Banned From Betting Sites After Bankruptcy, a Pennsylvania Man Relapsed on Kalshi
Problem-gambling counselors say prediction markets have become a go-to outlet for self-excluded gamblers because Kalshi sits outside state gambling protections.
A 35-year-old Pennsylvania man who went bankrupt from sports betting, then was banned from online sportsbooks, says he fell back into gambling on Kalshi, the prediction market app that is not covered by state gambling protections. Experts say his story is becoming common.
The man, identified by NPR only as Thomas because he fears his history could hurt his career, started betting on DraftKings and FanDuel during the pandemic. He had little interest in sports but saw betting as an easy way to make money. He placed parlays on football and tennis, bets that require several outcomes to hit. Working from home in financial services, he said there were few moments when he did not have one eye on placing a bet.
The losses piled up. Thomas ran up about $75,000 in credit card and personal loan debt and was more than $50,000 in the red to online sportsbooks. He filed for bankruptcy in late 2023, federal court records show, and signed up for Pennsylvania's self-exclusion list, which bars people from casinos and licensed betting apps. More than 30,000 state residents are enrolled in the program.
About two years later, he saw an Instagram ad for Kalshi offering a $20 bonus for the first $10 he spent. "Betting $10 became a couple hundred, and that became a couple hundred more, then thousands more," Thomas said. "And before long I was more than $25,000 in the red." He now lives with his mother and grandmother and has had to ask them for loans.
The gap in protection comes from how Kalshi is regulated. The company is not treated as a gambling business by states, as DraftKings and FanDuel are. It is supervised by federal officials as a provider of financial instruments known as swaps. Kalshi does not take part in the state self-exclusion databases, because joining would require a state gambling license, and the company says it is exempt from state gambling rules. States are contesting that position, and the dispute may end up at the Supreme Court.
Kalshi and its main competitor, Polymarket, have run aggressive advertising campaigns across the country, including in states where online sports betting is illegal. Counselors say the reach is showing up in their offices. "I hear from clients all the time who say, 'and now you can bet on anything,'" said Abdullah Mahmood, a problem gambling counselor at Maryhaven, a treatment center in Columbus, Ohio. "Some have also self-excluded from sportsbooks and then fell into prediction markets."
Kalshi rejects the criticism. Spokeswoman Dani Lever called Thomas "a cherry-picked case" and said the company's exchange model is healthier than a sportsbook's because its profits are not tied to traders' losses.
Researchers have linked frequent online betting to a higher chance of household bankruptcy and delinquent debt, and many social scientists now treat gambling addiction as a public health problem tied to anxiety, depression and suicidal thoughts.
