After Bankruptcy, He Found Kalshi and Gambled Again

A Pennsylvania man who had already filed for bankruptcy and banned himself from the nation’s biggest sportsbooks slipped back into compulsive betting after seeing an Instagram ad for the prediction market Kalshi, according to an NPR investigation published Oct. 2. His experience has become a flashpoint in a widening debate over whether fast-growing prediction markets are a new kind of financial exchange—or a sportsbook by another name.

The man, identified only as “Thomas,” 35, who works in financial services and asked that his middle name be used out of fear for his career, said he was more than $25,000 in debt after a relapse that began with a $20 sign-up bonus. His story illustrates what clinicians say is a structural gap: because platforms like Kalshi and Polymarket are not licensed by states, they do not participate in the state self-exclusion lists that bar problem gamblers from casinos and sportsbooks.

From Sportsbooks to Bankruptcy

Thomas began betting on DraftKings and FanDuel during the pandemic, mostly on difficult-to-win parlays on football and tennis. Over several years he accumulated roughly $75,000 in debt from credit cards and personal loans, more than $50,000 of it owed to online sportsbooks. He filed for bankruptcy in late 2023, federal court records confirm, then settled with most creditors and signed up for Pennsylvania’s self-exclusion list—one of more than 30,000 residents enrolled, state records show.

“I could have ten drinks one night and then be fine with not drinking again for a year,” Thomas told NPR. “But sports gambling was different. It really got me.”

The quiet lasted about two years. Then, Thomas said, an Instagram ad for Kalshi offering a $20 cash bonus for the first $10 spent pulled him back. “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. And before long I was more than $25,000 in the red.”

His go-to markets were bitcoin price contracts that reset every 15 minutes; trading records show stretches in which he was on 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.”

The Self-Exclusion Loophole

When Thomas tried to close his Kalshi account through a live chat, writing that he had a gambling addiction and had been self-excluded from regulated platforms for years, an automated response described self-exclusion as “irreversible” but instead offered a trading break, a voluntary opt-out, or a funding cap. He sent three more email requests over two days before Kalshi barred him from betting.

The gap he fell through is central to the story. Because Kalshi is regulated federally as a financial instrument—a “swap” overseen by the Commodity Futures Trading Commission—it does not need state gambling licenses and therefore does not join state self-exclusion databases. Kalshi does run its own voluntary opt-out and belongs to a prediction-market industry self-exclusion program, but it is unclear whether those overlap with the state systems.

“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 with a prediction market that may or may not even honor the request,” said Brian Pempus, a former sports-betting journalist who now runs the responsible-gambling site GamblingHarm.

The accounts of Thomas and two others documented by The Associated Press follow a similar arc. A 21-year-old soccer coach and a 33-year-old tax accountant both self-excluded from sportsbooks before relapsing on prediction markets. “Prediction markets are the same thing packaged in a different way,” the accountant said. “It’s a dangerous loophole.”

A Slot Machine in Your Pocket

Clinicians say the design of prediction markets can be as habit-forming as any casino product. Abdullah Mahmood, a problem gambling counselor at Maryhaven in Columbus, Ohio, told NPR that contracts expiring within minutes are “no different than a slot machine in your pocket.” Jesse Suh, a clinical psychologist in Philadelphia, said prediction markets remove the obstacles that once kept problem gamblers away from mobile betting.

“There may be real differences in how these products are defined or regulated, but in the therapy room, we are often seeing the same cycle of anticipation, action and reaction play out again and again,” Dr. Cynthia Grant, vice president of clinical for Birches Health, told the AP. “I sometimes think of it like different doors into the same room.”

Kalshi disputes that framing. Spokeswoman Dani Lever called Thomas “a cherry-picked case” and argued the exchange model is safer than a sportsbook because Kalshi’s profits come from fees, not customer losses. “Our profits aren’t tied to trader losses, so we don’t have the same predatory incentives,” she told NPR, adding that the company has “prioritized making Kalshi the safest venue for people to trade on.”

A Business Growing at 2,000%

The stakes are enormous. Bettors wagered nearly $60 billion on Kalshi in the last month, up from $2.8 billion in September 2025—a year-over-year increase of more than 2,000%, according to the data analytics site TickerTracker. Sports bets make up about 80% of that volume, with crypto markets the second-most-popular category.

That growth has been propelled by aggressive advertising—social media campaigns, celebrity deals with figures like Timothée Chalamet and Lionel Messi, and stadium signage—along with the Trump administration’s support. The company has also asked the CFTC to allow margin trading, which would let certain traders bet with borrowed money, a step aimed at attracting institutional investors.

Critics argue the marketing deliberately recasts gambling as investing. “They are gamified and designed to maximize your usage and screentime,” Pempus said. “They are extremely far from any form of investing.”

The Coming Legal Showdown

The fight over prediction markets is now headed toward the Supreme Court. New Jersey has petitioned the justices to resolve a split between federal appeals courts over whether states or the CFTC should regulate the industry. The CFTC, under chairman Michael Selig, asserts “exclusive jurisdiction” and has moved to ease its posture toward the sector, rescinding a prior advisory and signaling it may intervene in state lawsuits.

How much responsibility platforms bear for problem gambling remains genuinely contested. Nearly 20 million Americans show signs of problem gambling, according to the National Council on Problem Gambling; Kalshi became a member of the group in May and donated $2 million. Kalshi says it does not offer its own loans and allows deposits only by credit card.

For Thomas, the policy debate is personal. He now lives with his mother, a grocery store cashier, and his grandmother, and recently had to borrow money for food and car insurance. “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.”

What to Watch

Three questions will shape the next chapter. First, whether the Supreme Court takes up New Jersey’s case—and rules on whether prediction markets can operate in states where they are not licensed, with Kalshi’s response due in November. Second, whether the CFTC’s pending rules, which would formally define event contracts as swaps, tilt the regulatory balance. And third, whether Kalshi and its rivals will join state self-exclusion databases—the fix that clinicians say could close the loophole that pulled Thomas back in.