PREDICTION MARKETS VS SPORTSBOOKS
Plain English
Sportsbooks set odds and take the other side; prediction markets match buyers and sellers like a stock exchange. Knowing the difference matters for fees, liquidity, and edge.
Going deeper
Sportsbooks build a margin (the 'vig') into every price — typically 4-7% on a single game. Prediction markets like Kalshi and Polymarket charge transparent flat fees (typically 1-2% on profits) and let you trade in and out before resolution. The order-book model means liquidity isn't guaranteed; thin contracts have wide spreads. Sportsbooks offer instant fills with no spread, but you can only bet, not exit. The right venue depends on your edge: short-term sharps prefer prediction markets for capital efficiency; casual bettors who want simple parlays prefer books.
Examples
Vig vs spread math
A sportsbook offers -110 on both sides of a coin flip — implying 52.4% needed to break even. A prediction market lets you buy Yes at $0.50, with 1% fee on profit. Same coin flip, lower break-even probability.
Mid-event exit
You bought Yes at $0.45 on a Fed rate cut. Two weeks later it's at $0.78. On a sportsbook you must hold to resolution. On Kalshi you sell now and lock the profit.