For those who enjoy forecasting sports outcomes, there are now more options to consider. Prediction market traders can buy and sell shares on various contracts, such as which team will win the next Super Bowl or who will win the Masters. Contract pricing is dynamic and fluctuates in response to trading activity and the collective sentiment of the market.
Meanwhile, sports bettors in legal wagering states can place bets at fixed odds on the same markets at online sports betting sites. Are there advantages to one approach? What’s the difference between prediction market pricing and sports betting odds?
Let’s take a look at the key difference between event contracts and sports betting.
Key differences: Event contracts vs. sports betting
Event contracts and sports betting share several similarities. In both cases, you’re attempting to predict future outcomes. Correct calls can lead to profits, while you can walk away with nothing when you make incorrect choices. As you dig deeper into the two styles of forecasting, you will find notable differences.
| Feature | Prediction Markets | Sports Betting |
| Available Markets | Contracts are available for a wide range of markets beyond sports. Popular segments include politics, economics, and culture. | Wagering is available for a wide variety of sports. Some states allow betting on Academy Awards, but the general rule is sports only. |
| How You Participate | You buy and sell shares on the platform. The peer-to-peer trading element helps reflect overall market sentiment. | You’re placing bets at the sportsbook, essentially pitting yourself against the house. Odds may rise or fall after you have placed your bets. |
| Pricing and Structure | Prices are determined by the market and can be translated directly into the perceived likelihood of an outcome. | Sportsbooks determine the odds, but they may evolve in response to betting volume and other developments. |
| Profit and Liquidity | You can buy and sell shares at any time until the contract closes. Secure profits or mitigate losses early, or wait until contract resolution. | Your payout is based on the odds at the time of bet placement. Early payouts are occasionally available, but rarely on future wagers. |
How sports event contracts work
Interest in prediction markets has exploded recently. One of the biggest catalysts has been the introduction of sports contracts on various platforms. In a nutshell, a prediction market is an online platform where users can trade outcomes tied to future events.
Beyond sports, popular attractions include politics, economic indicators, and entertainment topics. The markets are typically presented with “yes” or “no” options on the outcomes, with pricing reflecting the perceived probability of it happening.
For example, consider the pricing at Kalshi for which team will win the NBA Finals. As we examined the market, the playoffs were right around the corner. Just three teams were trading at a price above $0.10 to win it all:
- Pro Men’s Basketball Champion
- Oklahoma City Thunder: $0.34
- Boston Celtics: $0.30
- Cleveland Cavaliers: $0.13
The market points to the Thunder as the overall favorite. The pricing indicates a 34% chance of Oklahoma City winning the title, with Boston at 30% and Cleveland at 13%. Behind the three leaders, just seven other clubs are viewed as having a 2% chance or greater of winning.
Once the NBA Finals come to a close, winning contracts are paid out at $1.00. Contract pricing for teams that fail to seal the deal will equal zero. For a $100 trade on the Thunder at $0.34, that would translate into 294.12 shares. At $1 per winning contract, that equals a return of $294.12.
Naturally, platforms get a fee that varies based on the market’s pricing. Using Kalshi as an example, fees on a $100 contract are capped at $1.74. Overall, prediction markets are event-focused and provide real-time insight into the overall sentiment of an outcome.
How sports betting odds work
Legal online sports betting remains immensely popular across legal wagering states. Bettors can choose from a range of top online sportsbooks such as FanDuel, DraftKings, BetMGM, and Caesars, with the mix of options varying by market.
Sportsbooks offer odds for a variety of markets, including individual games and events, futures, and a wide variety of props. American odds are the most common format in the US, while other countries present the numbers in decimal or fractional form.
Using American odds as an example, here’s what the moneyline looks like at FanDuel for an upcoming MLB game:
- Chicago White Sox at Cleveland Guardians
- White Sox: +200
- Guardians -245
For moneyline odds, a negative number indicates the favorite in the matchup, while the odds are positive for the underdog. The range between the numbers indicates the perceived closeness of the matchup. In this case, the Guardians are heavy favorites to win.
Moneyline odds can also help you quickly determine the potential payout. At odds of +200, the profit potential is $200 on a winning bet. Conversely, to win $100 at odds of -245, you’d have to place a bet of $245.
Sportsbooks make their money off the vigorish, which is a charge for facilitating the wager. Using odds of -110 as an example, a winning $100 bet would return $90.90. Why not a straight doubling of your money? The vig that’s built into the odds ensures the book gets its cut.
Comparing event contract pricing and sports betting odds
Prediction market offerings continue to evolve. For now, the main focus for sports at many of the top platforms is on future outcomes. At online sportsbooks, bettors can find odds for all upcoming games and events for a variety of sports, plus futures, props, and more.
As a result, it’s not a direct apples-to-apples comparison. However, some markets can be directly compared, allowing us to glean insights on correlations and differences. Here’s how prediction market pricing stacks up against sports betting odds in three popular cases.
Super Bowl Winner
At Kalshi, the current most popular sports contract by volume is on the winner of the next Super Bowl. As of this writing, over $27 million has been traded on this market. It’s an impressive tally, as we are months away from determining the results.
Sportsbooks typically don’t provide an exact tally of betting on future events. However, it’s widely understood that the winner of the next Super Bowl is the most popular futures market on the board.
