Same Event, Different Price: Prediction Markets vs. Sportsbooks

The main point of contention in the debate between prediction markets and sportsbooks is that prediction markets are just another form of sports betting, and therefore aren’t operating legally in that space.

That’s an argument the Supreme Court will ultimately decide. However, the reality for the moment is that prediction markets continue to operate, and there are notable differences in the offerings from Kalshi and Polymarket, and those of traditional sportsbooks.

One of the key differences: Price. Why is the same event priced differently on prediction markets than on sportsbook platforms? Let’s break it down.

Prediction Market Pricing vs. Sportsbook Pricing

The main reason for different pricing models is that prediction markets and sportsbooks have different business models.

Prediction markets operate as peer-to-peer trading, aiming to find a customer on each side of a proposed market. Sportsbooks, on the other hand, are the counterparty – the house, if you will – for your bet on any given market.

So how does the pricing difference show up? Let’s use an NFL regular-season game as an example.

Kalshi has the New England Patriots vs. Seattle Seahawks priced at Seahawks 63%/Patriots 37%. Note that those two prices add up to 100% (that’s implied probability).

For comparison purposes, those two prices correlate to odds of -170 for the Seahawks and +170 for the Pats.

However, at DraftKings Sportsbook, the moneyline is Seahawks -185/Patriots +154, and those two implied probabilities add up to more than 100%.

Why The Difference?

Sportsbooks build juice into their price, which correspondingly builds in a house edge. That’s a key component to a sportsbook’s business model. And it’s a necessary component, due to how sportsbooks are regulated by each state.

Prediction markets, by contrast, have no stake in which side of a market wins or loses. Kalshi, Polymarket, and others generate revenue via a trading fee or commission on each transaction, operating federally under Commodity Futures Trading Commission rules and regulations.

As you can see from the NFL example above, the prediction market model features a better price on both the favorite and the underdog in Patriots vs. Seahawks. What makes that possible is the profit model.

The fees charged by prediction market operators – perhaps 2% or less – are often notably lower than the juice built into sportsbook pricing. That allows for contract prices that fall closer to true implied probability, and prices that differ from those of a sportsbook.

Simply put, Kalshi, Polymarket, and others are trying to generate as many trades as possible to maximize profit on the modest trading fees placed on each transaction.

For more insight, click here: Prediction Markets Don’t Have Juice: Here’s Why.