Study warns against using borrowed funds on Kalshi and Polymarket
A new study finds that many people are using borrowed funds to wager on prediction market platforms like Kalshi and Polymarket. The research frames leveraged event-contract trading as a losing bet and warns against borrowing to trade. The report follows news that Kalshi plans to let users trade on borrowed funds, adding leverage to its regulated product mix. No details on Polymarket's plans regarding borrowed funds were provided.
Kalshi's plan to formalize margin trading arrives as retail traders are already informalizing it. The study shows borrowers are losing money, which means Kalshi's CFTC petition risks mainstreaming a behavior that currently sits in regulator blind spots. If CFTC approves Kalshi's margin request, the platform gains parity with Robinhood's leveraged options accounts, but it also absorbs responsibility for screening traders who cannot handle event-contract volatility.
ForecastEx and Polymarket must decide whether to match the product or let Kalshi own the margin category. Every month of CFTC delay protects competitors from that compliance burden, yet lets offshore venues keep their leverage monopoly. The question is whether Kalshi's balance sheet can absorb the first wave of margin defaults without damaging its brokerage partnerships or inviting faster CFTC intervention.