Lesson 8 of 9

Books, exchanges and prediction markets

Where you can bet, how each one settles, and the rules that void hedges.

  1. 8.1Exchanges and prediction marketsKalshi, Polymarket US and Novig: you bet against other people, not a bookmaker, and pay a trading fee instead of a built-in margin.
  2. 8.2The types of betting sites, and how each one prices and settlesA US bettor can bet against a licensed sportsbook, trade against other people on a CFTC-regulated prediction market, or play fantasy pick'em. Sweepstakes and offshore sites exist too, with much weaker protection.
  3. 8.3How prediction markets work for sports bettingA sports contract pays $1 if its outcome happens. Its price in cents is the market's probability, you can buy either Yes or No, and a fee is charged when your order fills.
  4. 8.4Kalshi fees explained, with the formula and net oddsKalshi charges a fee when your order fills: 0.07 × contracts × price × (1 − price), times a per-market multiplier. It peaks at 1.75¢ per contract at 50¢ and turns a 60¢ contract from −150 into about −161.
  5. 8.5Lay betting explained: liability, commission and the lay stakeA lay bet wins if the outcome doesn't happen. You risk the backer's winnings (your liability) to win their stake, less commission. US bettors get the same position by buying No on a prediction market.
  6. 8.6Sportsbook house rules: the fine print that decides your betEvery sportsbook publishes house rules that decide how a bet is graded when something unusual happens. They differ between books, and the differences are where hedges come apart.
  7. 8.7Listed pitchers vs action in MLB bettingAn action moneyline stands whoever starts. A listed-pitcher bet is refunded if the named starter doesn't take the mound. Books apply this differently, and a scratch can void one leg of a hedge.
  8. 8.8Settlement rules: regulation vs overtime, and tennis retirementsA hockey 60-minute line ignores overtime, soccer settles on 90 minutes plus stoppage, and books grade a tennis retirement in different ways. Hedge only between bets that settle on the same thing.