A widespread critique from Matt Kalish, co-founder of DraftKings, exposed a structural fault line in the prediction market industry that participants have mostly chosen to ignore: who exactly is making money, and at whose expense.
Kalish’s public campaign targets Kalshi, the leading prediction market regulated by the US Commodity Futures Trading Commission (CFTC). His primary accusation is that despite Calci’s status as a financial exchange, the platform functionally acts as a mathematical ledger that directs retail order flow to institutional market makers.
Matt Kalish, co-founder of DraftKings. Source: LinkedIn
“You are not trading against me,” Kalish wrote on X, referring to a trade where his odds were significantly mitigated by slippage. “We are all trading against the Susquehanna and the professional market makers on Wall Street.”
The stock market paradox: liquidity versus fairness
The conflict indicates a structural tension at the center of the prediction market model. Traditional sports betting books act as the house, managing risk by limiting winners.
Prediction markets like Kalshi use an order book model that attracts quantitative trading firms to provide liquidity but also creates what amounts to a shark tank for retail participants.
new Research from JMP Citizens Securities It gives weight to Kalish’s doubts. Traders with a trading volume of over $500,000 consistently make profits, with an average ROI of +2.6%. The average return for retail prediction market users is -8%, which is worse than the -5% typical for traditional sports betting. Small accounts under $100 lose 26.8%.
This structure allows Wall Street to extract profits from retail losses, effectively making Kalish a mathematical company that is “two to three years behind” in developing consumer products, Kalish says.
A war for legitimacy
Kalshi has worked hard to put distance between itself and the gambling brand, placing its event contracts as CFTC-regulated derivatives. To strengthen this framework, the company recently announced a $2 million investment in the National Council on Problem Gambling.
We are funding a new financial trading category within NCPG to promote the health and safety of traders.
Although financial markets have different incentive structures than casinos and sports betting, there is still the risk of irresponsible trading, whether it is active stock trading, or short-term trading… pic.twitter.com/mRGS3UNZ2H
– Tariq Mansour (@mansourtarek_) May 18, 2026
However, the industry is converging. As Calcio moves toward Wall Street, major gambling operators move into its territory. Kings Project and FanDuel Both launched predictive products — DraftKings Predictions and FanDuel Predicts — using CFTC-bound structures to avoid statewide betting bans.
After coming under pressure from both sides, companies like SportTrade are taking more radical steps: The company recently announced that it would exit sports betting entirely and shift to a regulated exchange model.
Data transparency under scrutiny
The most serious technical claim concerns how Calci handles user data. Kalish accused the platform of sharing user IDs with market makers through its API, which would allow professionals to identify order flow and choose when — or whether — to selectively provide liquidity to specific traders.
Why is it 93-1 if you bet $10 and 38-1 if you bet $1000 on something pic.twitter.com/ZXegUsakEz
– Matt Kalish (@mattkalish) May 15, 2026
This may not be enough to move forward. For the B2B brokerage community, this episode signals something broader: The prediction market sector has outgrown its niche status, but its infrastructure is under real pressure.
As the industry moves towards a Value: $22 billionHowever, questions are growing about whether these platforms act as neutral markets or whether they disproportionately benefit professional liquidity providers.
A widespread critique from Matt Kalish, co-founder of DraftKings, exposed a structural fault line in the prediction market industry that participants have mostly chosen to ignore: who exactly is making money, and at whose expense.
Kalish’s public campaign targets Kalshi, the leading prediction market regulated by the US Commodity Futures Trading Commission (CFTC). His primary accusation is that despite Calci’s status as a financial exchange, the platform functionally acts as a mathematical ledger that directs retail order flow to institutional market makers.
Matt Kalish, co-founder of DraftKings. Source: LinkedIn
“You are not trading against me,” Kalish wrote on X, referring to a trade where his odds were significantly mitigated by slippage. “We are all trading against the Susquehanna and the professional market makers on Wall Street.”
The stock market paradox: liquidity versus fairness
The conflict indicates a structural tension at the center of the prediction market model. Traditional sports betting books act as the house, managing risk by limiting winners.
Prediction markets like Kalshi use an order book model that attracts quantitative trading firms to provide liquidity but also creates what amounts to a shark tank for retail participants.
new Research from JMP Citizens Securities It gives weight to Kalish’s doubts. Traders with a trading volume of over $500,000 consistently make profits, with an average ROI of +2.6%. The average return for retail prediction market users is -8%, which is worse than the -5% typical for traditional sports betting. Small accounts under $100 lose 26.8%.
This structure allows Wall Street to extract profits from retail losses, effectively making Kalish a mathematical company that is “two to three years behind” in developing consumer products, Kalish says.
A war for legitimacy
Kalshi has worked hard to put distance between itself and the gambling brand, placing its event contracts as CFTC-regulated derivatives. To strengthen this framework, the company recently announced a $2 million investment in the National Council on Problem Gambling.
We are funding a new financial trading category within NCPG to promote the health and safety of traders.
Although financial markets have different incentive structures than casinos and sports betting, there is still the risk of irresponsible trading, whether it is active stock trading, or short-term trading… pic.twitter.com/mRGS3UNZ2H
– Tariq Mansour (@mansourtarek_) May 18, 2026
However, the industry is converging. As Calcio moves toward Wall Street, major gambling operators move into its territory. Kings Project and FanDuel Both launched predictive products — DraftKings Predictions and FanDuel Predicts — using CFTC-bound structures to avoid statewide betting bans.
After coming under pressure from both sides, companies like SportTrade are taking more radical steps: The company recently announced that it would exit sports betting entirely and shift to a regulated exchange model.
Data transparency under scrutiny
The most serious technical claim concerns how Calci handles user data. Kalish accused the platform of sharing user IDs with market makers through its API, which would allow professionals to identify order flow and choose when — or whether — to selectively provide liquidity to specific traders.
Why is it 93-1 if you bet $10 and 38-1 if you bet $1000 on something pic.twitter.com/ZXegUsakEz
– Matt Kalish (@mattkalish) May 15, 2026
This may not be enough to move forward. For the B2B brokerage community, this episode signals something broader: The prediction market sector has outgrown its niche status, but its infrastructure is under real pressure.
As the industry moves towards a Value: $22 billionHowever, questions are growing about whether these platforms act as neutral markets or whether they disproportionately benefit professional liquidity providers.
