Since prediction markets became more widespread in the United States, more people are likening them to sportsbooks. This is understandable, as both platforms allow you to forecast the possible outcome of sports events.
However, when you look closer at prediction markets vs sportsbooks, there are several distinctions between them. Those differences are what we will discuss in this guide. We will provide an overview of how prediction markets and sportsbooks differ in market structure, pricing, payouts, and, most importantly, the regulations that guide each one. Keep reading to learn more.
Quick Facts About Prediction Markets and Sportsbooks
Prediction markets are not sportsbooks. They do not support conventional betting.
At prediction markets, you trade contracts on various events, not just sports.
Sportsbooks usually have more coverage for sporting events than prediction markets.
What Is a Prediction Market?
A prediction market is an online platform where you trade on the outcome of real-life events. Such brands use a simple Yes/No format, allowing you to choose whether or not an event will happen. So, instead of placing traditional bets, you buy and sell shares or event contracts tied to specific outcomes like the winner of the next Primary elections.
What Is a Sportsbook?
A sportsbook is a gambling platform where you place bets on the outcome of sports events. These operators set the odds for each event and then offer you a wide range of markets, such as match winners, totals, spreads, and player props.
Prediction Markets Vs Sportsbooks: Key Differences Between the Two
We’ve given a brief overview of both prediction markets and sportsbooks. Now, let’s look closer at each one so you have a better idea of what differentiates them:
Event Coverage
The best
prediction market apps
and websites offer event contracts for various categories. You can trade on outcomes of politics, economics, crypto, entertainment, weather, and sports. This is unlike sportsbooks that focus mainly on sporting events. So, you have markets for games like soccer, basketball, and baseball; nothing about other common categories that are available on prediction markets.
Markets
Here is a typical example of what you will find under sports on a prediction market:
Tampa Bay vs Cleveland
Cleveland wins by over 1.5 runs
Yes (41 cents), No (61 cents)
Over 7.5 runs scored
Yes (49 cents), No (54 cents)
There might be options like spreads and totals on prediction markets. However, they still follow the binary format where you trade Yes or No Contracts. For instance, you can buy Yes contracts on Cleveland to win by over 1.5 runs. Meanwhile, at sportsbooks, you are betting directly on the odds for each market. You could have +149 for the same market of “Cleveland wins by over 1.5 runs.”
Pricing and Odds
When you read
prediction market guides, you will see that these platforms do not have traditional betting odds. Instead, you trade contracts with other users, and the prices reflect the likelihood that an event will occur.
For each event contract, the price ranges from 1 to 99 cents. So, if a Yes contract is priced at 49 cents, it means there is a 49% chance the event will occur. You get a $1 payout for every accurate prediction.
Meanwhile, sportsbooks set their own odds and do not use a peer-to-peer approach like prediction markets. On sportsbooks, your payout for correct bets depends on the odds you backed and the amount you wagered.
Legality in the US
In the US, prediction markets are treated as commodity or derivatives platforms that the Commodity Futures Trading Commission (CFTC) regulates. Since they are overseen at the federal level, they can operate even in states where sports betting is banned. On the other hand, sportsbooks are regulated at the state level as gambling operators.
Hits and Misses of Prediction Markets in Comparison to Sportsbooks
There are several benefits to using prediction markets in the United States, but there are also a few drawbacks to note when you compare them to sportsbooks. We’ve summarized these pros and cons below:
Pros and Cons
Widely available in the US
Offer contracts for other events, not just sports
Easy trading format for beginners
Sports coverage is limited compared to sportsbooks
Prediction Markets or Sportsbooks, Which Should You Choose?
Prediction markets and sportsbooks cater to different audiences, so it depends on what you want. While sportsbooks are great for just sports events, prediction markets allow you to trade outcomes on a broader level. Keep in mind that a prediction market is not an “alternative” to a sportsbook. They are very different types of platforms, and it’s up to you to choose the one you prefer. If you are interested in prediction markets, you can check out the list on this page to find the best ones.
Check Out These Top Sports Prediction Market Sites
Prediction Markets Vs Sportsbooks FAQs
No, prediction markets are not betting sites. On prediction markets, you trade event contracts, not place sports bets.
Yes, they are, provided you use regulated and secure brands.
This depends. While some prediction markets operate exclusively through apps, others have fully functional websites.
