TL;DR
- Pricing & fees: Sportsbooks bake in vig (often around -110 on 50/50 lines), implying ~4–5% house edge on balanced action. Prediction markets quote probabilities as prices (e.g., $0.63 = 63%) and tend to charge lower/transparent fees (e.g., Kalshi posts a public fee schedule; PredictIt charges 10% of profits plus policies on withdrawals; Polymarket currently states no trading fees though on-chain/network or third-party fees can still apply).
- Tradability: You can enter/exit prediction market positions like trades; sportsbooks are bet-and-hold (with occasional cash-out tools).
- Regulation: Sportsbooks are regulated by state/national gambling regulators (e.g., UKGC; US state regimes). Prediction markets may be regulated as event contracts/derivatives (CFTC in the US) and face evolving legal rules.
- Accuracy: Academic literature finds prediction markets can aggregate information efficiently, often rivaling or beating polls in some settings—but they’re not infallible and can be thin/manipulable.
What each one is (in one paragraph)
- Traditional sportsbooks set odds and margins (the vig/juice) and pay you if your selection wins; a common “even” price is -110, requiring $110 to win $100 on both sides of a 50/50 spread/total—this embeds the book’s commission.
- Prediction markets list Yes/No shares priced $0–$1 that settle at $1 (true) or $0 (false); the price is the implied probability. Traders can buy/sell and close early. Platforms include Kalshi (CFTC-regulated), PredictIt (political-focused), and Polymarket (crypto-based, expanding into regulated US via acquisition).
Fees & pricing: where your edge gets eaten
Sportsbooks (vig)
- On a 50/50 market, -110/-110 means you must hit 52.38% to break even—about a 4–5% overround/hold on a perfectly balanced book. US operators’ realized monthly holds often land ~6–11% across markets.
Prediction markets (visible fees/probabilities)
- Kalshi charges a transaction fee tied to expected earnings with current maker-fee details in a public fee schedule (updated July 8, 2025).
- PredictIt charges 10% of profits (and has policies around withdrawals).
- Polymarket documentation states no trading fees (but you may incur USDC/network or third-party on-ramp fees).
Takeaway: If you’re price-sensitive, lower explicit fees and market-driven prices can make prediction markets attractive vs fixed sportsbook vig—especially on coin-flip outcomes.
Liquidity, market breadth & tradability
- Sportsbooks excel in major sports with deep pre-game and in-play menus, but you can’t always trade out freely (cash-out availability varies). Industry data shows robust US liquidity and growth (e.g., AGA trackers).
- Prediction markets cover sports + non-sports (politics, macro, culture). Newer platforms have scaled rapidly—Polymarket monthly volume topped ~$1.16B in June 2025—but active trader counts can fluctuate, which affects liquidity and slippage.
- Because prices = probabilities, these markets also produce real-time consensus odds that many analysts watch as signal.
Regulation, KYC & consumer protections (US/UK snapshot)
- Sportsbooks: In the UK, remote operators must meet UKGC Remote Technical Standards (RTS); updates in 2025 tighten account-level limits and preserve consumer protections (e.g., the ban on reverse withdrawals). In the US, operators are state-licensed, taxed, and supervised; the AGA’s State of the States 2025 summarizes the landscape.
- Prediction markets (US):
- Kalshi is a CFTC-regulated exchange for event contracts with full KYC (ID/SSN; bank via ACH), and it posts a public fee schedule. Some state-level frictions remain (e.g., litigation over whether states can block certain contracts).
- PredictIt operates under a narrower framework for political markets and publicly discloses its fee policy.
- Polymarket settled with the CFTC in 2022 (Blockratize order) and has been blocked in the US since then; in July 2025 it announced a US return via acquisition of a CFTC-licensed exchange (QCX/QC Clearing), following the closure of DOJ/CFTC investigations—US rollout is regulatory-dependent.
Bottom line: Sportsbooks offer mature consumer protections in licensed markets; prediction markets are rapidly formalizing in the US but still face evolving rules and occasional state-federal clashes.
Are prediction markets “more accurate”?
Decades of research (e.g., Wolfers & Zitzewitz) show prediction markets can efficiently aggregate dispersed information, often matching or beating polls in certain settings. But accuracy is context-dependent: thin participation or large traders can sway prices, and recent commentary urges caution when volumes are low or narratives dominate.
Unique risks to weigh
If you choose prediction markets
- Regulatory flux: Court fights over what contracts are allowed (e.g., Kalshi litigation; PredictIt correspondence) create rule changes and eligibility risk.
- Market integrity & manipulation: Thin books can be moved; 2024–2025 coverage flagged whale activity and whipsawing odds.
- Resolution disputes: Outcomes follow market rules; on some platforms, disputes escalate to oracles/committees (e.g., Polymarket rules + UMA backstop). It’s transparent—but edge cases happen.
- KYC/on-chain frictions: Regulated venues require ID/SSN; crypto venues add wallet/network steps and potential chain fees.
If you choose sportsbooks
- Structural vig: You’re paying the house margin every bet; industry holds commonly land mid-single to low-double digits across months.
- Geo-limits & compliance: Must wager where it’s legal; operators run KYC/AML and responsible-gaming checks (UK RTS updates reinforce this).
Rewards (why some users prefer each)
Prediction markets
- Lower/transparent fees than fixed -110 vig; trade in/out to hedge or lock profits; prices double as probability estimates useful to forecasters. Recent growth (e.g., Polymarket volumes) suggests deepening liquidity.
Sportsbooks
- Polished UX, broad in-play menus, well-defined dispute/complaint paths and consumer protections (licensing, audits, technical standards).
Quick decision guide
- You want the best “price” on 50/50 events and flexibility to exit: try prediction markets with published low fees/no trading fees (mind liquidity and rules).
- You want mainstream leagues, promos, and a familiar app in a licensed market: use regulated sportsbooks (accept the vig as the cost of convenience/protection).
FAQs
Are prediction markets legal in the US?
Yes, but what can be listed is evolving. Kalshi is CFTC-regulated for event contracts; PredictIt operates under narrower relief; Polymarket plans a regulated US return via acquiring QCX. State-level challenges still arise.
Do prediction markets charge lower fees than sportsbooks?
Often yes. Sportsbooks embed vig (e.g., -110), while prediction markets post explicit fees (e.g., Kalshi fee schedule) or state no trading fees (Polymarket). PredictIt is an exception (10% of profit).
Are prediction markets more accurate than polls?
Sometimes, especially when liquidity is ample. The literature shows good accuracy, but experts caution about low-volume bias and manipulation risks.
Where do I find the rules on how markets resolve?
Read the platform’s market rules. For example, Polymarket documents how markets are clarified/resolved and how disputes escalate (e.g., UMA optimistic oracle).
Sources & further reading
- Sportsbook vig/overround: Investopedia explainers on -110 vig and bookmaker margin mechanics.
- Industry holds/revenue: AGA Revenue Tracker / State of the States 2025; Legal Sports Report monthly hold examples.
- Prediction markets 101: Investopedia primer on event contracts; classic academic review (Wolfers & Zitzewitz).
- Fees: Kalshi fee schedule (July 8, 2025) & help; PredictIt fee policy; Polymarket fees docs.
- Regulation: CFTC event contracts overview (Foley summary); Polymarket 2022 CFTC order; UKGC RTS updates.
- US rollout news: Financial Times on Polymarket–QCX; axios/investopedia round-ups; Better Markets letter noting DOJ/CFTC investigation closure.
- Litigation context: Kalshi v. CFTC D.C. Circuit hearing (Jan 2025) and state-level frictions.
