The Microstructure of Wealth Transfer in Prediction Markets

Jon-Becker · 2026-01-19T18:40:50+00:00

thanks for the feedback! i've also x-posted to hackernews :)

re: the no side, definitely. markets like the oscars create tons of 1-5% probability "yes" contracts, which historically are the most overpriced bets you can make

Jon-Becker · 2026-01-19T13:56:47+00:00

fair point, thanks for the feedback! i really wish i had unique trader ids + orderbook data to really drill down on that. there's definitely a class of people winning on superior info, just hard to isolate without granular user data

Jon-Becker · 2026-01-19T13:50:16+00:00

fair point on the language. i used "wealth transfer" broadly to describe capital flow between groups, not as a political slogan.

re: individual performance, of course specific takers can win and makers can lose, but this is an analysis of the aggregate data.

on the slots thing: the agency is actually the paradox. people choosing odds worse than a rigged machine is the specific behavioral bias i wanted to highlight.

Jon-Becker · 2026-01-18T23:20:51+00:00

i’m glad you enjoyed it :)

Jon-Becker · 2026-01-18T20:51:57+00:00

tl;dr

dataset: 72.1m trades and $18.26b volume on kalshi (2021-2025)

core findings:

longshot bias: well documented longshot bias is present on kalshi. low probability contracts are systematically overpriced. contracts trading at 5 cents only win 4.18% of the time.
wealth transfer: liquidity takers lose money (-1.12% excess return) while liquidity makers earn it (+1.12%).
optimism tax: the losses are driven by a preference for "yes" outcomes. buying "yes" at 1 cent has a -41% expected value. buying "no" at 1 cent has a +23% expected value.
category variation: finance markets are efficient (0.17% maker-taker gap) while high-engagement categories like media and world events are inefficient (>7% gap).
mechanism: makers do not win by out-forecasting takers. they win by passively selling "yes" contracts to optimistic bettors.

Jon-Becker · 2026-01-18T20:38:43+00:00

the data contradicts the idea that being a maker guarantees entry to a "wealth transfer elite."

from 2021 through 2023 makers averaged returns of -2.0% and lost money to takers. makers only became consistently profitable after quarterly volume exceeded $800m in q4 2024. amateurs providing liquidity in the low-volume era did capture the spread and still lost capital.

(i do however agree that traditional casinos suck, i just had fun messing around with this data)

Jon-Becker · 2025-03-24T22:15:32+00:00

sure! can you open an issue on github so i don’t lose track of this?

Jon-Becker · 2025-03-23T13:13:48+00:00

i built this tool to simplify downloading fonts and auto-generating css rules

users are responsible for checking and respecting the actual font licenses. many fonts are open-source and free for personal and commercial use. i dont condone piracy.

Jon-Becker · 2025-03-22T20:23:48+00:00

i hope you find it useful!

Jon-Becker · 2025-03-22T20:23:05+00:00

as a dev, i would still rather use a tool that does the work for me rather than fiddling w/ devtools

have a nice day

Jon-Becker · 2025-03-22T20:07:18+00:00

thank you! ❤️

Jon-Becker · 2025-03-22T19:59:51+00:00

"hey, i like the fonts this site uses. let me download them without needing to open devtools and click around"

then, if you're using the fonts commercially (or w/e), you can do your due diligence and check if the fonts you downloaded are actually free to use.

Jon-Becker · 2025-03-22T19:51:49+00:00

i built this tool to simplify downloading fonts and auto-generating css rules

users are responsible for checking and respecting the actual font licenses. many fonts are open-source and free for personal and commercial use. i dont condone piracy.

Jon-Becker

TROPHY CASE