A sportsbook sets the odds and takes the other side of your bet; a prediction market matches you with another person and takes a small fee. That one difference drives everything else: a −110 line costs you about 4.5% whatever you do, while an exchange fee is a cent or two per contract and zero if you post a limit order; you can sell an exchange position any time, at a market price; the age is 18 instead of 21; and exchanges operate in states with no sportsbooks, which is why those states are suing.
Who sets the price
Sportsbook: the book posts −110 on both sides of a spread, adjusts to balance its risk, and limits or bans winners. Its edge is in the line.
Prediction market: traders post bids and offers; the price is wherever buyers and sellers meet. The operator (Kalshi, Novig, Polymarket) never takes a side. There's no reason for it to limit winners; their trades are its fee revenue.
What it really costs
| Sportsbook (−110 / −110) | Kalshi (50¢ contract) | Novig (pre-game) | |
|---|---|---|---|
| Implied cost | ~4.5% of stake | 1.75¢ = 3.5% of stake (taker) | 0% |
| As a maker | n/a | 0% | 0% |
| Break-even win rate | 52.4% | 51.75% (taker), 50% (maker) | 50% |
The gap is smaller than exchange marketing suggests if you always hit the market, and larger if you post limit orders. Sportsbook promotions (boosts, bonus bets) can temporarily beat either, with conditions.
Getting out early
At a sportsbook, a bet is locked unless the book offers cash-out, at a price it chooses. On an exchange you own a contract you can sell to anyone at the current price, so you can take profit, cut a loss or hedge before the game ends. Liquidity permitting; thin markets have wide spreads.
Parlays
Sportsbooks multiply their already-margined odds and often shave more. Exchanges price combos from live market prices, via market makers responding to your request (Kalshi, ProphetX) or built from the legs (Polymarket). The result is usually better odds, sometimes a lot better, at the cost of thin liquidity on the combo itself. See Kalshi combos.
Age and place
- Age: sportsbooks are 21+ almost everywhere. Kalshi, Polymarket, Robinhood, Coinbase, FanDuel Predicts and DraftKings Predictions are 18+; ProphetX 19+; Novig and Fanatics Markets 21+.
- Place: a sportsbook needs a licence in your state; roughly a dozen large states have none, including California, Texas, Georgia and Florida (which has only Hard Rock Bet). Exchanges operate there under federal law. That's where most of the volume growth has come from.
The legal fight, in one paragraph
States say a contract on who wins the game is a bet and they license bets. The exchanges say it's a swap on a federally regulated exchange and states can't touch it. The Third Circuit agreed with the exchanges (New Jersey, April 2026); the Ninth Circuit agreed with the states (Nevada, August 2026); the Supreme Court has been asked to decide. Until it does, sports contracts can disappear from an exchange in your state by court order, which has happened in Nevada, Michigan and Washington. Full detail: Is Kalshi gambling?.
Which to use
- You want promotions, props on everything, live betting on every game, and you're 21+ in a licensed state: a sportsbook still does more.
- You want the lowest cost, the ability to sell early, and you're 18+ or in a state without sportsbooks: an exchange.
- You want both: most people who try an exchange keep the sportsbook for promos and use the exchange for the bulk.