After Bankruptcy, a Banned Bettor Found Kalshi

A 35-year-old Pennsylvania man who swore off gambling after filing for bankruptcy was drawn back into compulsive wagering by a prediction market platform that sits outside the state’s gambling rules, according to an NPR investigation published Oct. 2. The case has renewed scrutiny of Kalshi and similar platforms that critics say offer a regulatory loophole for problem gamblers.

Thomas, identified only by his middle name to protect his career, had self-excluded from sportsbooks and lost more than $25,000 on Kalshi — all after he had banned himself from the regulated sports betting sites that drove him to bankruptcy.

From Sportsbooks to Bankruptcy

During the pandemic, Thomas began placing wagers on DraftKings and FanDuel, mostly parlays on football and tennis. He never cared much for sports. “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.”

Working from his home in the financial services industry, Thomas said few moments passed when he did not have one eye on a bet. The cycle continued for years. He racked up roughly $75,000 in debt from credit cards and personal loans, including more than $50,000 owed to online sportsbooks, per federal court records. He filed for bankruptcy in late 2023 and then signed up for Pennsylvania’s self-exclusion list — one of more than 30,000 residents enrolled in the program, state records show.

The Instagram Ad That Pulled Him Back

About two years later, an Instagram ad offering a $20 cash bonus for the first $10 spent on Kalshi caught his attention. “I was bored and thought this could be fun, and it ended up turning into something that wasn’t fun at all,” he said.

“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.”

His go-to markets were tied to the price of bitcoin, which restarted every 15 minutes and never stopped. Trading records show he was sometimes glued to his phone for 18 hours a day. “The odds flip so quickly. It’s such a rush,” he said. “I never even traded Bitcoin or any crypto, but I just kept coming back to the rush of how unpredictable the markets were.”

Thomas eventually asked Kalshi to close his account, citing his gambling addiction and prior self-exclusion. He made the request through the app’s chat feature and again in three separate emails over the following days, according to correspondence he shared with NPR. Kalshi ultimately barred him, but only after repeated requests — leaving him without savings and again asking family for loans to cover food and car insurance.

A Regulatory Gap

The crux of the problem, critics say, is that Kalshi is supervised by the federal Commodity Futures Trading Commission as a provider of a financial instrument known as a “swap” — not as a gambling operator. As a result, it does not seek state gambling licenses, does not pay state gaming taxes and does not participate in state self-exclusion databases. It runs its own voluntary opt-out and belongs to a prediction-market industry self-exclusion program.

That framework has drawn mounting concern from state regulators. Pennsylvania’s Gaming Control Board told The Philadelphia Inquirer that prediction markets risk “creating a backdoor to legalized sports betting” with weaker oversight — noting that such platforms allow users as young as 18, compared with 21 for gambling under state law.

Kalshi rejects that characterization. Spokeswoman Dani Lever called Thomas “a cherry-picked case” and argued the platform’s exchange model is fundamentally healthier than a sportsbook. “Our profits aren’t tied to trader losses, so we don’t have the same predatory incentives,” she told NPR. In separate comments to the Associated Press, Kalshi spokeswoman Elisabeth Diana said that compared with casinos, the platform is “fairer, more transparent, and less predatory,” adding that “there is no house that wins when customers lose.”

The company says it has added trading breaks, deposit limits and mental-health partnerships, and in May 2026 it joined the National Council on Problem Gambling with a $2 million donation.

Making the Same Bet, in a Different Room

Clinicians say Thomas’s experience is increasingly common. “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 in Columbus, Ohio. “Some have also self-excluded from sportsbooks and then fell into prediction markets.”

Mahmood compared the fast-expiring markets at the center of Thomas’s case to a slot machine. “The ones that expire in a matter of minutes or hours are no different than a slot machine in your pocket,” he said. “And you’re able to do this literally all day, all night, as much as you want.”

The AP documented similar relapses, including a 21-year-old soccer coach and a 33-year-old tax accountant who both self-excluded from sportsbooks before returning to betting through prediction markets. “Prediction markets are the same thing packaged in a different way,” the accountant said. “It’s a dangerous loophole.”

Dr. Cynthia Grant of Birches Health, a national treatment network, described the two products as “different doors into the same room.” “The label on the door may change,” she said, “but once someone’s inside, the experience can feel very familiar.”

The stakes are substantial. Nearly 20 million Americans show signs of problem gambling, according to the National Council on Problem Gambling. Last year, Americans spent $166 billion on sports betting, roughly equal to Home Depot’s annual revenue.

A Market Exploding While the Courts Catch Up

Kalshi’s growth has been extraordinary. Bettors wagered nearly $60 billion on the platform in the last month — TickerTracker data shows the figure at about $62.7 billion over the trailing 30 days — up from $2.8 billion a year earlier, a year-over-year increase of more than 2,000%. Sports account for roughly 80% of its volume, with crypto-related markets second.

That rise has collided with a growing legal fight. Federal courts have issued conflicting rulings on whether Washington or state capitals hold authority over the industry. New Jersey has asked the Supreme Court to resolve the split, and the CFTC under Chairman Mike Selig has sided with the platforms, invoking its “exclusive jurisdiction.” President Trump, a former casino owner, has signaled sympathy for the industry — “the whole world, unfortunately, has become somewhat of a casino,” he said in April when asked about prediction markets.

What to Watch

The immediate question is whether the Supreme Court will settle the regulatory tug-of-war that has left problem gamblers in limbo. Also pending: Kalshi’s September request that the CFTC allow margin trading, letting users bet with borrowed money — a feature aimed at institutional investors but one that could deepen risk for retail traders.

For Thomas, the damage is done. Now living with his mother and grandmother in his childhood home, he is trying to rebuild his finances. “It’s hard to ask to borrow money because I spent everything I have on Kalshi,” he said. “My family kept telling me to stop, but I just couldn’t.”