Prediction markets promise professional players what many spent years trying to get from bookmakers: the chance to profit from correct forecasts without the risk of being personally limited for winning too often. Kalshi, Polymarket, and other platforms are turning this conflict into a competitive edge. But can the exchange model really reshape the betting industry, or will it simply hand players a new set of restrictions?

  • In recent years, prediction markets have evolved from a niche tool used mainly by political analysts into an industry with billions of dollars in turnover. Today it draws interest from professional traders and regulators alike around the world. What Is a Prediction Market?: we look at the essence of this phenomenon, the reasons behind its growing popularity, and the main challenges it faces.

Can prediction markets become an alternative to bookmakers for players who get limited for winning bets, or will personal limits simply give way to thin liquidity and trading costs? On 3S.INFO, we break down how a bookmaker's interests differ from an exchange's, how fees and slippage affect the real payoff, and why regulation may decide the outcome of this competition. One question deserves separate attention: can affiliates monetize a professional audience under the new model, and what risks arise in that shift?

Bookmakers Themselves Created the Demand for an Alternative

Sports betting has long harbored a contradiction the industry prefers to keep quiet. Bookmakers tout analytical tools, statistics, the promise of spotting value odds, and the chance to turn sporting knowledge into profit. Yet the moment a user begins to win consistently, the relationship with the operator can turn on a dime.

The maximum stake is cut first. Then certain markets become unavailable for large wagers. In some cases, the client is left able to bet such small amounts that a professional strategy loses virtually all economic sense.

Formally, the player remains a bookmaker's customer. In practice, they are no longer allowed to use the product on the same terms.

The reasons for limiting accounts vary. Operators protect themselves against arbitrage strategies, the use of stale odds, the information advantage held by certain participants, and other risks. But for a professional bettor the outcome is the same: even a positive mathematical expectation stops mattering if you cannot place a bet of the size you need.

This looks especially jarring against the fact that losing customers rarely face comparable restrictions, precisely because they are unprofitable.

For a long time, experienced players had to seek out more accommodating bookmakers, spread their activity across multiple sites, or move to betting exchanges, platforms where users wager against each other rather than against the bookmaker. Prediction markets have now joined that list: markets where participants trade contracts on the outcome of sporting, political, economic, and other events.

Of course, the exchange model itself is hardly novel. Betfair Exchange demonstrated long ago that sports betting can function without the traditional bookmaker who takes the opposite side of every wager. What distinguishes prediction markets is their synthesis of that trading mechanics with financial-market infrastructure, a broader set of event categories, and, in the US, a fundamentally different regulatory framework.

Why a Winning Player Is Not a Threat to an Exchange

In the traditional bookmaking business, the operator sets the odds, takes the bets, and manages the risk on its own book. A customer who wins too consistently can become an unwanted source of losses.

Prediction markets operate on a fundamentally different mechanism.

A user buys a contract on a particular event outcome. For example, a YES contract priced at $0.60 pays out $1 if the corresponding result occurs and nothing if the forecast proves wrong. The 60-cent price roughly reflects the market's estimate of the event's probability at 60%, though it does not guarantee that estimate is accurate.

The other side of the trade is taken by another market participant or a liquidity provider. The venue organizes trading, ensures execution, and collects fees according to its own fee schedule.

This is precisely where the fundamental conflict with traditional betting emerges.

For a bookmaker, a professional player can be a financial threat. For an exchange platform, that same player can become a source of additional turnover and liquidity.

A successful trader trades more often, analyzes prices, posts orders, and can contribute to more efficient price formation. Their profit, therefore, does not necessarily run counter to the platform's interests.

This is not to say that Kalshi or Polymarket guarantee every user unlimited trading. Venues impose participant requirements, risk-management rules, position limits, and tools for monitoring suspicious activity. Their legal models, access terms, and fees also differ.

Still, the user comes away with a meaningful alternative: the venue may measure their commercial value not by how much they lost, but by how much trading activity they generated.

No Limit. But Can You Actually Place $50,000?

Here the elegant theory collides with the less convenient reality.

Suppose a professional player has identified a mispricing in a sports event. The bookmaker offers odds of 2.10, while the player's model puts fair value closer to 1.90.

