Study Finds Prediction Market Combo Users Lose More Than Traditional Parlay Bettors

A new analysis by Citizens JMP Securities has found that users who place combination contracts on prediction markets — the structural equivalent of parlays — experience worse financial outcomes on average than customers placing traditional parlay bets at licensed sportsbooks. The research adds to a growing body of evidence that prediction markets, despite their regulatory classification as financial derivatives rather than gambling products, carry consumer risk profiles comparable to or worse than traditional sports betting products.

The Citizens JMP findings focused specifically on prediction market combo users and compared their returns against traditional parlay bettors at licensed sportsbooks. The report found that traders placing prediction market combos lose more than traditional parlay bettors, and that users who engage in both markets simultaneously — mixing prediction market combos with traditional parlays — experience the worst financial outcomes of any user category studied.

Why This Research Matters for Regulators

The context around this study matters enormously. Prediction market platforms like Kalshi and Polymarket promo code have argued successfully before the CFTC that their products are federally regulated derivatives instruments, not gambling products, and that this classification exempts them from state-level gambling taxes, age verification requirements, and advertising restrictions that licensed sportsbooks must follow. The implicit premise behind that argument is that prediction markets function differently from betting products in ways that justify different regulatory treatment.

Research showing that the consumer harm profile of prediction market combo users meets or exceeds that of parlay bettors at licensed sportsbooks complicates that narrative. If users are experiencing comparable or worse financial outcomes, regulators and state legislators can point to this evidence when arguing that the consumer protection rationale for gambling regulation applies equally to prediction markets, regardless of their legal classification as derivatives.

The American Gaming Association has cited the tax revenue gap created by prediction markets’ exemption from state gambling frameworks as its primary argument for regulatory parity, estimating that states are losing more than $1 billion annually in foregone gambling taxes. The Citizens JMP research adds a consumer protection dimension to that argument, suggesting that prediction market users may be more financially vulnerable than the current regulatory framework acknowledges.

The Broader Context

The prediction market industry is under sustained regulatory pressure from multiple directions simultaneously. Minnesota signed a felony ban on prediction market operation that takes effect August 1, 2026, and is already facing legal challenges from both Kalshi and the CFTC. Spain has blocked access to Kalshi and Polymarket review while investigating whether the platforms constitute unlicensed gambling operations under Spanish law. The 17 states that have signed an amicus brief challenging federal preemption in the Minnesota litigation represent a substantial coalition of state governments pushing back against the existing regulatory framework.

For the established sports betting industry, the Citizens JMP research provides useful ammunition in a battle that has so far been primarily fought on tax revenue grounds. If prediction market operators can be shown to cause comparable consumer harm to licensed sportsbooks while paying none of the same taxes and following none of the same advertising or responsible gambling rules, the case for regulatory equalization becomes significantly stronger.

Users considering prediction markets vs. sports betting should be aware that combination contracts on prediction markets carry meaningful financial risk, and that independent research is beginning to quantify that risk in comparison to traditional sports betting products. Whether regulators ultimately act on this research to impose parity requirements on prediction market operators remains the central policy question for the industry in 2026.