Record trading figures during the World Cup have underscored the growing significance of prediction markets within the US sports betting scene, giving Wall Street a fresh reason to take notice. Analysts, including those at Stifel, have highlighted that trading volume on CFTC-regulated prediction markets nearly matched the $12.5 billion bet through US sportsbooks in June. Notably, prediction markets offered more competitive pricing compared to state-regulated sportsbooks during this period, according to data analyzed by Citizens.
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World Cup Sparks Surging Volume
Stifel attributes the surge in June’s trading volume to several factors, with the World Cup being a primary driver. They estimate that the notional trading volume in CFTC-regulated prediction markets doubled, ballooning to roughly $40 billion. Despite the launch of Robinhood-backed Rothera, Kalshi maintained its dominance with over 80% market share, though it faced slight competition. Interestingly, DraftKings has started integrating its in-house exchange into its operations. And there’s a metric many are watching — “taker” trading volume. Though it only accounts for one side of each trade, Stifel considers it closest to sportsbook handle in assessing customer activity.
Competitive Pricing Advantage
During the World Cup, prediction markets outshone traditional sportsbooks in pricing efficiency. Citizens’ pricing data from all 104 matches revealed Polymarket had the lowest average implied vig at 2.70%, with Kalshi following at 4.71%. DraftKings led the conventional pack with a 4.97% vig. Prediction markets had also outperformed sportsbooks during March Madness, a trend that might extend into the upcoming NFL season. The reason? Citizens points to deeper liquidity and heightened participation from market makers, fostering increased competition among liquidity providers. They’re keen to see if this pricing edge is structural or merely event-driven.
Operators Eye Infrastructure Investment
Despite the legal gray areas, sports betting operators continue to pump resources into prediction markets. DraftKings rolled out its in-house exchange, DKeX, albeit initially limiting it to lower-volume sports. This move signals a potential shift in strategy as they progressively route more customer flow internally. Stifel noted several new initiatives, with Robinhood-backed Rothera and emerging prediction ventures from major firms like Meta and Underdog making headlines. Truist’s Barry Jonas observed that prediction markets have transformed from potential threats to lucrative opportunities for operators like DraftKings and FanDuel. Yet, he warns that investment returns and regulatory challenges still cast clouds over the horizon. What’s next? The NFL season is set to test whether prediction markets can maintain their pricing advantage. Outcome swings can be dramatic — and profitable — but only time will reveal their true scope.
Marcus Chen brings a quantitative approach to poker strategy and sports betting analysis. With a background in data analytics and over eight years covering professional poker circuits, his articles combine statistical insights with practical advice for serious players looking to sharpen their edge at the table.
