What is the difference between a prediction market and a sportsbook?
Written by A sportsbook takes the other side of your bet. A prediction market connects you with another user who wants the opposite outcome. Everything else flows from that one difference.
Both let you wager on game outcomes, both let you exit early, and both take a cut for running the market. After that, the structure is pretty different.
Who you're betting against
At a sportsbook like FanDuel or DraftKings, the house is always on the other side. They set the opening line, take your money, and pay you if you're right. You're playing against them.
At Kalshi or Polymarket, the platform runs an order book, like a stock exchange. You buy a contract, and another user sold it to you. The platform never takes the other side. It just matches buyers with sellers and takes a small fee.
How the price is shown
Sportsbooks use American odds. A -110 line means bet $110 to win $100. A +150 line means bet $100 to win $150. The number is a payout ratio. To get the implied probability, you have to do a short calculation.
Prediction markets price in cents. A 55-cent contract pays $1 if you're right and $0 if you're wrong. The price is the implied probability directly. Buy at 55 cents and the market is saying that outcome has about a 55% chance.
How each one takes its cut
A sportsbook builds its margin into the line. A true 50/50 game would have both sides at +100. Instead you see -110 on both sides. Both bettors are paying more than they can win. That gap is the vig.
A prediction market charges a fee per trade instead. Kalshi publishes its formula: 0.07 times the number of contracts, times the price, times one minus the price. On a 50/50 contract, that works out to a smaller margin than a typical -110 vig.
Seeing them side by side
| Sportsbook | Prediction Market | |
|---|---|---|
| Who takes the other side | The house | Another user |
| How they earn margin | Vig built into the odds | Fee per trade |
| Price format | American odds (-110, +150) | Cents (55c = 55% chance) |
| Who sets the price | Oddsmakers, adjusted for bet flow | Supply and demand on an order book |
| Regulator | State gambling commission | CFTC (federal) |
Who moves the price
A sportsbook has oddsmakers. They open a line and shift it as money comes in. A big bet on one side moves the number toward the other. But the house controls where the line starts and how far it moves.
On a prediction market, the price moves with every trade. A lot of buyers on Yes pushes the Yes price higher. No oddsmaker sets the opening number. The market finds its own level.
Which one should you use?
Sportsbooks offer more game types, more props, and bigger bet limits. Prediction markets often have tighter margins on the games they do cover, and the price is transparent at a glance. Most serious bettors keep accounts at both.