The player is ready to stake $50,000, but the bookmaker accepts only $100. The account has long since been restricted.

On a prediction market, the picture looks better. The user finds a contract at an attractive price and doesn't run into a comparable personal limit. Yet the order book holds only $3,000 worth of contracts at that price.

To place the rest, the user has to buy at progressively worse prices. This is where slippage kicks in: the average execution price on a large order ends up worse than the initial quote.

As a result, the potential edge can vanish before the purchase is even complete.

A bookmaker restricts a professional by a risk manager's decision. An exchange restricts them by the amount of money other participants are willing to put on the opposite outcome at an acceptable price.

The difference is substantial, yet for a player who wants to place large sums regularly, both situations can mean the strategy cannot be executed.

That said, the exchange has one important advantage: as the number of users and liquidity providers grows, the market's capacity can expand. A bookmaker's personal limit, by contrast, can persist regardless of how much its overall turnover grows.

But as long as liquidity remains unevenly distributed, the promise of free trading holds up best on popular sporting events. In smaller leagues and niche markets, professionals may run into the same volume constraints, only without a bookmaker's outright refusal.

Fees Instead of Margin: A New Economics or the Same Old Costs?

Advocates of prediction markets point to another advantage: the prospect of better prices.

With a traditional bookmaker, the margin is baked into the odds. On exchange venues, the cost of trading is constructed differently, through the bid-ask spread, fees, and potential slippage.

So the absence of a standard bookmaker margin doesn't mean trading automatically becomes cheaper.

On Kalshi, the fee depends on the characteristics of the trade and the applicable fee schedule. Polymarket also uses fees on certain markets and mechanisms to incentivize liquidity providers.

The distinction between maker and taker plays an important role. A maker posts an order and adds liquidity to the book, waiting for a counterparty. A taker fills an existing order and gets immediate execution.

For a professional player, this means choosing between speed and price. You can post an attractive order and wait, but no one guarantees it will fill. Or you can trade immediately, though the final cost will be higher.

There is also a more complex problem: adverse selection. A trader's order may be filled precisely when new information has already shifted the real probability of the event, leaving the offered price unfavorable.

So the competitiveness of prediction markets cannot be measured solely by how attractive the quotes look.

The true price of a trade is the cost of the contract, the fee, the spread, and the ability to place the desired volume without sacrificing the mathematical edge.

For professionals, this economics is familiar. For mass-market players used to a clear bookmaker's odds, it may prove to be an additional barrier.

Prediction Markets Are Already Taking Share, Not Just Drawing Attention

Until recently, prediction markets were seen mainly as an alternative financial product. Trading on election outcomes, central bank decisions, and economic events carved out a niche of its own.

Sports changed the scale of the competition.

According to Pew Research Center, combined monthly trading volume on Kalshi and Polymarket rose from $26 billion in May to $53 billion in July 2026. Sports contracts were the main driver.

Картинка: Combined Global Monthly Trading Volume of Kalshi and Polymarket
May 2026, $26 billion, July 2026, $53 billion, $60 billion, $45 billion, $30 billion, $15 billion, $0 billion

Source: Pew Research Center, September 2026. Trading volume does not equal platform revenue and is not fully comparable to bookmakers' betting stakes.

At volumes like these, treating prediction markets as an experiment is already difficult.

The venues are starting to compete with traditional sportsbooks for the sports audience, advertising budgets, and investor attention. At the same time, their product potentially reaches not only bettors but also traders who never used a bookmaker app before.

Competition is gradually spilling into marketing as well. Kalshi, Polymarket, and Novig are actively working on brand recognition, while traditional operators respond by improving their offerings and developing their own prediction market products.

This creates an interesting paradox.

For years, bookmakers sorted customers into desirable and undesirable based on profitability. Now a new type of competitor has emerged that is potentially willing to serve both categories.

While the mass audience still needs convincing to change its habits, professional players hardly need the value of the alternative explained to them.

Bookmakers May Lose the Competition but Win Through Regulation

The most serious threat to prediction markets lies neither in the product nor even in liquidity.

It concerns the legal status of sports contracts in the US.

