Definition
Prediction markets are event-based trading platforms where participants buy and sell YES/NO contracts on real-world outcomes — sports results, election winners, financial events, entertainment — with prices determined by supply and demand rather than a bookmaker's line. A YES contract on "Will Team A win?" pays out at full value if the event occurs; a NO contract pays out if it does not. Prices fluctuate between 0¢ and 100¢ and represent the crowd's collective probability estimate for the outcome.
Unlike a sportsbook, an exchange-style platform need not price every market or hold the same bookmaker risk on individual bets. Revenue can come from transaction fees, commissions or service contracts, depending on the operating model. Fee ranges are not interchangeable: KPMG's 2026 entry-model comparison shows different economics for technology vendors, brokers, clearing firms and contract markets.
How prediction markets work in practice
A participant can buy a YES contract at, say, 42¢. If the contract pays 100¢ when the event resolves YES, the gross payoff difference is 58¢ before fees and other costs; if it resolves NO, that contract pays zero. Prices respond to orders but should not be treated as calibrated probabilities without accounting for liquidity, spread, fees, participant mix and market design. Kalshi operates within the US CFTC contract-market framework; that classification is venue- and jurisdiction-specific.
For iGaming operators, responsibilities depend on the model. A permitted external venue can provide an order book, but market-making, limits, settlement, retained exposure, reporting and hedging obligations remain contract- and jurisdiction-specific. A venue connection does not by itself remove the need for trading or risk controls.
Prediction markets vs sportsbook: the three key differences
| Dimension | Sportsbook | Prediction markets |
|---|---|---|
| Who sets prices | Operator (trading desk) | Market (supply and demand) |
| Who holds risk | Depends on book and supplier contract; fixed-odds operators commonly retain exposure | Depends on venue, clearing, market-making and operator routing |
| Revenue model | Betting hold and/or supplier economics | Venue fee, commission, spread or service contract |
| Event coverage | Sports and racing | Sports, politics, finance, entertainment |
| Trading operation | Common for fixed-odds pricing and exposure | Scope depends on market-making, retained risk and venue contract |
Market size (2025–2026)
Recent professional and on-chain reports document substantial growth, but their venues and counting methods differ:
- KPMG: Kalshi and Polymarket combined exceeded $40 billion in 2025 trading volume, up from roughly $9 billion in 2024.
- TRM Labs: the on-chain venues in its dataset exceeded $20 billion in monthly volume in January 2026. Its methodology counts maker and taker sides separately.
- KPMG: 89% of Kalshi's 2025 fee revenue came from sports markets. This is a Kalshi-specific revenue mix, not a market-wide share of bets or users.
What "prediction markets for operators" means (B2B context)
In a B2B iGaming context, "prediction markets for operators" refers to the full infrastructure stack that sits between raw venue liquidity and the end player:
- Venue connectivity — one permitted source, fixed odds or a multi-source architecture; exact contracts, production status and settlement behaviour must be disclosed. Turbo Stars currently documents Polymarket first and lists Kalshi, Manifold and other sources as roadmap items.
- Operator stack — PAM, wallet, KYC, CRM, bonus engine, risk reporting and compliance
- Casino and sportsbook cross-sell — same wallet, same player view, so a prediction-market session leads directly into casino or sportsbook without re-deposit or re-KYC
This cross-sell layer can be an important economic driver for operators, but any conversion or LTV result must identify the cohort, denominator, observation window and comparison method. Turbo Stars first-party results are tracked separately from external market benchmarks.
Related terms
- Polybetting — Turbo Stars' B2B prediction-market solution for licensed operators
- Prediction markets platform — the full product page for the Turbo Stars prediction-market stack
- Prediction markets vs sportsbook — a comparison guide for operators
- Polymarket for operators — why Polymarket is a liquidity source, not an operator platform
Frequently asked questions
What is a prediction market?
A prediction market is a trading platform where participants buy and sell contracts on the outcomes of real-world events. Contracts are typically YES/NO binary shares — a YES share pays out if the event occurs, a NO share pays out if it does not. Prices fluctuate between 0 and 100 cents and reflect the collective probability estimate of the crowd, rather than odds set by a bookmaker.
How do prediction markets differ from sports betting?
The labels do not determine one universal risk model. A fixed-odds sportsbook commonly prices markets and retains betting exposure, while an exchange-style prediction venue can match participants and charge fees. Pricing, market-making, clearing, settlement and retained risk depend on the exact contract and operating model. Prediction markets may also cover non-sports events.
Which prediction-market venues are widely referenced?
Polymarket and Kalshi are widely referenced prediction-market venues. KPMG reports that their combined trading volume exceeded $40 billion in 2025, up from roughly $9 billion in 2024. Polymarket is an on-chain venue; Kalshi is a CFTC-designated contract market in the United States. Their legal and technical roles cannot be treated as interchangeable across jurisdictions.
Can iGaming operators offer prediction markets under their existing licence?
It depends on the product structure and jurisdiction. An existing gaming licence should not be assumed to cover event contracts automatically. The Curaçao LOK requires relevant online-gaming or supplier licensing through the CGA; the UK Gambling Commission says current prediction products are likely to fall within betting-intermediary or betting-exchange licensing; and US event-contract venues operate within the CFTC framework while state disputes continue. Operators need product-specific legal review before launch.
What does 'prediction markets for operators' mean?
Prediction markets for operators refers to B2B infrastructure that can connect a permitted venue or pricing source with an operator UI, analytics, controls, PAM, wallet and compliance workflow. Exact venue access, retained risk, settlement and target-market authorisation must be demonstrated for the proposed model rather than inferred from an aggregation label.