The table below compares the current Kalshi “chance of winning” versus the FanDuel odds for the top five favorites to win the next Super Bowl.
| Team | Kalshi “Chance” | FanDuel Odds |
| Philadelphia Eagles | 13% | +600 |
| Kansas City Chiefs | 12% | +850 |
| Baltimore Ravens | 11% | +700 |
| Buffalo Bills | 11% | +750 |
| Detroit Lions | 9% | +1000 |
Both sides agree that the Eagles are the overall favorite to win, while the Lions have the fifth-best chance. In the middle, there’s a slight disparity. FanDuel odds point to the Ravens and Bills having a better shot than the Chiefs. Kalshi’s pricing places Kansas City ahead of those two clubs, albeit slightly.
Interestingly, you can dig into the “order book” for each team on Kalshi. This gives you further insight into contracts and demand at various price points, as to where the market may be headed. Sportsbooks’ odds will evolve in response to betting volume and other developments. However, there’s no peek behind the curtain into demand and volume.
Masters Winner
The Masters is one of the four annual Golf majors. It’s a popular attraction at online sportsbooks, and we can now say the same about Kalshi. The prediction market platform has attracted over $15 million in contracts on the tournament winner. In advance of the first tee, just four golfers had a price greater than $0.05 on “yes” for the Masters winner.
- Masters Tournament Winner
- Scottie Scheffler: $0.17
- Rory McIlroy: $0.13
- Collin Morikawa: $0.07
- Jon Rahm: $0.06
At FanDuel and DraftKings, the two sportsbooks that attract the most overall volume, the same four names topped the odds board. However, the order was slightly different, with Rahm edging ahead of Morikawa for third place.
| Masters Winner | FanDuel Odds | DraftKings Odds |
| Scottie Scheffler | +400 | +400 |
| Rory McIlroy | +650 | +650 |
| Jon Rahm | +1400 | +1300 |
| Collin Morikawa | +1600 | +1600 |
In terms of the likelihood of winning, Kalshi’s pricing is in line with what top sportsbooks suggest. Just like with the Super Bowl, bettors can dig deeper into the numbers at the former to get a sense of overall demand and what traders are willing to pay.
As the Masters got underway, Scheffler got off to a solid start, with his odds shifting to +250 at FanDuel and DraftKings. His price at Kalshi climbed to a “yes” price of $0.28.
If we dig into the Kalshi order book, we find over 200,000 contracts with an “ask” of $0.29 or more and over 100,000 “bids” at $0.28 or less. The real-time look at market demand is a game-changer for those into sports forecasting.
UFC Main Event
While many of the markets available at Kalshi involve multiple choices, some contracts revolve around a single upcoming outcome. UFC 314 is approaching, with Alexander Volkanovski and Diego Lopes set to square off in the main event. To date, over $631,000 contracts have been traded on the winner of the fight at Kalshi.
- UFC 314: Volkanovski vs. Lopes
- Volkanovski: Yes, $0.55
- Lopes: Yes, $0.47
At DraftKings, the moneyline odds are also tight for what’s expected to be a competitive matchup.
- Featherweight Title: Volkanovski vs Lopes
- Volkanovski: -130
- Lopes: +110
For moneyline odds, we can translate the listed number into implied probability with straightforward calculations for both positive and negative numbers.
- Negative: Odds/(Odds+100)*100 = implied probability
- Volkanovski: 130/(130+100)*100 = 56.52%
- Positive: 100/(Odds+100)*100 = implied probability
- Lopes: 100/(110+100)*100 = 47.62%
In this case, there’s a strong correlation between the probabilities. Volkanvoski has a slightly better chance of winning based on the sportsbook odds, while the numbers for Lopes are right in range. So what does this mean for your bottom line?
If you bet $100 on Volkanovski to win at -130, the profit potential is $76.90, leading to a total return of $176.90 if he wins. A wager of the same amount on Lopes at +110 would bring back $110 if he came out on top, for a total return of $210.
For those who spent the same $100 on Lopes at $0.55, they’d have 181.82 shares. If he wins, those contracts settle at $1. That translates to $181.82, minus platform fees.
If you spent $100 on Lopes at $0.47, you’d get 212.76 shares. An upset victory settles those contracts at $1, which translates into $212.76, less fees.
In all cases, a losing prediction or sports bet equals zero returns. Whether you’re forecasting on prediction platforms or with online sportsbooks, be sure to keep that in mind.
Which is better: Prediction markets or sports betting?
If you’re into forecasting, there’s value to be found in both approaches. Prediction markets help you get a better sense of the actual sentiments of participants. To do the same with sports betting, you must watch for shifts in the odds, which may or may not happen.
As of now, sportsbooks offer more betting options. Most high-volume contracts in sports prediction markets revolve around future outcomes, such as the winner of a league championship. That said, the gap could close as the sports event contract laws are rapidly changing.
For experienced sports bettors, prediction markets can provide you with additional insight into the actual market sentiment of future outcomes. Instead of just patiently waiting for the odds to shift, prediction markets could also be used as a hedge against new developments.
If you’re new to either style of forecasting, understand the concepts and how everything works before putting anything substantial at risk. One is not necessarily better than the other, so you can approach both with a learning mentality as you explore what works best for you.