Kalshi frames its business as trading event-based financial contracts that fall under federal oversight by the Commodity Futures Trading Commission (CFTC), the US regulator for futures and derivatives markets.

Individual state authorities argue that such contracts are in fact sports bets and should therefore be governed by local gambling law.

The disagreement has already produced conflicting court rulings.

In April 2026, the federal Third Circuit Court of Appeals sided with Kalshi in its dispute with New Jersey. But in August, the Ninth Circuit denied the platform protection from regulation in Nevada, and in September the Sixth Circuit ruled in favor of applying Ohio's and Tennessee's gambling laws.

On October 21, Reuters reported that the conflicts between rulings could push the dispute to the US Supreme Court. Kalshi CEO Tarek Mansour has also acknowledged that scenario.

For the market, this is far more than a legal debate over how to classify a product.

If sports contracts are recognized as financial instruments available under a single federal system, prediction markets will gain a serious edge over bookmakers forced to work with licenses and restrictions in each state.

If, instead, the approach that treats sports contracts as gambling prevails, the platforms may face licensing requirements, taxation, and additional access restrictions.

In that case, part of their initial competitive advantage would disappear.

A market that seeks to rewrite the rules of betting risks ending up governed by the very rules it set out to escape.

That said, it is too early for bookmakers to celebrate. Even if regulation tightens, the exchange model has already demonstrated users' commercial interest. Traditional operators will have to decide whether to compete with it or fold it into their own business.

What Will Change for Affiliates: A New Audience or Yet Another Monetization Problem?

The rise of prediction markets could affect the affiliate industry more profoundly than it appears at first glance.

Traditional betting affiliate programs are oriented primarily toward deposits, gambling activity, and operator revenue. Under the Revenue Share model, the affiliate usually gets a percentage of net gaming revenue, and a successful player may not only fail to generate a commission but also create negative accruals, depending on the program's terms.

For prediction markets, the economics are potentially different.

If the venue earns revenue from trading fees, an active and successful trader can be a commercially valuable customer. They trade regularly, generate turnover, and don't necessarily create a direct loss for the platform.

This opens up the possibility of monetizing an audience that the classic bookmaker market often considers unprofitable.

Professional betting communities, analytics sites, odds comparison services, statistical platforms, and resources focused on value betting, the search for wagers with positive mathematical expectation, become especially interesting.

But transplanting the familiar affiliate model onto prediction markets won't happen automatically.

In classic betting, an operator can forecast a customer's economics fairly precisely based on deposits, retention, and playing behavior. On prediction markets, revenue per user depends on trade frequency, fees, and the structure of trading activity.

Venues will therefore have to design affiliate terms that account for actual trading turnover, not just the first deposit.

New risks arise alongside this. If regulators restrict access to sports contracts in certain states, affiliates may find that an audience they have already acquired loses the ability to use the product. Requirements for advertising financial instruments and gambling add further uncertainty.

A familiar story for the industry could repeat itself here: a partner brings in a customer, the platform gains turnover, but a change in legislation or commercial terms suddenly alters the economics of the partnership.

Who Wins by 2030: Bookmakers, Prediction Markets, or Regulators?

On the face of it, each side has ample grounds for victory.

Bookmakers command an established audience, recognizable brands, marketing budgets, and sports betting infrastructure. Prediction markets offer a different product economics, more flexible pricing, and potentially attractive terms for professional participants. Regulators, meanwhile, hold the power to determine where, for whom, and on what terms business may operate.

But the most likely scenario isn't the destruction of one model by the other. It is the gradual convergence of the two industries.

Bookmakers Won't Disappear, but They Will Be Forced to Change

The mass-market player doesn't always need an order book, trading orders, and fee calculations. They want to pick a match, back their favorite team, and get a clear result.

Traditional bookmaker apps retain an edge here: a simple interface, a wide range of markets, familiar mechanics, and well-developed retention tools.

However, if prediction markets can offer comparable convenience at more attractive prices, bookmakers will have to respond. A likely answer is developing their own exchange products or integrating event contract trading.

In that case, the line between a sportsbook and a prediction market will start to blur.

Bookmakers may lose their monopoly on the sports audience, but keep their market share by adopting their competitors' technology.

