Prediction markets vs sportsbooks
Our Crowd source reads prediction markets such as Polymarket and Kalshi. They let you back many of the same outcomes a sportsbook offers, but the mechanics differ, and so does the right way to compare their prices with a book's.
Contracts in cents
A prediction market trades yes/no contracts that pay $1 if the outcome happens and nothing if it doesn't. Prices run between 0 and 100¢ and read directly as chances: buying "Bears win" at 58¢ means paying for a 58% chance. You trade with other people rather than against a bookmaker, and you can usually sell before the game if the price moves your way. Because you are not betting against the house, an exchange has no reason to limit you for winning the way a sportsbook does.
Fees instead of vig
A sportsbook hides its margin in the prices of both sides. A prediction market has no built-in vig; you pay in two other ways:
- The bid-ask spread. If buyers bid 57¢ and sellers ask 59¢, buying now costs 59¢. The gap is the price of trading immediately.
- The venue's fee. Exchanges charge a fee on each trade, and it can depend on the price. Kalshi's taker fees, for example, take a form like 0.07 × contracts × price × (1 − price); the examples here use that, rounded up to the cent to be safe. It is largest near 50¢ and shrinks toward the extremes. On 100 contracts at 50¢ it comes to $1.75, or 1.75¢ each, so the all-in price is 51.75¢, about −107 in sportsbook terms. Fee schedules change, so check the venue's current one.
Always compare all-in. A contract that looks cheaper than a book's price at its headline cents can be dearer once the fee is added.
Liquidity
A sportsbook quotes a price and decides how much it will take. On an exchange, a price is only as good as the money behind it. Liquidity is money waiting to trade near the current price, and depth is how much is available at or near it. A great price with $20 behind it can't take a real-sized bet: a bigger order eats through the best offers into worse ones. Thin markets also move on small orders, so their prices say less about the real chance.
Who runs them
Venues differ in who regulates them, where they operate and how they settle contracts, so check a venue's current status and rules before you use it. A prediction market is not a sportsbook, and a contract's settlement rules can differ from a book's.
How Consensus Edge uses Crowd
Crowd is one of our three sources: Polymarket and Kalshi prices, read as chances and blended with Square and Sharp. A thin market is easy to push around, so a sensible blend trusts a deep Crowd price more than a thin one. A source with no market is left out, never guessed. Crowd is a third, independent price, not a read on who is betting.
Example. Two places to back the Bears to win (illustrative prices, not live data): a sportsbook at −125, and Kalshi with Yes contracts offered at 54¢, with at least 100 contracts at that price.
- Sportsbook: −125 breaks even at 125 ÷ 225 = 55.6%.
- Kalshi: 100 contracts cost $54.00. Fee: 0.07 × 100 × 0.54 × 0.46 = $1.7388, rounded up to $1.74. All-in $55.74 for a $100 payout, so you profit $44.26 if the Bears win.
| Where | Headline | Break-even | As American odds |
|---|---|---|---|
| Sportsbook | −125 | 55.6% | −125 |
| Kalshi at 54¢ | 54¢ | 55.74 ÷ 100 = 55.7% | 55.74 ÷ 44.26 × 100: about −126 |
| Kalshi at 52¢ | 52¢ | 53.75 ÷ 100 = 53.8% | 53.75 ÷ 46.25 × 100: about −116 |
At 54¢ the contract looked 1.6 points cheaper than −125, yet all-in it is a touch worse. At 52¢ the fee is 0.07 × 100 × 0.52 × 0.48 = $1.7472, rounded up to $1.75, and the contract really is the better price. The headline cents never settle it; the all-in cost does.
Terms in this lesson
Prediction MarketContractKalshiPolymarketCrowdLiquidityDepthAll-in PriceDynamic Blending