Everyone is talking about Kalshi and Polymarket, the “prediction market” platforms.
But I recently came across a sobering statistic:
More than 70% of users on these platforms are losing money. And meanwhile, a tiny group of users is capturing almost all the profits.
The thing is, this imbalance isn’t due to luck.
Today, I want to explain what’s separating the winners from the losers — because it can happen in the startup world, too. And I want to make sure you end up on the winning side.
The Rise of Prediction Betting
The prediction markets are advertised as a groundbreaking way to make money:
Bet on anything — from election outcomes to snowfall totals to celebrity divorces.
Welcome to the world of prediction markets, a form of investing that involves buying or selling contracts tied to the outcome of future events.
According to a recent survey, close to 10% of U.S. adults — about 20 million people — have traded on the prediction market. That’s up from close to zero activity just four years ago.
As this market has gained traction, two venture-backed platforms have emerged: Polymarket and Kalshi. Polymarket is in talks to raise funds at a $15 billion valuation, while Kalshi just raised a billion dollars at a $22 billion valuation. Trading volume on these platforms jumped from $1.8 billion in April 2025 to $24.2 billion in April 2026.
Both platforms market themselves as a life-changing tool for regular people, implying that everyone has a fair chance to strike it rich.
Gushed one woman on TikTok in an ad for Kalshi, “I was about to be unable to pay my rent, but I got two years of rent through Kalshi’s predictions.”
But for most prediction-market investors, the reality isn’t quite so rosy…
Sobering Statistics in the Prediction Markets
A recent investigation by The Wall Street Journal found that only a handful of prediction-market bettors are making money. Most are losing it all.
On Polymarket, more than 70% of users lose money. And meanwhile, more than two-thirds of the profits go to just 0.1% of accounts. The chart below illustrates the disparity:
Each figure represents 1,000 Polymarket accounts.
- The accounts in orange lost money.
- The accounts in dark blue (a tiny number!) captured two-thirds of the profits.
- The accounts in light blue earned one-third of the profits.
On Kalshi, too, losers vastly outnumber winners. Spokesperson Elisabeth Diana said there are nearly three unprofitable users for each profitable one.
What’s going on here? Is the system rigged? Are the 0.1% simply smarter than everyone else?
Not quite. They’re just using the right strategy...
Amateurs vs. the Pros
For the most part, the prediction-market “pros” are just that — investment professionals. They’re trading firms, options traders, and seasoned investors. They invest for a living. And they don’t go into any bet without extensive data and research.
That’s how they’re able to achieve such a high level of success. And it’s why they’re part of the 0.1% dominating the prediction markets.
On the other side are the amateurs. These are mostly casual traders and investors who think they can hit financial home runs like the big boys. But here’s the problem:
Many of these investors bet on emotions — not data. They bet on what feels right, or on what’s trending on social media.
Many simply click “yes” on an event they hope will happen. Often, the thrilling part becomes placing the bet, not actually winning it.
Betting on emotion is a trap. And that trap can be hard to get out of. As former poker player and statistician Michael Boss said about the prediction markets, “Casual traders have no chance.”
These two investment strategies (Data-driven vs. Emotion-driven) are why we’re seeing these results unfold in the prediction markets.
But be careful. Because the same divide can happen in startup investing…
Don’t Get Too Excited!
Much like the prediction markets, startup investing offers opportunities to earn life-changing returns from a single investment.
This can lead some startup investors to fall into the same trap as their prediction-market counterparts. They invest based on emotion, telling themselves things like “Wow, that startup looks cool — it’s gonna be huge!” Or “Hey, this product is really popular right now!”
The pros, meanwhile, aim to take emotion out of the equation. They invest by treating the startup world like a data-driven business.
They scour thousands of deals, dig into financials, assess markets, identify competitors, and review a team’s credentials. Essentially, they analyze hundreds and hundreds of data points to make sure that any startup they invest in has legitimate profit potential.
Of course, analyzing all this data is easier said than done.
But that’s where we come in…
Invest Like the Pros
At Crowdability, we do the research for you.
We review deals with the same rigor that top investors use. We identify promising startups, then comb through the data to ensure these are opportunities worth investing in. In short, we help you invest in startups like the pros.
As Matt shared recently, our data-focused strategy has been very successful.
In our Private Market Profits research service, we’ve introduced members to nearly 120 startups since 2016. 41 of them are in the black — either through realized exits or unrealized "up" rounds. Our loss rate is just 11.7%. And meanwhile, our list of 10-baggers (1,000%+ winners) continues to grow and grow.
The prediction markets show us what happens when amateurs go up against data-driven pros without the right tools. Most lose money.
Startup investing doesn’t have to be the same story. With the right approach — the kind we’ve been using for a decade — you can have success just like the professionals.
Happy investing.
Editor
Crowdability.com