Prediction Markets Will Gain Market Share but Lose Some of Their Freedom

The most promising direction for prediction markets is professional and highly active users, sensitive to price quality, fees, and restrictions.

It is precisely this audience that can sustain high trading activity without constant bonus campaigns.

But as platforms grow, so does the cost of regulatory compliance. If the US market gets stricter rules for sports contracts, companies will have to adapt, and some of their advantages will diminish.

The paradox is that the more prediction markets come to resemble bookmakers' competitors, the more grounds regulators have to treat them as part of the betting industry.

Long-term resilience will come not only from technology but also from licenses, legal infrastructure, liquidity, and the ability to operate under different legal regimes.

Regulators Will Gain More Influence but Won't Necessarily Stop the New Market

Regulators occupy the strongest position when it comes to user access. Even a successful exchange model cannot scale in a jurisdiction where the activity is prohibited or requires an unobtainable license.

Yet regulation doesn't necessarily mean driving prediction markets out. Special requirements for sports contracts could emerge that preserve the exchange mechanics while strengthening oversight of consumer protection, financial risk, and advertising.

Such a scenario could benefit large players with sufficient capital, while significantly complicating market entry for smaller platforms.

Instead of dozens of independent competitors, the industry risks ending up with a handful of large companies able to absorb compliance costs and provide sufficient liquidity.

Here's the most interesting part: regulation meant to bring order to competition may at the same time accelerate market consolidation.

Why the Player Risks Losing Again

There is a temptation to frame the growth of prediction markets as the liberation of professional bettors from the constraints of the bookmaking business. But financial markets have already shown that the absence of personal limits does not mean equality of opportunity.

If prediction markets go mainstream, competition there will intensify among ordinary users, professional traders, automated trading systems, and large liquidity providers.

The latter hold advantages in information processing speed, data analysis, risk management, and access to capital.

An ordinary player may gain the ability to trade without a personal limit imposed by a bookmaker, yet at the same time run into more efficient prices, fewer obvious market mispricings, and professional counterparties.

Moreover, large platforms may potentially be able to raise fees, introduce additional position limits, and change access terms for certain markets. If competition shrinks, users will once again find themselves with few alternatives.

The player may no longer be limited for making successful forecasts. Instead, the very structure of the market may make systematic winning significantly harder.

For professionals, these are not the same thing. Fair competition in a liquid market is preferable to a personal ban on large stakes. But for the mass audience, the economic outcome may change far less than the new technology promises.

That is precisely why the main measure of prediction markets' success should be not only total trading volume, but also the availability of liquidity, the transparency of fees, and participants' ability to compete on comparable terms.

Forecast: The Winner Won't Be the Bookmaker or the Exchange, but Whoever Controls Access to the Market

By 2030, the most likely scenario is a hybrid one: traditional bookmakers keep the mass audience, prediction markets establish themselves in sports trading, and some of the largest companies begin operating in both models at once.

Regulators, meanwhile, will define the boundaries of permissible business, and it is their decisions that will shape which platforms can scale.

The most significant change may lie not in players migrating from bookmakers to exchanges, but in the emergence of a new type of operator that combines a sportsbook, a trading venue, and financial infrastructure.

For investors, this means the value of a prediction market should be assessed not only by turnover and user acquisition rates, but also by the quality of liquidity, dependence on sports contracts, and resilience to legislative change.

For affiliates, a new segment for monetizing a professional audience is opening up, yet partnership terms and product availability may prove no less unstable than in traditional gambling.

For bookmakers, it is a warning: years of limiting profitable customers created the very demand that competitors are now capitalizing on.

And for players, the outcome may feel entirely familiar.

First, they will be offered more freedom, better prices, and an end to the usual restrictions. Then the market will begin to consolidate, fees and participant requirements will shift, and professional competition will intensify.

Prediction markets may indeed spare successful players from a bookmaker's risk manager's decision. But that doesn't yet mean they will spare them from the system's restrictions. It's just that those restrictions will now be set by exchange economics, the largest market participants, and regulators.

If we look for the main winner of this competition, it will most likely be not a single company but a business model capable of simultaneously controlling liquidity, user access, and regulatory compliance.

The player, once again, will find themselves in a position where someone else sets the rules.