Overview Prediction Markets

https://kalshi.com/ Kalshi Inc. is an American financial exchange and prediction market based in New York City, offering event contracts. Launched in July 2021, it offers a platform where both retail and institutional traders can place trades on various future events, including economic indicators, weather patterns, awards, as well as political and legislative outcomes. The platform enables users to trade on yes-or-no questions, with contracts priced based on the market's estimated probability of an event occurring. The exchange provides contracts that pay out $1 for correct selections. In October 2024, Kalshi received approval to reintroduce election markets, allowing users to wager on political outcomes, such as congressional control and presidential elections.

Smarkets Smarkets is a prominent UK-licensed peer-to-peer betting exchange and prediction market platform. It allows users to bet against each other by "backing" (betting for an outcome) and "laying" (betting against an outcome), typically offering better odds and a significantly lower commission of just 2% on winning bets.

https://polymarket.com/ Polymarket is an American cryptocurrency-based prediction market, headquartered in Manhattan, New York City. Launched in 2020, it offers a platform where individuals can place bets on various future events, including economic indicators, weather patterns, awards, as well as political and legislative outcomes. Participants can deposit USDC cryptocurrency through the Polygon blockchain network and trade shares that represent the likelihood of specific outcomes occurring in the future.

https://www.fanatics.com/ Sports and setting up BitCoin prediction market

Chatter Prediction market news

Explaining profit in prediction markets

Okay, the user wants a concrete example of making a profit in a prediction market. I’ll need to explain the math behind it, like expected value (EV) and possibly the Kelly criterion. I’ll create a scenario with numbers to make it clear but concise. I think I can break it down into a simple example, showing how to calculate potential profit based on probabilities and stakes. I’ll keep it straightforward, no need for extra tools. Nice, let’s make it very concrete.

Setup of the market

• Event: “Will Bitcoin be above $100k on Dec 31, 2027?”
• Contract: YES share pays $1 if true, $0 if false
• Market price: 0.40 (implies 40% probability)
• Your estimate: 55% probability You think the market is too pessimistic.

1. Expected value of a trade

Suppose you buy 100 YES shares at $0.40.

• Cost:   Cost = 100 · 0.40 = $40
• Payoff if event happens:   Payout = 100 · 1 = $100   Profit if true:   100 − 40 = $60
• Payoff if event does not happen:   Payout = 0   Loss if false:   0 − 40 = −$40

Now compute expected value using your 55% probability: EV = 0.55 · 60 + 0.45 · (−40) = 33 − 18 = $15 So on a $40 stake, your expected profit is $15, i.e. 15/40 = 37.5% expected return. That’s the core: you profit because your probability (55%) is higher than the market’s implied 40%.

2. How much should you bet? (fractional Kelly)

Let’s say your bankroll is $1,000.

• Price: 0.40
• Payout if correct: you gain $0.60 per $0.40 bet   b = 0.60/0.40 = 1.5
• Your probability: p = 0.55, so q = 0.45

Kelly fraction:   f* = (p · b − q) / b = (0.55 · 1.5 − 0.45) / 1.5 = 0.25

Full Kelly says: bet 25% of your bankroll → $250.

Most disciplined traders use half‑Kelly to reduce volatility:

  f_half = 0.5 · 0.25 = 0.125

So you’d stake 12.5% of $1,000 = $125.

At price 0.40:   Shares = 125/0.40 = 312.5 ≈ 312 shares

• If event happens:   Payout ≈ 312 · 1 = $312   Profit ≈ 312 − 125 = $187
• If event fails:   You lose your $125 stake. Your edge is the same as before (probability vs price), but Kelly gives you a principled way to size the bet.

3. Profit by selling before resolution

Suppose you buy at 0.40 and later the market moves to 0.60.

• You bought 312 shares at 0.40 → cost ≈ $125
• You sell 312 shares at 0.60 → receive ≈ $187.20

Profit ≈ 187.20 − 125 = $62.20

You’ve locked in profit without waiting for the event to resolve.

4. What actually makes this profitable?

In this example, you make money because:

• The market says 40%, you believe 55%.
• That gap gives you positive expected value.
• Kelly (or fractional Kelly) keeps your bet size sane.
• You can profit either by holding to resolution or by trading the price move.

Sports betting markets

Novig Sports betting platform. The platform's first week volume surpassed Kalshi and Polymarket U.S.'s opening week volume for sports contracts, as well as those of Underdog and DraftKings' proprietary prediction markets exchange, DKeX, according to data calculated from Novig. ProphetX said earlier this month that the CFTC approved its applications to register as both a designated contract market, which is an exchange, and a derivatives clearing organization, which clears trades.

ProphetX CEO and co-founder Dean Sisun said the approval "positions ProphetX to become the first sports-native direct-clearing prediction market in the United States." The company's claim is that it will offer sports event contracts and build a sports-native exchange and clearing structure under the CFTC framework.

Betr, the real-money gaming company founded by Joey Levy and YouTube star and boxer Jake Paul, is taking a distribution-first approach. The company acquired Ascent Capital Management, a National Futures Association-registered introducing broker, to accelerate its launch of prediction markets powered by Polymarket. Levy told CNBC that Betr's advantage is breadth. "We are the first super app in the space offering picks, Sportsbook, casino, arcade, and soon prediction markets all in one app with one wallet," Levy said. "So yes we think we can take on FanDuel, DraftKings, Kalshi, etc. given we are offering more content overall and have that differentiated experience." Levy added that Betr is seeing "explosive revenue growth" while growing "efficiently and profitably."

Robinhood brings another model: brokerage distribution, giving event contracts exposure to consumers who already think in terms of trading, probabilities and market prices rather than traditional betting slips.

Crypto.com is playing an infrastructure role. FanDuel Predicts announced an expanded event-contract offering through Crypto.com's CFTC-regulated exchange and clearinghouse, OG Prediction Markets, broadening the types of sports and entertainment markets available to customers. That gives FanDuel a way to participate in prediction markets without immediately becoming the exchange itself.

DraftKings has also moved into prediction markets, framing the category as complementary to its sportsbook business rather than a replacement. The company reported DraftKings Predictions had its biggest weekend yet. "Driven by the NBA Finals and the start of the World Cup, total customers grew over 200% compared to the prior weekend," the company said in a news release.

Fanatics is another major sportsbook operator watching the space closely as sports trading moves from niche prediction markets toward mainstream wagering behavior.