Prediction Markets vs Sports Betting: Which Internet Capital Market Will Prevail

In 2026, the line between financial instruments and sports betting is blurring faster than regulators can keep up with. On the one hand, there are bookmakers with decades of infrastructure and licences. On the other, there are prediction markets, which in just two years have evolved from a niche experiment into platforms with a turnover in the tens of billions of dollars. The question of who will win this race has no simple answer – but the answer will determine the future of online betting.

Prediction market explained

Prediction markets are exchanges where participants trade binary contracts on the outcomes of real-world events. The contract price, ranging from $0.01 to $0.99, reflects the market probability: if the market estimates the probability of an event at 60 per cent, the contract is worth around $0.60. If the event occurs, the contract is settled at $1; if it does not, it is settled at $0.
 

The key difference from a bookmaker is that here you trade against other participants, and the platform acts as an exchange rather than a counterparty. There is no bookmaker’s margin built into each odds figure – instead, there is a transaction fee, just like on a stock exchange. Pricing is transparent: there is an open order book, all orders are visible, and the price is determined by supply and demand. If you change your mind, you can sell your position at any time before the market closes.
 

To explain in simple terms how do prediction markets work, they are like a stock exchange for predictions. Instead of shares, there are contracts on whether a team will win, whether a bill will pass, or whether Bitcoin will reach a certain price. Politics, economics, sport, cryptocurrencies, culture – the categories are not limited to any single area.
 

The key platforms in 2026 are Kalshi, which is regulated by the CFTC and trades in dollars, and Polymarket, which operates in USDC. The combined monthly trading volume of the two platforms exceeded $50 billion by July 2026.

What is the bookmaker model?

A traditional bookmaker is the house against which you place your bets. The odds are set by the operator itself, with a margin of between 1.5 per cent and 10 per cent built in. This means that even in a perfectly balanced market, the punter is at a disadvantage due to the built-in commission.
 

The bookmaker model has its strengths. Decades of regulated infrastructure, extensive coverage of sports leagues, a familiar interface, and instant payouts after the match. But there are also limitations: bookmakers cap the winnings of successful punters, close accounts when punters are consistently in profit, and do not allow punters to close a position before the event has ended. Regulation takes place at state and national level – taxes, licences, and mandatory KYC.
 

It should be noted that the market is gradually offering new solutions. Some bookmakers are moving away from mandatory player verification, offering a more private betting experience. However, not all operators do this, and the majority still operate with mandatory verification.
 

Sports betting remains the largest online entertainment market: global revenue for 2026 is estimated at $178 billion, with a forecast of $394 billion by 2035. Europe and North America account for 70 per cent of total global activity.

A comparison of the two models

The table below compares prediction markets vs sports betting in terms of key parameters.

A Keyrock-Dune study of over 5,000 identical markets has shown that prediction markets offer, on average, 77 per cent better odds than bookmakers. The advantage is particularly significant in the 40–70 per cent probability range, where the bookmaker’s margin is at its highest. However, in terms of regulatory maturity, bookmakers are still ahead – decades of licensing and consumer protection have built up a level of trust that prediction markets regulation is only just beginning to establish.

The 2026 World Cup as a turning point

The 2026 FIFA World Cup became the biggest event in the history of prediction markets. Kalshi processed $37.7 billion in July – a 14 per cent increase on June – of which $1.9 billion was attributable to the final. Polymarket processed $12.9 billion, of which $4 billion was in the winner’s market. In total, the sector reached $50.6 billion in July. By way of comparison: betting turnover at legal US bookmakers in June 2026 stood at $12.59 billion.
 

The paradox is that it is precisely the sports markets – around 80 per cent of Kalshi’s volume – that have prompted regulators to start scrutinising prediction platforms more closely. The same applies to its main competitor – Polymarket.
 

Polymarket sports betting demonstrated that sports contracts are no different from traditional bets, apart from the form of settlement – and states began to lose tax revenue. It is estimated that 11 states lost more than $600 million by March 2026, by June 2026, their number had grown to 16.
 

This led states to classify prediction markets as gambling rather than financial exchanges. Eleven states introduced legislation against prediction platforms in 2026.

