Sports prediction markets explained: how Kalshi and Polymarket sports betting works, and how it compares with sportsbooks

Sports prediction markets let you trade contracts on game results instead of betting against a bookmaker. A contract on "Chiefs win on Sunday" pays $1 if they win and nothing if they lose; its price, say 62¢, is the market's estimate of the chance. You trade it with other people on a federally regulated exchange such as Kalshi or Polymarket US, you can sell before the final whistle, and the exchange earns a fee rather than profiting from your losses.

In two years sports went from nothing to most of the money in prediction markets. That growth has put the industry on a collision course with state gambling regulators, sportsbooks and the leagues themselves, in a fight that may end at the Supreme Court. This guide explains how sports contracts work, what they really cost compared with a sportsbook, where you can use them, and what could change.

Figures, fees and state availability as of 22 October 2026. State rules on sports contracts change month by month; the app you use checks your location.

Sports prediction markets in numbers

Pew Research Center's analysis of data from The Block shows how fast it happened. Kalshi launched sports contracts in January 2025; by autumn 2025 sports were about 90% of its volume. In June and July 2026, with the World Cup, sports trading topped $58 billion on Kalshi and neared $22 billion on Polymarket. Pew notes that in the first quarter of 2026, prediction market sports volume was roughly on par with the $40 billion Americans wagered at legal sportsbooks.

One caveat: "notional" volume counts every contract at its $1 face value, so a 10¢ contract counts ten times what it cost. The comparison with sportsbook handle is rough, but the direction is not in doubt.

How a sports event contract works

Every sports market is a question with a yes-or-no answer, priced between 1¢ and 99¢:

1. You buy at the current price. At 62¢ a contract, $100 buys about 161 contracts (before fees).
2. The price moves during the week or the game as injuries, line-ups and the score change. You can sell at any time to someone who wants to buy.
3. At the end, winning contracts pay $1 and losing ones $0. 161 winning contracts pay $161: a $61 profit before fees (how payouts work).

What you can trade depends on the platform, but the main kinds are:

• Game winners, the equivalent of a moneyline bet.
• Spreads and totals on many games: "Bills win by more than 3.5", "over 47.5 points".
• Futures: who wins the Super Bowl, the NBA title, the World Series, the MVP award.
• Combos (parlays): one contract that pays $1 only if every leg wins (parlays explained).
• Player and in-game markets on some platforms, the area critics worry most about for integrity.

Reading the price as odds is simple: the price is the chance. 62¢ is 62%, or about −163 in American odds and 1.61 in decimal (how to convert odds).

Prediction markets vs sportsbooks

The first three rows are the heart of it. A sportsbook profits when you lose; an exchange profits when you trade. That is the core of the argument that prediction markets are markets, not casinos, and also why critics say the difference is technical (is Kalshi gambling?).

What it costs: fees vs the vig

Sportsbooks do not charge a visible fee. Their cost is built into the odds: on a typical game both sides are priced at −110, so you risk $110 to win $100. Over many fair coin flips that costs you about 4.5% of every dollar staked. Exchanges show their cost as a fee instead (Polymarket's fee schedule, Kalshi vs Polymarket fees). Here is the expected cost of the same $100 bet on a 50/50 game:

So exchanges are usually cheaper on a coin-flip game, and much cheaper if you use limit orders. But the exchange figures leave out the spread (the gap between the best buy and sell prices), which takers also pay; on a busy NFL game it is a cent or less, on a small market much more (slippage and spreads).

There is a catch for longshot fans. Exchange fees are charged per contract, and longshots are cheap contracts, so as a share of your stake, fees are highest on longshots:

A 10¢ underdog on Kalshi costs about 6.3% of your stake in fees, a 90¢ favourite 0.7%. Longshots are also usually overpriced to begin with (the favourite-longshot bias), so the two effects stack (how to calculate expected value).

Combos are the extreme case. Data published on Kalshi's combos in 2026 showed the average combo priced at about a 9% chance, against over 40% for single markets, and Polymarket charges combos a 0.05 taker rate whatever their legs. Every leg adds another chance to lose and another slice of margin.

What you can trade right now

Football is the biggest draw. In its brief to the Supreme Court, the NFL said about $1.8 billion of the $3.3 billion traded on prediction markets on the opening Sunday of the 2026 season was tied to its games.

