Prediction Markets Don’t Have Juice: Here’s Why

If you’ve made sports bets with any frequency, then you’re familiar with juice. Ostensibly, that’s the cut a sportsbook takes on each accepted bet.

Prediction markets don’t have such a fee, which is one reason why bettors/traders find platforms such as Kalshi or Polymarket as attractive options.

So why don’t prediction markets have juice? The bulk of the answer lies in one of the key differences between sportsbooks and prediction markets.

Who You’re Trading Against

When you make a bet at, say, DraftKings Sportsbook, it’s you against DraftKings. The operator is the house, setting the odds and acting as the counterparty on your wager.

In doing so, DraftKings bakes juice into its price. For example, in the NFL, the most common juice is -110 on each side of a point spread. That builds in a house edge, as the two implied probabilities add up to more than 100%.

However, Kalshi and Polymarket don’t serve as the house, which eliminates the need for juice. They’re not on the other side of your trade.

Instead, they operate as a peer-to-peer exchange. You’re putting forth a trade based on the implied probability of an event occurring, but need someone else to accept the opposite side of that trade.

And to clarify, you’re trading on final outcomes, comparable to betting moneylines, or to taking a side on a Yes/No prop.

Unlike juice, the two implied probabilities add up to 100%, or $1. For example, if you make a trade at 60% (60 cents) on an NFL Week 1 matchup, the person on the other side accepts the opposite result at 40% (40 cents).

That 60% price correlates to sportsbook odds of -150, while the 40% price correlates to +150. In contrast, a -150 sports bet would have the other side of that wager in the +130 range.

To sum it up: Sportbooks utilize juice because they’re operating as the counterparty (and also under very different regulations). Conversely, prediction markets aren’t impacted by an outcome, therefore they don’t utilize juice. Instead, they take commission fees on each transaction.

Transaction Fees vs. Juice (Vig)

Prediction market operators make their money off a transaction fee on each contract bought or sold. So, how is that any different than a sportsbook using juice to help generate profit?

First off, as alluded to in the section above, Kalshi doesn’t have a financial stake in either side of the trade. The outcome of the event has no impact on the company, which is not the case with sportsbooks.

Kalshi gets its cut via charging per-contract fees, operating under Commodity Futures Trading Commission rules and regulations. And those fees are generally nominal, perhaps as low as 0.5% and up to 2.5%.

That can often beat the sportsbooks’ 4.5-5% on standard -110 lines. But not always, depending on event pricing. So do your homework.

Also important to note: Prediction market operators look to generate as many transactions as possible, since that’s how they generate revenue.

So Kalshi, Polymarket, and others are often more receptive than sportsbooks to sharper consumers/traders. That’s also something you need to be aware of when utilizing prediction markets as the person on the other side of your trade could very well be a market maker or someone far more advanced/experienced.

For more insight, take a look at PredictionPro’s Top 5 Mistakes Prediction Market Traders Make (And How To Avoid Them).