Glossary / Books & exchanges / Prediction market
A ParlayAPI glossary entry

Prediction market

A prediction market trades contracts that pay a fixed amount if a real-world event occurs and nothing if it doesn't - so the contract's trading price is a direct read of the market's probability estimate. Kalshi and Polymarket are the prominent examples.

In practice

A contract trading at 62¢ that pays $1 on the event implies a 62% probability - no odds conversion needed. Sports event contracts have made prediction markets a de facto parallel sportsbook in parts of the US, with a different regulatory footing. Compared to sportsbooks: transparent order books and no traditional vig (spreads and fees replace it), but thinner liquidity outside headline markets.

Where it shows up in ParlayAPI

Prediction-market probabilities are a natural cross-check against sportsbook implied probabilities for the same event - persistent gaps flag either fee structure differences or genuine disagreement worth investigating. ParlayAPI's aggregate covers 45+ sportsbooks & sources, giving the sportsbook side of that comparison in one call.

Related terms