Amid growing worries about potential manipulation, users are dedicating more time and financial resources to prediction markets than ever before.
A recent survey conducted by Truist Securities reveals that while user engagement in prediction markets is robust, there are significant concerns regarding the fairness of these platforms. A majority of participants suspect that others may possess superior information.
Over 60% of respondents indicated that they frequently suspect insider trading or have done so regarding at least one specific contract. Furthermore, more than 70% acknowledged that such concerns have either frequently or occasionally deterred them from entering markets they found appealing. Despite these issues, most users remain active participants and have no intention of withdrawing.
The survey, which included 482 active users of prediction markets, illustrates a dedicated and engaged user base, even in the face of challenges these platforms may present.
Participation is primarily driven by outcomes related to sports events, political developments, and economic indicators, with users predominantly from higher education backgrounds and middle to upper-income levels.
Nearly half of the respondents engage with prediction markets multiple times a week, with many believing they are achieving success, which likely encourages their continued participation.
In terms of competition, DraftKings leads in both user engagement and perceived quality. Kalshi follows closely as the second-best product (16.6%), narrowly surpassing FanDuel (15.2%), despite having a smaller user base. This indicates that prediction-focused platforms are effectively competing on quality.
One important insight for traditional sportsbooks is the noticeable shift in user attention towards prediction markets. Approximately 61% of users report spending more time on prediction markets compared to just 14% who devote more time to sportsbooks.
Furthermore, nearly 54% of users claim they experience more frequent wins in prediction markets. If platforms like Kalshi and Polymarket enhance their mobile experiences, which users have identified as a top priority, they could further close the gap with DraftKings.
About 53% of respondents attribute their preference for prediction sites to the belief that these platforms are “more skill-based than luck-based,” ranking this reason higher than better odds, wider options, and intellectual engagement.
Concerns regarding insider trading are particularly notable. When asked about their worries regarding manipulation impacting outcomes, most respondents expressed at least some level of concern. Approximately 21% are extremely concerned, while 40% are somewhat concerned, and only 18% are not very or not at all worried.
Significantly, most users report some level of suspicion regarding insider trading. About 31% frequently suspect that specific contracts are influenced by non-public information, and another 37% have suspected it at least once.
In total, around 71% of users have avoided a market due to fears of manipulation, presenting a clear opportunity for platforms that can effectively address these concerns.
Measures against insider trading ranked third among the most cited strategies for increasing participation, with 17.6%, following improvements to mobile experiences (19.9%) and offering a wider variety of event categories (17.7%).
Notably, among the 75% of respondents who engage in sports outcome trading, 85% indicated they had previously bet on sports before prediction markets became available commercially. These users typically transitioned from traditional online sportsbooks like DraftKings and FanDuel (72%), friends (46%), land-based casinos (40%), and offshore sportsbooks (36%). This suggests that most users are not newcomers but are migrating from established betting avenues.
Of those utilizing both sportsbooks and prediction markets, 61% are now spending more on the latter, while 58% believe they win more often in prediction markets. Users cite several advantages of prediction markets over traditional sportsbooks, including faster payout speeds and reliability (26%), a greater variety of available markets (26%), and easier onboarding processes (15%).
For context, about 1 in 5 respondents noted that legal sports betting is unavailable in their home state. Among these individuals, 88% expressed that they would “certainly” or “likely” switch to prediction markets if given the opportunity.