The future of online gambling is quietly shifting towards "prediction markets". Against the backdrop of the booming prediction markets, issues arise—how can platforms attract traffic and retain players when every event can be bet on?
The answer is actually hidden in an academic report.
❕The truth about betting on underdogs: Players like to "take a gamble"
According to research from University College Dublin (《Makers and Takers: The Economics of the Kalshi Prediction Market》July 2025, UCD School of Economics Working Paper (https://t.me/pasauseful/14))analyzing over three hundred thousand transaction data from the US prediction market Kalshi, the results are quite disheartening:
Those who bet on underdogs lose the most. The average loss on low-priced (high odds) events is over 60%;
Conversely, those "boring" popular events can still make a slight profit on average.
The reason is quite simple—humans inherently overestimate low-probability events.
Even if the odds of winning are only 10%, the thrill of "turning things around overnight" is enough to keep them coming back.
This behavior is reflected in the prediction markets as "Favorite–Longshot bias", and in online gambling, it is the well-known "underdog trap" for platforms.
The study cites the classic theory of behavioral economics—Prospect Theory, proposed by Nobel laureate in Economics Daniel Kahneman and Amos Tversky.
The theory points out that humans systematically overestimate the risks and rewards of low-probability events, thus deviating from rational pricing.
In Kalshi's data, this bias is very apparent:
Players continuously lose money on low-priced contracts (underdog bets); while rational market makers (Makers) are more stable, they also exhibit a slight overconfidence bias (δ≈0.005), occasionally making mistakes;
Ultimately, the market forms a typical structure—rational market makers provide prices, while emotional players provide volume.
This is what's called "Emotional Liquidity". In other words, the activity in prediction markets and even online gambling is essentially driven by player emotions.
In plain terms, 💰emotional players' bets support the platform's revenue, and keeping them betting is of utmost importance.
❕Extracting platform retention logic from loss behavior
Research in prediction markets tells us: Players are keen on buying "possibilities". This is actually the most valuable behavioral signal for platforms.
Rather than urging players to increase their bets, it's better to guide them to play smarter:
🟥Risk-tiered recommendations
Display different types of bets in tiers:
Entertainment zone: Underdog bets, exciting but high-risk, used to attract traffic;
Profit zone: Popular bets, stable returns, focused on retention.
This is akin to psychological tiered marketing—satisfying the emotion of "taking a chance" while giving rational users a sense of security.
🟥 Rational warning mechanism
The system can identify a user's recent streak of losses in underdog bets. For example, if a player loses 5 times consecutively in markets with odds over 10 times, the system pops up a gentle reminder:
"You've lost quite a few underdog bets, try a safer bet?"
This type of micro-interaction "rational reminder" can extend the lifecycle more than continuously pushing for more bets.
🟥 Learning-based odds recommendation system
Based on Kalshi's probability research model, the platform can add an "odds reference column" to the betting interface:
"Odds 10.0 ≈ Actual winning probability below 8%"
Helping players understand the real risks behind the odds not only enhances trust but also transforms the platform's image from "bookmaker" to "coach".
❕Cryptocurrency wallets become the gateway: The new hub of traffic
Retention is just the first step, attracting traffic is more crucial. The future prediction markets will seamlessly integrate with cryptocurrency wallets.
Kraken recently acquired the CFTC-regulated Small Exchange (DCM), meaning they can legally launch event-driven derivatives trading in the US.
In other words, 💰users can soon enter the prediction betting interface directly from their cryptocurrency wallets—from assets to betting, all in one step.
This is similar to the GCash model in the Philippines: The electronic wallet directly integrates into the gambling ecosystem, forming a closed loop.
The advantages brought by the wallet gateway are very direct:
Natural user traffic inflow (wallet users are potential betting users);
Significantly reduced transaction barriers (balance as betting chips);
Behavioral data can be tracked and optimized (from recharge to betting forming a complete profile).
For operators, this is a more efficient "wallet-level traffic pipeline" than acquiring customers through advertising.
The core of prediction market gambling is no longer just about odds and wins or losses, if platforms can utilize psychological data, design rational guidance mechanisms, and combine wallet-level entry to form a closed-loop traffic, they can transform short-term bets into long-term participation.
And this, is the most valuable future direction for prediction market-based gambling.
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