Wagering has evolved from using a bookie to introducing a variety of technological advancements. In recent years, the introduction of so-called prediction markets has somewhat disrupted the industry. Large platforms, such as Kalshi and Polymarket, are allowing users to trade on the outcomes of sports events, as well as on politics and pop culture.
In this article, we’ll discuss what prediction markets are, how they work, how they differ from betting, and whether the two can coexist while reaching the same customers.
Defining the Two Models
Traditional sports betting is built on a familiar principle. The casino sets the odds of certain events, and players wager on the outcome. This is the case with Solana casinos too: those that accept crypto for betting and those that accept fiat. According to experts such as those at CryptoManiaks, using Solana is safer and less costly, but the principle remains the same.
Prediction markets, on the other hand, are more like the stock market. Instead of betting against a bookmaker, users buy and sell shares tied to possible outcomes. The prices fluctuate based on which event is more likely to happen. The players exit the wager by selling the shares.
User Experience
Users treat prediction markets as they would a trading platform. They can hold positions or buy low and sell high as outcomes become easier to predict. It’s therefore a more flexible experience than making wagers.
The fees operate differently as well. Sportsbooks take the other side of the wager and earn money if you lose a bet, while prediction markets charge a fee on every transfer, as a trading platform would.
The market also differs because it allows users to place “wagers” on events beyond sports. The array of possible events to bet on is always expanding, and it now includes elections, celebrity trials, and even weather forecasts.
Are Prediction Markets Disruptive?
Some feel that the introduction of a new method for gambling will disrupt the existing gambling industry. There are reasons to believe so, since emerging technologies can disrupt old industries, especially when they are not regulated.
The ability to trade in and out of positions introduces a level of flexibility that the betting industry can’t match. However, regulation and established industry networks also provide a sense of security. This is something that the prediction markets don’t have yet.
Regulations
At this point, the gambling industry is much more regulated than prediction markets, and there’s an effort to introduce further regulations. This is especially true when it comes to measures made to prevent harmful gambling practices.
Some players find these regulations burdensome, while others recognize their benefits. The fact that the casino is licensed is also seen as proof of its trustworthiness. It will take a while for government agencies to engage with prediction markets in that way.
User Skills
Prediction markets require certain skills from their users, as their interfaces are more complex and similar to those of trading platforms. This somewhat limits the base of users they could have. Sports betting is much more accessible in this regard.
This is a problem the industry can overcome, as it will always adapt to meet its users’ needs. That’s a process that will also take a while and require effort from both users and the industry, but not in equal parts. Users have also found ways to adapt to new technologies, and with a young, tech-savvy population interested in betting, overcoming such issues will be easier than with similar technological advancements.
Coexistence
There’s an argument to be made that the two betting modes could coexist without harming each other’s market positions. There are users who are interested in both and will use both, but at this point the markets don’t overlap much.
The market for predictive trading is still focused on tech-savvy users and those with financial experience. However, there was a time when crypto casinos were a niche market, and it has since changed and exploded into the mainstream. Something similar could soon happen to the prediction markets in the years to come.
To Sum Up
Prediction markets have emerged as a new trend in the world of betting. The platforms that allow users to bet on sports, political events, celebrity news, and even weather forecasts are somewhat different from those that operate as sportsbooks. These platforms are similar to trading platforms, allowing users to buy and sell shares with the potential to profit.
Some feel that the introduction of prediction markets could disrupt the gambling industry, but it’s too soon for that, and it seems the two can coexist. Prediction markets aren’t well-regulated, so many users don’t trust them.
