Prediction markets
- Kalshi: contracts that settle at $1.00 or $0.
- Polymarket: Yes and No shares priced from $0.00 to $1.00.
Prediction Markets vs Betting Exchanges: What Is the Difference?
One question sorts them: who is on the other side of your bet?
A betting exchange matches back and lay bets between customers at decimal odds and charges commission on your net winnings in a market. A prediction market trades contracts on outcomes: on Polymarket shares are priced from $0.00 to $1.00 and the price represents the probability, and a Kalshi contract settles at $1.00 or $0.
That is the core of prediction markets vs betting exchanges: an order at a price against a bet at odds, and a transaction fee on expected earnings against commission on net winnings. Our access register lists Kalshi and Polymarket at BetInAsia through BLACK and at MadMarket through Edge, and lists Betfair at all four brokers.
The four brokers
Prediction markets vs betting exchanges at a glance
Who is on the other side of your bet? That one question sorts the three models: the operator at a sportsbook, another customer on an exchange, another user on the newer contract venues. The result? Three rulebooks to read.
Sportsbook, betting exchange and prediction market compared: counterparty, price and rules
| Question | Sportsbook | Betting exchange | Prediction market |
|---|---|---|---|
| Who is on the other side? | The operator takes the other side, and Betfair's Sportsbook terms say "you are betting directly with PPB Counterparty Services Limited". | Other customers take the other side, and Betfair "acts as a facilitator and does not act as a counterparty", bar the cases its clause lists. | Other users take the other side: Polymarket says prices emerge as users trade with each other, and Kalshi runs an orderbook. |
| How is the price set? | Fixed odds set the price, and Betdaq calls its Sportsbook "our fixed odds sports betting product". | Customers offer to back or lay at the odds they choose; Matchbook and Smarkets match by price, then by time. | Users place orders for shares priced from $0.00 to $1.00 at Polymarket, where the price represents the probability. |
| Where do the rules sit? | Betfair keeps "separate rules, terms and conditions for each of our Exchange and Sportsbook products". | Exchanges publish their own rules, such as Matchbook's Market Rules. | The rules sit on each market's page, and Kalshi says: "Always check the market's Rules and Important Information sections." |
What is a betting exchange?
An exchange lets you offer a price to other customers instead of taking one from an operator. You can back an outcome, which means betting that it happens, or lay it, which means betting that it does not, and an offer waits unmatched until another customer takes the other side.
Betfair puts the operator's role in one clause: customers bet with each other, and Betfair "acts as a facilitator and does not act as a counterparty", bar the cases the same clause lists. Betdaq uses the same word for its own role.
Read on: how a betting exchange works, betting exchanges via brokers, and Betfair via broker.
What is a prediction market?
A prediction market lets you trade a contract on an outcome. We cover Kalshi and Polymarket, and their details differ.
How Polymarket works
Polymarket runs a Central Limit Order Book (CLOB), and its documentation says prices are not set by Polymarket: they emerge from supply and demand as users trade with each other. Each share is quoted between $0.00 and $1.00, and the price represents the probability of the outcome: $0.25 is 25%, $0.50 is 50%, $0.75 is 75%. Prices are probabilities.
A new market starts with no price. The first one appears when a limit order to buy Yes at $0.60 meets a limit order to buy No at $0.40: the two add up to $1.00, so they match, and the match creates a complete set of Yes and No shares for the two buyers.
An operator matches orders off chain, and smart contracts settle the trades on chain.
How Kalshi works
At Kalshi you hold contracts, and a winning contract pays into your cash balance. Orders can rest in an orderbook until they are matched. A market settles when the official outcome is confirmed and Kalshi's markets team finalises the result, using a "source agency" such as a league's official statistics or a government release.
The key differences explained
Set the two models side by side and four differences do the work: payoff, price formation, charges and depth.
Contracts vs odds
An exchange quotes odds; a prediction market quotes a price. Both carry the same information on different scales: implied probability is 1 divided by the decimal odds, and on Polymarket the price is that probability written in dollars.
Decimal odds, implied probability and contract price: arithmetic, not a live market
| Decimal odds | Implied probability (1 divided by the odds) | Contract price |
|---|---|---|
| 5.00 | 20% | $0.20 |
| 4.00 | 25% | $0.25 |
| 2.00 | 50% | $0.50 |
| 1.25 | 80% | $0.80 |
Read the 2.00 row as arithmetic: a Kalshi contract bought at $0.50 that settles at $1.00 pays twice the price paid, before any fee, which is the multiple that decimal odds of 2.00 describe.
The ending differs more than the quote does. A Kalshi contract settles at $1.00 or $0, with exceptions such as a last fair market price or a non-standard amount like 50-50. Kalshi adds two cautions: a market that stays open after the event does not mean the payout criteria went unmet, and a market is not re-settled because the event looks finished while trading was still open.
How prices are formed
Matchbook's terms say offers are binding once submitted and can be withdrawn until they are matched, with matching by price first and then by time of submission, which the terms sum up as "first in, first matched", while Betfair lets you cancel an unmatched bet at any time.
