for political, cultural, and sports-related events.
Whether Kalshi is legal could eventually reach the Supreme Court.
Kalshi’s product is advertised as “legal” for users 18+, but unregistered users could potentially gamble through a family member or friend. While traditional betting apps have shied away from directly courting teens, Kalshi has embraced college-aged gambling.
Kalshi Could Cause Addiction Relapse
Because Kalshi holds a federal registration, it operates outside of state gambling laws. This could present risks, as it is not bound by individual states’ rules concerning underage participation.
“A younger client of mine relapsed using the app Kalshi,” said Abdullah Mahmood, a problem gambling counselor at the Maryhaven addiction treatment center near Columbus, Ohio. “He is only 20 years old. Knowing he couldn’t use his DraftKings account in Ohio, a friend of his told him about prediction markets like Polymarket and Kalshi. He had a few months of sobriety, but urges intensified, and in the back of his mind, he knew he could wager on sports using these apps.”
According to Mahmood’s experience, Kalshi lacks effective age verification.
“The reality is that these apps have no age verification. I know that because I could easily make an account without it verifying my age, despite it saying it is 18+. They also have no RG messaging or resources listed for those who experience problems with their gambling.”
Most sports betting states have a legal age of 21, but some are 18, including Kentucky, which borders Ohio.
Is Kalshi Safe for Beginners?
Kalshi is not safe for beginners — though the risks can depend on what you mean by beginner. It’s best to avoid betting sites like Kalshi if you feel uneasy with gambling.
In general, beginners face information asymmetry against insiders and high-volume bettors who treat Kalshi like a full-time job. The house doesn’t need to exist for you to lose.
Additionally, convoluted market rules can create confusion and disadvantages for newbies.
Kalshi is not safe for beginners in sports betting because:
- The peer-to-peer format can be more complicated than house-banked betting.
- It’s difficult to price the market correctly for your entry or exit.
- Parlays and props can be more complicated than on traditional betting apps.
Kalshi may pose risks due to its habit-forming features, which stimulate dopamine release. According to Dr. Hoff, it exhibits high levels of intermittent reinforcement.
Bottom line: You can become addicted to using the platform.
More: Kalshi vs Polymarket: Which Is Riskier For Consumers?
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