Let's Talk About Prediction Markets

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The Rise of Prediction Markets in Sports

You couldn’t always trade on sporting events with prediction markets.

What started as a way for traders to capitalize on economic changes, politics, or pop culture has found, unsurprisingly, what the true cash cow is.

Betting on sporting events.

In one week of the NFL season, Kalshi had more trading volume than it had on the entire US election.

Because prediction markets are CFTC-regulated, they are operational in all 50 states, and with fewer hurdles to jump through than licensed sportsbooks, everyone is trying to get into the mix. 

What This Means for Sports Bettors

While there is considerable debate about whether prediction markets are beneficial or detrimental to the sports betting industry, one thing is sure.

As of now, they are here to stay.

There are certainly benefits for sports bettors who are now “trading” sports bets on these exchanges and in these markets.

Since you are not betting against the house and are now trading against other people, or, in some situations, major financial institutions, there are better prices available, meaning there is more EV, meaning users can realize a higher ROI.

That is only half the equation.

Sports betting is a zero-sum game. If you win, the house (or in this case, the other party) loses, and vice versa.

While some sportsbooks are sharper than others, the same applies to trading. Although better prices are often available on these platforms, you are usually going against sharper traders.

In every trade, there is a winner; there is also a loser.  

So, does this make the prediction market model better or worse for the industry?

Whether you believe prediction markets are beneficial or detrimental to the industry depends on your perspective.

As a sharp sports bettor or an originator, prediction markets are amazing. Set your own price, have access to high liquidity, and find yourself in more +EV spots.

There is more transparency in these markets, lower fees, better odds, and it's more widely available.

However, the real danger of prediction markets comes from using them as a source of truth.

Randomness runs rampant in sporting events and sports betting, but it’s also a fundamental aspect of the world we live in.

Just because a prediction market indicates that the odds of a sporting event, a political race, or an economic factor are likely to occur, that does not mean it will happen.

While prediction markets could become a better sportsbook for bettors to devig from to find a better estimation of true odds, the pricing in these markets is not the end-all be-all.

Prediction markets offer bettors a better way to bet, but not everyone can win. They are a positive for the industry. With even sportsbooks trying to launch their own offerings, it will be interesting to see how the industry continues to innovate.

Let’s Get This Straight

Every week, we dissect a relevant sports betting topic to determine its validity.

Future Bets are Almost Always -EV

A lot of people love betting on futures. We get it, it’s nice to see your favorite team do something good, or it’s nice to have your opinion validated, and get paid for it.

Here’s the reality:
The money you’re tying up could be working for you now.

Sports betting is not like investing in the stock market, and having a portfolio of futures is not the same as a portfolio of securities.

Sports betting gives you the unique opportunity to compound your bankroll daily instead of yearly. Bettors can make an average return of 7% every single day, increase their bankroll, and do that for an entire year.

(Winning 7% every day is not possible; there will be down days, but the point stands)

Instead of tying up too much money in futures, let your bankroll work for you now.

Oftentimes, the future price you love today will be even better tomorrow.

Featured Platform Spotlight: Novig

Every week, we highlight one of our trusted tools or platforms that helps our readers become better and more profitable sports bettors.

Novig is at the forefront of the prediction market movement in the US, and it’s one of the best platforms in the industry.

Read our full overview of Novig.

With the lowest vig in prediction markets, no fees, impressive market offerings, parlays, player props, and more.

Novig’s app provides real-time data, including odds history and traded volume, allowing you to analyze market trends before placing a trade. For example, you can see how NFL spreads shifted over time or check liquidity for a tennis match.

Novig’s low-vig exchange is an ideal choice for sharp and recreational bettors. We use it ourselves, and it’s a platform worth signing up for.

$25 purchase match promo code: BETSMART