How prediction market pricing works
A prediction market is an exchange for binary outcomes. Every
contract pays $1 if the event resolves YES and $0 otherwise. The
trading price between launch and resolution is the live
consensus probability, expressed in cents.
The price is the probability
A YES contract at 35 cents is the market's bet that the event
has a 35% chance. The matching NO contract trades near 65
cents. Arbitrage keeps the two close to summing at $1, with
small deviations caused by trading fees, exchange spread, and
short-term order book imbalances.
Why prediction market prices are usually tighter than a sportsbook line
A sportsbook adds a margin (the vig) to both sides of every
market: a typical -110/-110 spread sums to 104.76% implied,
with the extra 4.76% being the operator's edge. Prediction
markets are exchanges, not bookmakers, so traders set the
prices and the operator only takes a fee on settled contracts.
YES + NO normally sums within a few tenths of a cent of $1.00
on liquid markets, which is a much narrower margin than any
sportsbook will quote.
When a sportsbook's no-vig implied probability disagrees with
the matching prediction market on the same outcome, that gap
is the signal serious bettors look for. The bigger the
disagreement, the more likely there is a positive expected
value bet on one side or the other.
Comparing the major venues
Polymarket is a decentralized exchange running
on the Polygon blockchain and settling in USDC. It hosts
markets on essentially any topic, from elections to crypto
prices, with the widest universe of any prediction market. US
access is restricted; it is most commonly used by
international traders.
Kalshi is a CFTC-regulated US derivatives
exchange listing event contracts approved by the regulator. It
settles in USD through a normal bank account. The market
universe is smaller and more conservative than Polymarket but
fully accessible to US residents in supported states.
Manifold uses play money ("mana") rather than
real currency. It is built for forecasting practice, calibration
research, and casual prediction. Prices still represent
implied probabilities, and the math here applies the same way,
but no real money changes hands.
Converting a prediction market price to traditional odds
Read the cent price as a percentage and divide 100 by it to get
the decimal odds, then convert to American or fractional as
normal. A 40 cent contract is decimal 2.50,
American +150, fractional 3/2. A 67
cent contract is decimal 1.493, American
-203, fractional 1/2.
Prediction Markets FAQ
How do prediction market prices map to American odds?
The cent price is the implied probability. Divide 100 by it
to get decimal odds, then convert to American. 25 cents is
25%, decimal 4.00, American +300. 75
cents is 75%, decimal 1.333, American
-300.
Are prediction market odds better than sportsbook odds?
On average, yes, in the sense that they carry less vig. A
liquid prediction market price is close to a no-vig estimate.
But sportsbooks routinely move slower than prediction markets
on news, so individual sportsbook lines can offer better
value than the matching prediction market in the short term.
The right comparison is line by line, not market by market.
What happens when YES and NO don't add up to 100 cents?
If YES + NO sums to less than $1.00, there is a small
arbitrage opportunity: buy both sides for less than $1.00 and
collect $1.00 at resolution. If they sum to more, the gap is
the exchange's effective spread plus fees. On liquid markets
the deviation is usually a fraction of a cent.
Can I sell a prediction market contract before it resolves?
Yes. All three exchanges use continuous order books, so you
can close a position at any time by selling to another trader
at the current market price. This is the main practical
difference from a fixed-odds sportsbook bet.
Which is better for US bettors, Polymarket or Kalshi?
Kalshi is the only fully US-regulated option, accessible to
most US residents with a regular bank account. Polymarket
offers a wider market universe but is built around crypto
rails and is generally not open to US users. See the
Kalshi
odds converter and the
Polymarket
odds converter for venue-specific tools.