Regulatory landscape: Europe and the UK

In the UK, the issue has been settled unequivocally. In February 2026, the UK Gambling Commission classified prediction markets as ‘Betting Intermediaries’ under the Gambling Act 2005 – they are classified as gambling and require a gambling licence. Polymarket does not hold a licence and geo-blocks UK IP addresses. Kalshi is similarly unavailable: the FCA has banned binary options for retail clients since 2019.
 

Europe is following suit. In June 2026, regulators in nine countries (Belgium, France, Germany, Italy, the Netherlands, Poland, Portugal, Spain and Switzerland) stated that prediction markets without a local licence are illegal. In August, Germany clarified that participation from German IP addresses is prohibited. New Zealand and India blocked prediction platforms in 2026
 

Regulation of prediction markets remains fragmented: in some places it falls under financial licensing, in others under gambling regulations, and in others still it is completely banned. But the question of whether polymarket gambling is permitted in most countries has already been answered – yes. There is one clear trend: a shift towards the ‘grey area’. For now, bookmakers have the upper hand in the legal sphere – decades of regulated infrastructure and a clear regulatory status give them an advantage that prediction markets lack.

Two betting models in one place: how Dexsport combines a bookmaker with a prediction market

Bookmakers cannot ignore their customers’ interest in prediction markets and are keen to integrate this tool. DraftKings has already launched DraftKings Predictions – a prediction market product within its sportsbook. Kalshi, by contrast, dominates the sports sector rather than politics. The line between betting and financial instruments is blurring on both sides – this is part of a broader concept of internet capital markets, where issuance, trading and settlements take place on the blockchain.
 

Dexsport goes a step further. In addition to its betting line, the platform features a separate section dedicated to prediction markets. This section covers not only sports markets but also politics, society, gaming, cryptocurrencies and other categories. The section operates like a traditional prediction market: contracts with market-based pricing and the option to close out a position. However, players do not need to register a separate account – it is the same account used for sports betting, playing slots and purchasing prediction contracts. One platform, one wallet, three ways to participate.
 

Whilst the prediction market is still resolving regulatory issues, Dexsport already offers players both models in one place – and does so with additional benefits. No verification required: sign up via email, Google, Telegram or a Web3 wallet, with no documents needed. 37+ cryptocurrencies across 20+ networks: from Bitcoin and Ethereum to stablecoins on popular blockchains. Payouts via a liquidity pool and smart contracts – automatic, with no manual processing. This combination of bookmaking infrastructure, prediction market mechanics and the freedom of cryptocurrency is something that traditional platforms do not yet offer as a package.

Overall growth and forecast

Both markets are growing. Prediction markets are growing exponentially: from $1.2 billion/month at the start of 2025 to over $50 billion/month by mid-2026. Bernstein’s forecast is $240 billion by the end of 2026 and $1 trillion by 2030. Traditional betting is growing more steadily, but on a smaller scale: up to $394 billion by 2035.
 

Prediction markets versus sports betting – it is not a question of choice. In the future, countries will pass laws; the status will depend on policy, but the sector is increasingly moving into the legal sphere. The line between a bet and a financial instrument will continue to blur – and the question is not ‘who will win’, but ‘when will they merge’. Until then, hybrid platforms combining both models within a single account will have the advantage: players do not need to choose between an exchange and a bookmaker – they get both models without compromise.

FAQ

What is the key difference between prediction markets and bookmakers?

In prediction markets, you trade contracts with other participants, whilst the platform acts as an exchange (there is no margin built into the odds, only a transaction fee). With a bookmaker, you bet against the operator, who builds a margin into the odds.

Why is the question ‘Is Polymarket a form of gambling?’ so relevant?

Regulators in different countries give different answers: some view it as a financial derivative (at federal level in the US), whilst others regard it as gambling (the UK and a number of European countries). This creates a fragmented landscape.

What was the catalyst for the growth of prediction markets in 2026?

The FIFA World Cup. The total volume of prediction markets reached over $50 billion by July 2026, with around 80 per cent of Kalshi’s volume attributable to sporting events.

What advantage did research reveal that prediction markets offer?

An analysis by Keyrock-Dune showed that, in identical markets, prediction markets offer, on average, 77 per cent better odds than bookmakers, particularly in the 40–70 per cent probability range.

How does Dexsport resolve the choice between the two models?

The platform combines both approaches within a single account: in addition to the bookmaker’s odds, there is a section for prediction markets (sport, politics, crypto, etc.). Players do not need to create a separate profile – one account, one wallet.