Problem Gambler Finds a New Addiction on Kalshi

After a 2023 bankruptcy left him banned from the major sportsbooks, a 35-year-old Pennsylvania man identified only by his middle name, Thomas, swore off gambling. Two years later, an Instagram advertisement brought him back in — this time through Kalshi, a fast-growing prediction-market platform that operates outside the state system meant to protect people like him.

Thomas, who works from home in financial services, went from a $10 promotional bet to more than $25,000 in the red, according to NPR, in a case his family says is part of a widening shadow over an industry that has exploded in size while its legal status remains unsettled.

A Familiar Cycle

Thomas’s first episode began during the pandemic, when he tried DraftKings and FanDuel despite having little interest in sports. He favored parlays — hard-to-win wagers that bundle multiple outcomes for a large payout — and soon found he could not stop. “I could have ten drinks one night and then be fine with not drinking again for a year,” he told NPR. “But sports gambling was different. It really got me.”

The cycle continued for years, leaving him roughly $75,000 in debt from credit cards and personal loans, with more than $50,000 owed to online sportsbooks. He filed for bankruptcy in late 2023, settled with most creditors, and self-excluded from DraftKings and FanDuel — a safeguard that bans a person from a platform at their own request.

Then, scrolling Instagram, he saw Kalshi offer a $20 cash bonus for the first $10 spent. That was all it took. “Betting $10 became a couple hundred, and that became a couple hundred more, then thousands more,” he said. “And before long I was more than $25,000 in the red.”

His preferred markets were not sports but 15-minute Bitcoin price contracts that reset around the clock. At times, his trading records show, he was glued to his phone 18 hours a day. “The odds flip so quickly. It’s such a rush,” he said. “And when I’d lose, my brain just kept wanting to win it back.”

An Industry Outside the State System

The central question raised by Thomas’s experience is how prediction markets are regulated. Kalshi is not licensed as a gambling business by any state. Instead, it is supervised federally by the Commodity Futures Trading Commission (CFTC) as offering a type of financial instrument known as a “swap.”

That framework is under attack. In late September, the 6th U.S. Circuit Court of Appeals ruled that Ohio and Tennessee can apply their gambling laws to Kalshi’s event contracts, reversing a Tennessee injunction and deepening a split among federal circuits. Circuit Judge Julia Smith Gibbons rejected Kalshi’s argument that its sports contracts are swaps, writing that swaps are tools for hedging financial risk rather than gaming contracts, and that regulating gambling is a core state police power, The Revision reported.

The decision raises the odds the Supreme Court will eventually settle who governs prediction markets. Similar fights are unfolding in New York, Connecticut, Arizona and Minnesota. New York Attorney General Letitia James sued Kalshi in July, calling it an “illegal, unlicensed gambling operation” and seeking to halt its operations and force it to forfeit profits, Al Jazeera reported. Kalshi dismissed the suit as “political theater from the leadership in our own state.”

An Industry Built on Sports

Sports bets make up roughly 80% of Kalshi’s total volume, with crypto-related markets second. Bettors wagered nearly $60 billion on the platform in the last month, according to the analytics site TickerTracker — up from $2.8 billion a year earlier, an increase of more than 2,000%.

The company has fueled that growth with aggressive advertising, tapping dozens of influencers and striking deals with celebrities including Timothée Chalamet and Lionel Messi, and its branding appears at professional soccer and baseball games. Counselors say that ubiquity is itself a hazard. “We are all so bombarded with these ads, online campaigns and all their offers,” said Abdullah Mahmood, a problem gambling counselor at Maryhaven in Columbus, Ohio. “And the way they position themselves, as trading, not gambling … it all seems geared toward their bottom line and not considering those at risk of relapsing.”

The relapses are not isolated. The Associated Press interviewed a 21-year-old soccer coach and a 33-year-old tax accountant who both self-excluded from sportsbooks and then returned to betting through prediction markets. “Prediction markets are the same thing packaged in a different way,” the accountant said. “It’s a dangerous loophole.”

The Self-Exclusion Gap

One of the sharpest gaps involves self-exclusion lists. Following his bankruptcy, Thomas signed up for Pennsylvania’s list, one of more than 30,000 residents enrolled. The program bans him from casinos, mobile sports betting and other online betting, and blocks direct marketing from betting operators. Prediction market sites like Kalshi are not automatically included.

When Thomas asked Kalshi, through its app, to close his account and cited a gambling addiction, an automated response described self-exclusion as a “responsible trading safeguard designed to be irreversible” but offered alternatives instead: a trading break, voluntary opt-out, and a personalized funding cap. He made three further requests over two days before Kalshi ultimately barred him.

Kalshi spokeswoman Dani Lever called Thomas “a cherry-picked case” and argued that an exchange model is fundamentally healthier than a sportsbook because the company’s profits are not tied to trader losses. “We’ve prioritized making Kalshi the safest venue for people to trade on,” she said, pointing to trading breaks, deposit limits and mental-health partnerships. She added that irresponsible trading “is a real risk in any type of financial market with retail participants.”

Critics dispute that framing. “It’s outrageous that prediction markets are offering sports bets in states where people have taken the courageous step to self-exclude and have to do it all over again,” said Brian Pempus, who runs the advocacy site GamblingHarm.

A Growing Public-Health Concern

Nearly 20 million Americans show signs of problem gambling, according to the National Council on Problem Gambling. In May, Kalshi joined the council and donated $2 million — a step that struck observers as notable given the company’s insistence that it does not offer gambling at all.

Recent actions have done little to quiet the concerns. Kalshi asked federal regulators in September to allow margin trading — letting some users bet with borrowed money — to attract institutional investors, though the firm says it would not apply leverage to sports, culture or “mention” markets.

As KUER reported, University of Utah economist Scott Schaefer said the only thing that truly sets prediction markets apart from gambling is how the federal government has chosen to regulate them. Utah lawmakers passed HB243 this year to classify proposition bets on predictive markets as gambling, prompting Kalshi to sue the state.

“The ones that expire in a matter of minutes or hours are no different than a slot machine in your pocket,” Mahmood said. “And you’re able to do this literally all day, all night, as much as you want.”

What to Watch Next

With federal appellate courts now shaping the fight and a circuit split widening, the Supreme Court may be forced to decide whether a wager on a sports outcome is a hedge or a bet. In the meantime, states continue to sue, Congress weighs bills to ban sports-like event contracts, and people like Thomas are left to rebuild. He is now living with his mother and grandmother, and recently had to ask them for a loan to cover food and car insurance. “My family kept telling me to stop,” he said. “But I just couldn’t.”