Season-long futures trade all year. The Super Bowl market shows how closely the two biggest exchanges track each other:

Other big markets as of 22 October 2026:

Live and in depth: World Series odds · NBA championship odds · Super Bowl odds · all sports markets. Price gaps like the 49ers' 1.5 points are why traders keep accounts on both (prediction market arbitrage).

Where sports prediction markets are legal

This is where it gets complicated. The exchanges are regulated by the CFTC, a federal agency, and argue that federal law preempts state gambling laws for contracts listed on them. Many states say sports contracts are simply unlicensed sports betting. The result is a patchwork:

• States with no legal sports betting, such as California and Texas, are where prediction markets matter most: about 11 states have no legal sports betting market at all, and in most of them sports contracts are available (Kalshi in California · Kalshi in Texas).
• Nevada: Kalshi is not available after the state's federal court wins (Kalshi in Nevada).
• Washington: a state court order in August 2026 led Kalshi to block sports, election and other event contracts (Kalshi in Washington).
• Michigan: sports contracts blocked by a court order (Kalshi in Michigan).
• Ohio: the state ordered ten operators to stop by 16 October 2026; most kept going while the case continues (Ohio's deadline).
• Massachusetts: a state court order against Kalshi's sports contracts.
• Connecticut: orders against ProphetX, Underdog and others in September 2026.
• Missouri: cease-and-desist letters to six operators on 18 September 2026; Crypto.com and Novig sued the state.
• Tennessee: a cease-and-desist to Underdog on 9 October 2026; Underdog sued four days later (Underdog vs Tennessee).
• Utah: sued Kalshi and two Susquehanna firms on 20 October 2026, seeking up to $61 million (Utah's lawsuit).
• Illinois: a federal judge blocked the state from enforcing its new prediction market rules against Kalshi and Coinbase on 2 October 2026 (Illinois ruling).
• California tribal lands: after a Ninth Circuit ruling for three tribes, Kalshi blocks their reservations.

On top of the law, the apps set their own rules. DraftKings and FanDuel generally offer sports contracts only in states where they do not run a licensed sportsbook, and FanDuel has said it will stop sports contracts in any state that legalises online sports betting. Novig serves 47 states and DC, ProphetX 49. State by state: is Kalshi legal in your state · Florida · New York · Georgia · Ohio · Utah.

The court fight, and why it may reach the Supreme Court

The legal question is narrow but decisive: are sports event contracts swaps under the Commodity Exchange Act, which only the CFTC regulates, or wagers, which states regulate? Appeals courts have split, which is the classic reason for the Supreme Court to step in, though it is not expected to decide whether to hear the case before December. A final CFTC rule calling them swaps would strengthen the platforms' hand, but states argue an agency cannot turn gambling into derivatives by definition (the CFTC proposal · the NFL's brief).

For traders, nothing changes until a court or the CFTC acts: availability depends on your state, and enforcement so far has targeted platforms, not users.

What could happen next

1. The Supreme Court takes the case and sides with the states. Sports contracts would fall under state gambling law. Expect platforms to geofence sports in states that object, as Kalshi already does in Nevada, Washington and Michigan, and to seek state licences where they can. Non-sports markets would be largely unaffected.
2. The Court sides with the platforms, or the CFTC's swap rule becomes final and holds up. One federal market for sports contracts nationwide, with age, integrity and advertising rules set by the CFTC. States would lose most of their leverage, and sportsbook companies would lean further into their own prediction apps.
3. The Court declines to hear it. The circuit split stays, so where you live keeps deciding what you can trade, and the state-by-state lawsuits continue.

Whatever happens, the CFTC's role grows. Its October 2026 proposal also says sportsbook bets and casino games are not swaps, drawing a line between exchange-traded contracts and the house-banked products states license.

Integrity: the leagues' worries

Sports leagues have mostly welcomed legal sportsbooks, which share data and monitor suspicious betting. Prediction markets are newer and federally regulated, and the NFL's brief spells out its concerns: contracts a single player could influence, such as a missed field goal; a regulator, the CFTC, with about 543 employees to police markets nationwide; and a minimum age of 18 rather than 21.

The exchanges reply that every account is identity-verified and that trades are recorded and visible to surveillance. Insider rules apply to athletes too: Giannis Antetokounmpo, who owns a small stake in Kalshi, may not trade any NBA market (Giannis and Kalshi).

Who is on the other side of your trade?

