“Prediction markets beat sportsbooks by 100-300 bps on liquid markets but have 10-50% spreads on long-tail events”
Compares spreads across DraftKings, FanDuel, Polymarket, and Kalshi on identical sports markets to isolate how counterparty identification versus maker competition affects pricing. Finds PM prices are 100-300 bps better on liquid markets but long-tail markets on prediction markets have 10-50% spreads. Argues sportsbooks tighten spreads through counterparty-aware pricing while PMs compensate through maker competition and order book transparency.
Some technical background helpful
Platforms mentioned: DraftKings, FanDuel, Polymarket, Kalshi