Prediction Markets: What They Are and How They Differ From Sports Betting
While the user won’t notice any major differences from sports betting on the front end, this means the marketplace itself (i.e., companies like Kalshi or Polymarket) is not on the other side of the contract. The exchanges provide a marketplace between buyers and sellers and, along with a clearing house, ensure the legitimacy of both parties and oversee the payout of the contract. For example, a contract selling for $0.20 indicates a 20 percent chance of that event happening — at least, according to what people are willing to pay for it. Any event you can imagine could potentially be added to the market, including elections, economic indicators, sporting events, the Academy Awards, which coach a team will hire, etc. So, what are prediction markets and why are they such a big deal in the sports betting space?
They are all rushing to not be late to the party, while prediction markets are still new, or even unknown, to so many people. In short, the ability to reach more customers and thus make more money is why companies are making this push. With optimism that prediction markets will remain federally legal in their current form, plenty of companies are joining the space. BetMGM and Caesars, notable sportsbooks that are also under parent companies with massive brick-and-mortar casino businesses, have not yet entered prediction markets. Because the companies running the prediction markets don’t care who wins, the companies aren’t exposed to the risk of users beating them to news and information. FanDuel Predicts is expected to expand to other states in 2026, but did say in a press release that “As new states legalize online sports betting, FanDuel will cease offering sports event contracts in those states.”
Now his former company and his current one both have prediction markets that launched in December. The counterpoint is that stock markets operate similarly to prediction markets and are not considered gambling. “Now, we have people betting on the Eagles -2.5 with it.” “This was written for like oil futures and weather predictions where they have to help have some checks and balances if the farmers have a bad winter or something,” Goldman said.
The market size for the sports betting market is projected to reach USD 298.1 billion by 2035. The global sports betting market is estimated to be valued at USD 111.9 billion in 2025. Online gambling increased significantly positively affecting the sports betting market adoption trends, since the pandemic restricted land-based gambling. Further, the sports betting market is expected to grow significantly as a result of such collective factors along with the sports betting market opportunities. The presence of a significant percentage of young population who also participate in various forms of sports is the most important factor contributing to the sports betting market development.
The Asia Pacific region accounted for around 30.0% of revenue and is expected to maintain the high CAGR in the sports betting market. Further, the basketball and baseball segments of the sports betting market best offshore sportsbook are also expected to expand by close to 10%. Following football, the horse racing segment accounted for the second-largest sports betting market share and is expected to thrive at a CAGR of 10.3% during the forecast period.
In an effort to appease the states that hold their gaming licenses, they are not offering sports markets (or, in some cases, any markets at all) in states that have legal sports betting. We accept our responsibility in pursuing litigation where that confusion exists because it’s critically important that overzealous state gaming boards not stand in the way of competition and innovation.” On the other side, it would be unreasonable to say most of the sports contracts on prediction markets don’t clearly mimic sports betting. “Frankly, when sports betting rolled out, you had established illegal operators that had a great product, and so the steps to close the gap were very clear. There are some similarities in how the industries grew quickly once the legal groundwork was set.
You can start with a spread, check the team total, look at a player prop, then move into a parlay build without feeling like you’ve lost the original event page. New customers in AZ, CO, CT, DC, IA, IL, IN, KS, KY, LA, MA, MD, MI, MO, NC, NJ, NY, OH, PA, TN, VA, VT, WV, WY. New customers in AZ, CO, CT, DC, IA, IL, IN, KS, KY, LA, MA, MD, MI, MO, NC, NJ, OH, PA, TN, VA, VT, WV, WY.
People who want to bet on sports and live in states that don’t have legal sports betting have an avenue to do so via prediction markets. “These prediction markets … are gambling — pure and simple,” Cox said. In neighboring Utah, a state where sports betting is still illegal, Republican governor Spencer Cox also spoke out against prediction markets in response to a statement from new CFTC Chairman, Mike Selig, but for different reasons.
With prediction markets, you could also choose to sell your shares before the Super Bowl. If you looked at NFL futures on a prediction market website it would list teams and the likelihood, percentage-wise, that each team would win the Super Bowl. When it comes to prediction markets, you are exchanging your money with other market participants – just like the stock market. Basic odds set by the sportsbook are point spreads, moneylines and totals. It is important to note that these prices are constantly in flux, much like the stock market. We will also dive into how prediction markets differ from sports betting and how to use sites like Kalshi and Robinhood.
