Prediction Markets are red hot – everyone is now trying to jump on board. Although federally regulated as trading financial futures lets call it for what it is – betting. Gambling. And with federal law superseding state law it is breaking the gambling monopoly held by states, Indian Tribes, and the well known Vegas type casinos.
I think it’s great.
In California the Indian Tribes have held-up sports betting and fun for the masses for years to protect their own casino profits and now they’re going to get run over. No tears here.
So let’s look at a few prediction markets:
Summary
Lowest to Highest Fees for Sports Prediction Markets
1. Polymarket (When it re-enters the US)
2. Kalshi
3. Crypto
4. Robinhood
Polymarket – The largest in the world is just re-entering the US market after taking care of regulatory issues. My current understanding is trading fees will be near zero at .01 percent. No fees for deposit or withdrawals.
I don’t know if there will additional ‘exchange fees’ or ‘gas fees’ for tracking on a crypto blockchain. But Polymarket will likely destroy much of the competition in the US with its almost free trading – assuming it can be as user friendly as alternatives.
Kalshi – Already available in the US Kalshi offers a wide range of predictive trades.
The fee structure, though, is a convoluted financial equation resulting in significantly different rates depending on the likelihood of the trade. Consider fees to be somewhere between 1 and 2 cents, but can be substantially higher for since contracts. Basically, 50/50 trades are very expensive and trades with 85/15 or higher odds are very cheap. HOWEVER, if you trade a lot of contracts at once, such as 100, then Kalshi’s fees become a substantially smaller percentage.
I signed up but the identity verification process was broken. But even if that gets resolved, I’m not sure due to the weird fee structure, and Polymarket almost being free, if there is a strong future for Kalshi. It may be big now – because Polymarket has not been in the US – but it may not last.
Robinhood – Easy to use but fees are 2 cents for $1 contract, which makes trading high/low risk events impossible, and can take a high percentage of winnings. It results in weird events where a 99%/1% trade is offered, but it can’t be made use of because one would lose money by paying a 2 cent fee where the max payout is 1 cent.
The 2 cents is 1 cent to Robinhood and 1 cent to Kalshi which is used for trades.
I wouldn’t be surprised to see Robinhood reduce fees in the future. It has a larger business enabling it to be more competitive for prediction markets.
Crypto – Crypto has $1 and $10 trading contracts. Crypto’s fees are hidden from easy access – they can be found here. The fee for a $1 contract is 2 cents. The fee for a $10 contract is 10 cents if you lose and 20 cents if you win.
Note that Crypto currently talks about “waiving” other fees, meaning it is setup to impose additional higher fees in the future.
The Crypto website says sports trading is only allowed before an event starts. But looking at individual games it shows in game fluctuating odds and suggests one can trade until the end of the game. I think part of their website may be outdated as only allowing sports trades before a game starts would be a huge negative. Other markets like Robinhood let you trade until the game ends thus enabling you to better target the odds you want and to make additional in-game trades to reduce risk or reduce a loss by creating a second trade for the other team.
The number of events shown on Crypto is small – which is a huge problem.
Crypto fees are cheaper than Robinhood because it has a 50% lower fee when you lose. Fees for winning are the same for Crypto and Robinhood
PredictIt – No sports trading it is mainly for political events.
Maximum trade amount is $3500. No fee to create a trade, but if you win PredictIt takes 10 percent of your winnings. It then takes another 5 percent as a withdrawal fee.
The fees are very high. And unlike sports events which are quickly over, it can take years to know the outcome for a political bet. PredictIt only makes sense if you get incredible odds and wait on the outcome and afford a 15% fee. But you’re also up against a $3500 limit so no big payouts. Personally – no.
Coming Soon …
Fanatics, Fanduel, DraftKings, Truth Social and more
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