Arbusers

The biggest betting event of 2024 was, by far, the US Presidential elections. For years, the only reliable exchange offering this event was Betfair, and it offered a lot of arbitrage positions against the traditional bookmakers.

In today’s reality, the sophisticated bettor wants even more options, able enough to sustain bigger volumes, cross market arbitrage, and high volatility trading. The market demonstrated the need for new platforms, and a number of them made an impressive entry, in combination with a booming US gambling market. In this thread, I will compare Polymarket, Predictit and Kalshi, the most prominent platforms in the prediction market landscape, each offering unique features and experiences.


Odds

In smart betting it always comes down to the odds. Polymarket keeps a clear advantage here as it operates with almost no trading fees, allowing users to buy and sell shares freely (in reality it is the same like backing and laying an outcome). However, it charges a 1.5% withdrawal fee when users cash out their USDC. Since Polymarket is built on Polygon, network transaction fees are minimal. I will explain the fee structure of Polymarket in a future post.

Kalshi charges a trading fee of 1% per contract (capped at 10% of net profits), and has in place a settlement fee of 10% on net winnings when a contract resolves in a trader’s favour. Deposit and withdrawal fees vary depending on the payment method you choose.

PredictIt has one of the highest fee structures, with a 5% fee on profitable trades and an additional 10% withdrawal fee on any funds withdrawn. These high fees significantly impact long-term profitability.


Polymarket is the most cost-effective for all kind of bettors, while Kalshi comes with moderate fees. PredictIt is the most expensive, making it less attractive for high-volume trading. Polymarket holds a clear advantage here.


Reliability

Kalshi is a fully regulated platform, operating under the oversight of the Commodity Futures Trading Commission (CFTC). This regulatory compliance ensures a high level of reliability and legal assurance for users. PredictIt also operates within a regulated framework, focusing primarily on political events. However, it has faced legal challenges that have impacted its operations to a certain extend. Polymarket, operates in a regulatory gray area as there is no regulation mentioned in their website. This lack of formal regulation can pose some risks related to market manipulation and legal uncertainties, as we have seen recently.


User Experience

Polymarket, utilizing blockchain technology, offers a decentralised platform that appeals to users interested in a broader range of markets and real-time data. It takes advantage of various narratives and stories that circulate in social media, and when they see a growing trend they come with a betting event. The range of markets is unlimited, some times even funny. The requirement to use cryptocurrency (USDC) for transactions may be an obstacle for some users unfamiliar with digital assets. In Kalshi users can trade on a variety of events using fiat currency, making it accessible to a broader (old fashioned if I am allowed to say) audience. The available markets are limited compared to Polymarket’s. Predictit also operates with traditional fiat currencies, making it accessible to a broader audience, but at the same time it makes it more expensive, as their fees are higher compared to Polymarket. Again, the range of the offered events is limited.


Conclusion

Each platform presents distinct advantages and considerations:

Polymarket excels in offering a wide array of markets with substantial trading volumes, benefiting from real-time data and decentralised operations.
Kalshi provides a secure and regulated environment, appealing to users who prioritise legal compliance and a user-friendly experience.
PredictIt serves those interested in political event trading within a regulated framework but may face limitations due to its niche focus and regulatory hurdles.

You should consider your priorities regarding market diversity, regulatory assurance, and transaction methods when choosing a platform that best suits your needs. In my view, Polymarket holds a clear advantage and it is a must have exchange. You could also use all 3 of them in order to get the best available odds at any given time. Some times, the offered markets create arbitrages between the exchanges, but you ll have to compete with massive bot action that scoops up everything.

It seems to me a very long and painful battle over the legality of prediction market platforms is ahead. The pie is big and everyone looks for the lion's share.

I believe there will be at least 6 prediction market platforms until the end of 2026, all competing against each other, and against regulation. In my view Polymarket holds a significant advantage simply because it has access to unlimited funding (P. Thiel). Funding will be needed in case of a recession of the economy.

I am wondering if any of the very big names, Amazon, Apple, Google, Meta, Musk etc, will make a move in the gambling sphere.

arbusers wrote: ↑

Thu Apr 03, 2025 2:35 pm

It seems to me a very long and painful battle over the legality of prediction market platforms is ahead. The pie is big and everyone looks for the lion's share.

And if this legal battle ends at a point... this will mean that DraftKings and Fanduel will also offer prediction markets platforms.