On Polymarket the number you see is the midpoint of the gap between the best bid and the best ask, or the last traded price when that gap is wider than $0.10, so a buyer who sees $0.37 against a best bid of $0.34 and a best ask of $0.40 pays $0.40, because a market buy takes the lowest ask. Mind the gap.
Fees and commission
Fees next. Exchanges take commission on net winnings in a market. Kalshi charges "a transaction fee on the expected earnings on the contract", and some of its markets carry different fees.
Exchange commission compared: what each exchange charges it on and what its terms state
| Exchange | Charged on | What its terms state |
|---|---|---|
| Betfair | Net winnings in a market, with no commission on a net loss | The rate follows the package you choose or a market base rate, less a Betfair Points discount. |
| Betdaq | Net winnings in a market; nothing on a net loss | Betdaq applies a normal rate, plus an enhanced rate on some sports. |
| Matchbook | Net profits on a market | Matchbook charges 2% to customers located in the United Kingdom, the Isle of Man, the Channel Isles and Ireland, 4% to all others, and 2% on enhanced special markets to everyone. |
| Smarkets | Net winnings in each market | The default rate is 2%, charged at market settlement. |
Kalshi's help centre often ties its different fees to special events such as an election or a large sporting championship, and adds that "maker" fees apply to resting orders in some markets, charged only when the order is finally executed.
Liquidity and market depth
Polymarket's documentation ties depth to the spread: tighter spreads signal more liquid markets. A large order can move the price sharply, so look at the depth of the book before trading in size.
What the mechanics show
An exchange bet is a price agreed with another customer and paid, less commission, on the net result of a market. A Kalshi contract settles at $1.00 or $0, and a Polymarket share is priced between $0.00 and $1.00. We put no legal label on either; we stay with the mechanics.
Which should a sports bettor use?
By mechanics
If your method rests on laying, decimal odds and early exits, the exchanges name those tools. Cash out? Betdaq lists it on markets carrying the Cash Out symbol, and Matchbook describes it as a way to "lock in profit or reduce exposure on a runner early". Smarkets offers trade out on an individual contract.
Prediction markets handle sport through rules written market by market. In Kalshi's help centre, a standard NFL player market settles on the player's real statistics once the player has taken part in at least one play, even after an injury or an ejection, while protected NFL player markets follow another rule. Read the rules.
Our view is plain. An exchange suits a bettor who thinks in back, lay and cash out; a prediction market suits one who wants to trade a priced contract through an order book. These two kinds of venue answer different questions.
By broker access
BLACK is BetInAsia's platform and Edge is MadMarket's; the matrix below shows which tool opens which venue. New to brokers? Start with bet brokers explained, then compare them under best bet brokers.
Prediction markets and betting exchanges via brokers: the tool that opens each venue
| Betting site |  BetInAsia |
 AsianConnect |
 MadMarket |
 Sportmarket |
|---|---|---|---|---|
| Betdaq | BLACK | Not listed | Edge | Available |
| Betfair | Sharp Exchange | Piwi247 OrbitX | Sharp Exchange Edge | FairExchange |
| Kalshi | BLACK | Not listed | Edge | Not listed |
| Polymarket | BLACK | Not listed | Edge | Available |
| Matchbook | BLACK | Not listed | Edge | Available |
| Smarkets | BLACK | Not listed | Edge | Available |
BetInAsia and MadMarket each open all six venues. Sportmarket lists Polymarket, Betdaq, Matchbook and Smarkets without a named tool and opens Betfair through FairExchange; AsianConnect has an entry for Betfair only. Betfair opens through Sharp Exchange at BetInAsia and at MadMarket.
Examples of prediction markets and betting exchanges
Betting exchanges
- Betfair: commission on net winnings in a market.
- Betdaq: Cash Out on marked markets.
- Matchbook: offers matched by price, then by time.
- Smarkets: bets matched on percentage odds.
Comparing prices across venues is a subject of its own, covered in our guide to arbitrage betting.
Questions on prediction markets and betting exchanges
How are prices formed on Polymarket?
Polymarket prices come from a Central Limit Order Book, where they emerge as users trade with each other. A share is quoted between $0.00 and $1.00, and the displayed price is the midpoint of the bid-ask spread.
What does a Kalshi contract pay at settlement?
Kalshi describes resolution at $1.00 or $0, paid into your cash balance once the official outcome is confirmed and its markets team finalises the result.
What is the difference between a limit order and a market order?
A limit order executes only at your price or better and waits in the order book until someone takes it. A market order executes at once at the best price available. On Polymarket every order is technically a limit order.
How do exchanges charge for a winning bet?
Betfair charges a commission calculated by reference to your net winnings on a market, so your stakes do not enter the sum. Betdaq, Matchbook and Smarkets also charge commission on net winnings or net profits in a market.
Can I reach Kalshi and Polymarket through a broker?
Our access register lists Kalshi at BetInAsia through BLACK and at MadMarket through Edge, and Polymarket at both and at Sportmarket, where the register names no tool. AsianConnect has no entry for either.