How sports prediction markets work, what trading them actually costs, and where to trade them legally in the US.
An exchange where users trade YES/NO contracts on sports outcomes — game winners, totals, championships, awards — against each other rather than against a house. Each contract pays $1 if the outcome happens, $0 if not.
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A sports prediction market is an exchange where you trade a YES/NO contract on a sporting outcome against other users rather than against a house. Each contract pays $1 if the outcome happens, $0 if it doesn't, and the price in cents is the market's implied probability.
A true coin flip trades around $0.49 / $0.51 on a prediction market: no house sets the line, so the only cost embedded in the price is the spread between the best bid and the best ask — typically about 1% on liquid contracts. Over hundreds of trades that cost is what separates a small profit from a small loss.
No house margin. Just the spread.
Three venues lead: Kalshi (CFTC-regulated, USD, 47 states + DC), Polymarket (CFTC-licensed, US app, 49 states + DC), and Rebet (mobile sweepstakes, 39 states + DC).
Game winners, totals, season-long awards (MVP, Cy Young, Heisman), conference/division winners, championship futures, and increasingly some prop-style markets. Live in-game markets are still limited — exchange order books reprice more slowly during play.
Profits on CFTC-regulated venues are taxed under Section 1256 (60% long-term, 40% short-term capital gains) rather than as gambling income. For active sports bettors, this is often a meaningful annual savings. See our are prediction markets gambling explainer for the full breakdown.
Three weaknesses: (1) live in-game order books reprice slowly; (2) prop depth is thinner; (3) parlay-style combo entries aren't natively supported — Rebet's social app is the closest thing to that format among the venues we cover.
An exchange where users trade YES/NO contracts on sports outcomes — game winners, totals, championships, awards — against each other rather than against a house. Each contract pays $1 if the outcome happens, $0 if not.
Only the bid-ask spread plus the venue's fee — roughly 0.5–1% in spread on liquid Polymarket contracts, and a small per-contract fee on Kalshi. There is no house margin built into the quoted price.
Kalshi (USD via ACH, 47 states + DC), Polymarket (US app, 49 states + DC), and Rebet (sweepstakes app, 39 states + DC) are the three main US-legal venues.
Only in a limited way. Order books reprice more slowly once a game is under way, so live markets are thinner and spreads widen. Most volume sits on pre-game and season-long contracts.
No. On CFTC-regulated venues like Kalshi and Polymarket, profits are taxed under Section 1256 (60/40 capital gains), not as gambling income — typically a better outcome for active bettors.
Catie has spent 15 years covering iGaming, sports betting, and now prediction markets — first as a trade reporter, later as head of editorial at two major industry publications. She has tested every regulated US event exchange since Kalshi's 2021 launch and writes the bulk of PredictionWins' platform reviews and tax explainers.
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