I'm a big fan of polymarket and a very active user there since years. At this point no fees are quite +EV in my opinion. I bet on really a lot of markets and even a small advantage can be profitable this way. Scalping is also a good strategy on polymarket while otherwise you pay the spread at bookmakers. They are even giving free money away to put up limit orders on the exchange... (not sustainable forever)

The main downside is the rules are sometimes really bad of markets. Then there is a big discussion about little wording of the rules. And it's not clear how they are going to resolve markets, sometimes they go with the spirit of the market sometimes not. So watch out for this, newbies probably lost lots of money to the regulars by this. Nothing is a lock when it comes to disputes.

I do wonder tho what their plan is because exchanges are not that profitable to run compared to bookmakers. Can they sustain no fees forever? I heard they want to make some media company that uses the predictive power of the exchange to offer better news (more accurate) then mainstream media. No idea how they are going to exactly monetize that. I think for that reason eventually it might fail. I could see them launch a cryptocoin at a certain point that you will be able to stake. Then if you own a certain amount and have it staked you get very low fees or zero fees. This will be a way to cashout for polymarket investors, dump the coin and cash out. The usual altcoin story.

I think that exchanges in general have really high fees in the gambling industry. Like 5% on winnings on betfair, that is quite a lot if you ask me. Imagine paying that much to your broker when buying stocks. No wonder then most eventually lose and quit. You can only win if you know quite well where the price should be and it's also mispriced enough or with some very good trading skills maybe (botting etc.).
Like, i think the skill level is somewhat lower on polymarket then betfair, no idea if that makes sense? The fees alone. And also betfair is quite a ghosttown, orders only get matched when it was a wrong price. It seems exhausted with sharp action to me. If you put up orders at value prices they rarely get hit, but wrong odds always do. I think exchanges need a certain amount of fish or otherwise market making is not profitable because you get screwed by sharps. Then nobody puts up liquidity anymore, gamblers leave and it becomes a ghost town. Like when news comes out and your orders get taken, based on this new information. Then this bet that was originally +EV is now -EV. I think on betfair this happens quite a lot.

Another problem with high fees on exchanges: it makes it hard to be competitive with sharp books. Because if you pay 5% on the winnings, then trade it at similar odds like pinnacle does, that is a handicap in some way. Because exchanges are also competing with other places to offer the best odds. With no trading fees and like 1% spreads they are the best odds compared to other places most of the time. So there is a lot of action taking place.

Sx.bet is btw also doing great things imo. This is focused on sports but they have zero fees. They are working to offer more markets in the future. The problem right now there is they don't allow for a function to back both sides of a bet and cashout. Like if you bet both sides of a coinflip at 49% chance, that is a no risk bet. On polymarket you can merge shares in such case and get money back instantly, sx.bet should also offer something like this. Otherwise it's not really worth it to put up much liquidity and play for bookmaker. If they ever implement this in an update i might give market making a shot because i think with zero fees some scalping strategies should in theory work. A bit similar to what bookmakers are in essence doing.

If polymarket does ever charge fees i will probably have to be more selective on what i bet again and bet the bigger value plays only. Now i just like to trade a lot.

arbusers wrote: ↑

Fri Apr 11, 2025 6:47 pm

arbusers wrote: ↑

Thu Apr 03, 2025 2:35 pm

It seems to me a very long and painful battle over the legality of prediction market platforms is ahead. The pie is big and everyone looks for the lion's share.

And if this legal battle ends at a point... this will mean that DraftKings and Fanduel will also offer prediction markets platforms.

I heard Kalshi is being sued because they are offering sports events. Originally they argued that prediction markets should be legal because it offers predictive value and things like that. But now if they offer sports markets they are one competing with bookies who try to shut them down. So they also would fall under the same regulations as bookies.

But then other hand where do you draw the line. When is it investing, trading or gambling? What are prediction markets really? To me polymarkets are mostly like special derivative markets as options. But then once you offer sports is it still a prediction market or are we sports gambling?

arbusers wrote: ↑

Sun Apr 06, 2025 10:24 am

I believe there will be at least 6 prediction market platforms until the end of 2026, all competing against each other, and against regulation. In my view Polymarket holds a significant advantage simply because it has access to unlimited funding (P. Thiel). Funding will be needed in case of a recession of the economy.

I am wondering if any of the very big names, Amazon, Apple, Google, Meta, Musk etc, will make a move in the gambling sphere.

I don't think it makes that much sense for say an apple, they have absolutely nothing to do with it. And gambling could maybe ruin their image. But what i am more sure about, at a certain point bookmakers will also try to get in on it. Robinhood i think is now starting to offer sports markets? At least i heard something about it. They where also looking into prediction markets. Interactive brokers offered bets on the election last year, if i'm correct for the first time ever. They already have the infrastructure. I think mostly the legal framework is missing.