On an exchange there is no house, but that does not mean your counterparty is another fan. Much of the liquidity on sports markets comes from market makers: professional trading firms that post buy and sell prices on thousands of contracts at once and earn the spread. They are why a mid-week NFL game has a tight market, and why prices on Kalshi and Polymarket rarely drift more than a point or two from the sportsbooks' consensus.

The biggest firms are also becoming owners. Robinhood's own exchange, Rothera, is a joint venture with Susquehanna, one of the largest options trading firms, and Utah's October 2026 lawsuit named two Susquehanna entities alongside Kalshi. ProphetX, by contrast, has said it will not run an affiliated trading arm that takes positions against the public.

What it means for you:

• Prices are efficient on big games. Beating a market that professional firms are making is hard; your edge, if any, is more likely in smaller markets or in information they do not have yet.
• Your order meets theirs. A market order buys at the market maker's offer. A limit order lets you be the one earning the spread.
• Nobody limits you for winning. Market makers adjust their prices, not your account.

Sports prediction markets outside the US

The global Polymarket exchange lists sports from football and cricket to Formula 1 and esports, with combos since June 2026, but it is closed to US residents and close-only in the UK, France, Germany, Australia and other countries (where Polymarket is legal). In countries with regulated betting, the closest equivalent is a betting exchange such as Betfair Exchange or Smarkets, where you back or lay outcomes against other users and the exchange takes a commission on winnings (Polymarket alternatives). The economics are the same as on a prediction market: you trade with other people, not against the house.

Sports prediction market apps compared

Reviews: Kalshi app · Robinhood · DraftKings Predictions · FanDuel Predicts · Underdog · Novig · ProphetX · Coinbase. The overall ranking across sports and everything else: the best prediction markets.

How to trade sports contracts well

1. Use limit orders. They cut fees to a quarter (Kalshi) or zero (Polymarket) and stop you paying the spread (limit vs market orders).
2. Compare prices across exchanges. A point or two on every trade is real money over a season (spread scanner).
3. Be wary of longshots and combos. Fees take the biggest share of cheap contracts, and longshots tend to be overpriced.
4. Trade before the game, not only during it. Live markets move fast and spreads widen; a market order mid-game can fill far from the last price.
5. Sell when the price reaches fair value. You do not have to wait for the final whistle: locking in a profit early frees money for the next game (hedging).
6. Size bets for the long run. Even a real edge loses often; the Kelly criterion caps how much to stake (Kelly criterion · Kelly calculator).
7. Know how a market settles. Overtime, postponements and a player who does not play are handled by each market's rules, not by sportsbook conventions (how markets resolve).
8. Keep records for taxes. How sports contract profits are taxed is not settled; keep every statement (Kalshi taxes).

If it stops being fun, step away: the National Problem Gambling Helpline is 1-800-GAMBLER, whatever the legal label on the app.

Sports prediction markets: frequently asked questions

Is Kalshi sports betting legal?
Kalshi is federally regulated and offers sports contracts in most states, but several states say they are illegal sports betting, and courts are split. Kalshi blocks what it cannot offer where you are.

What is the difference between prediction markets and sports betting?
On a prediction market you trade contracts with other people and the exchange charges a fee; at a sportsbook you bet against the bookmaker, who builds a margin into the odds. Prediction markets are regulated federally, sportsbooks by states.

Are prediction markets cheaper than sportsbooks?
Usually, on evenly matched games: a Kalshi market order costs about $3.50 per $100 at 50¢ against roughly $4.55 of vig at −110, and limit orders cost far less. On longshots, exchange fees take a bigger share of the stake.

Can I bet on sports on Polymarket in the US?
Yes, through Polymarket US, the regulated US exchange, subject to state availability. The global Polymarket site is closed to US residents.

How old do you have to be to trade sports contracts?
18 on Kalshi and most apps, 21 on Novig and in some states (age rules).

Do prediction markets limit winning traders?
Exchanges have no reason to, since winners are paid by other traders. Accounts can still be restricted for breaking rules, such as insider trading.

What are the biggest sports prediction markets?
NFL games and the Super Bowl, then the World Cup, the NBA and the World Series.

Keep reading

• Is Kalshi gambling? Prediction markets vs sportsbooks
• Is Kalshi legal in your state?
• Can you parlay on Kalshi or Polymarket?
• Super Bowl odds on Kalshi and Polymarket
• DraftKings Predictions review
• The best prediction markets
• Election betting odds: the complete guide
• Polymarket fees vs Kalshi fees