Kalshi vs Polymarket: The Battle to Reinvent Sports Parlays
The US sports betting industry is entering a new phase of disruption as prediction market platforms Kalshi and Polymarket push deeper into territory long dominated by traditional sportsbooks. At the center of this battle is one of the most popular and profitable products in gambling: the multi-leg bet.
Known as parlays in the US, accumulators in the UK, and multis in Australia, these bets allow players to combine multiple outcomes into one wager for a much larger payout. While risky, parlays generate massive revenue for sportsbooks and now account for the majority of online betting income in some states.
Prediction markets want a piece of that action, but cracking parlays is proving far more complex than simply copying sportsbook models.
Why Parlays Matter So Much
Parlays have become the backbone of modern sports betting. In New Jersey, one of the few states that breaks down betting revenue by wager type, parlays made up 63% of all online sports betting revenue in the year to October.
Bank of America Merrill Lynch analyst Shaun Kelley has described parlays as the “killer app” of sports betting, saying they have fundamentally changed how the industry makes money. For sportsbooks, bundling multiple bets increases profit margins and reduces risk.
For prediction markets, however, parlays represent both an opportunity and a technical challenge.
How Prediction Markets Work and Why Parlays Are Hard
Prediction markets operate very differently from traditional sportsbooks. Instead of betting against a “house” that sets the odds, users bet against each other on yes-or-no outcomes. Prices move based on demand, reflecting the collective view of the market.
This system works well for single events, like who will win a game, but breaks down when users want to combine multiple outcomes. Each leg of a parlay requires its own pool of buyers and sellers. Without enough liquidity, pricing becomes unreliable and trades fail to execute.
Traditional gambling companies like DraftKings and FanDuel owner Flutter don’t face this problem. They simply bundle odds internally and manage risk using algorithms. Prediction markets must rely entirely on other users to take the opposite side of each bet.
As Adam Rivers of consultancy Alvarez & Marsal puts it, prediction markets have struggled to offer the “exotic bets” that US gamblers love, especially same-game parlays.
Kalshi’s Big Bet: “Combos”
Kalshi believes it has found a solution.
In late 2025, the company launched “Combos,” a customizable, peer-to-peer parlay feature. Instead of preset odds, Kalshi uses a request-for-quote system. When a user creates a combo bet, such as one team winning and a player scoring above a certain threshold, other traders can step in to provide pricing and liquidity.
The response has been dramatic.
Kalshi says Combos generated more than $100 million in trading volume in a single week, with sports now accounting for about 90% of weekend activity on the platform. During the recent NFL Wild Card weekend, a single game reportedly generated over $100 million in trades.
This surge marks a major shift. Prediction markets are no longer just places to bet on elections or economic data, they are becoming serious competitors in sports wagering.
Why Traders Are Moving to Kalshi
Several factors are driving the migration from sportsbooks to prediction markets.
First, pricing. Because Kalshi does not act as the house, there is no built-in “vig” or margin baked into odds. Traders often find better prices than those offered by sportsbooks.
Second, limits. Traditional sportsbooks routinely restrict or ban users who win too often. Kalshi has no incentive to do this, since it earns money from transaction fees, not player losses.
Third, tax treatment. Many Kalshi contracts qualify under Section 1256 of the US tax code, meaning gains may receive a more favorable tax split compared with sportsbook winnings, which are taxed as ordinary income.
Finally, transparency. Every trade on Kalshi is recorded on a public ledger, giving users real-time insight into where money is flowing, something sportsbooks only disclose weeks later, if at all.
Polymarket Takes a Different Path
Polymarket, another fast-growing prediction market, has so far taken a more cautious approach. The platform offers preset bundles of bets, mostly outside sports, but does not yet allow fully customizable parlays.
That said, Polymarket is clearly interested. On its Discord server, the company has offered a $50 bonus to the first user who submits a successful multi-leg bet when the feature launches.
Like Kalshi, Polymarket is aggressively building liquidity by offering incentives to traders willing to provide pricing depth.
Liquidity Is the Real Battleground
Liquidity, not technology, is the defining challenge.
Kalshi currently pays individual liquidity providers up to $1,000 per day and has partnered with Susquehanna International Group as its first institutional market maker. The company also operates its own trading arm, a move that has sparked controversy and a proposed class-action lawsuit alleging conflicts of interest.
Kalshi’s leadership has dismissed the claims, but the issue highlights the tension between growth and trust as prediction markets scale.
Traditional Sportsbooks Push Back
Established gambling companies are not standing still.
DraftKings and Flutter have both launched prediction-style products, though only in states where traditional online betting is restricted. Executives remain skeptical about prediction markets’ ability to compete at scale.
Flutter chief executive Peter Jackson has argued that sportsbooks still offer far greater choice, while DraftKings CEO Jason Robins has said prediction markets are “structurally limited”, especially when it comes to parlays.
Regulation Looms Large
Kalshi operates under the oversight of the Commodity Futures Trading Commission (CFTC), but several states, including New York and Massachusetts, argue that sports event contracts are simply gambling in disguise.
Legal rulings in these cases could determine whether prediction markets can expand nationwide or face significant restrictions.
The Bigger Picture
Prediction markets currently make up an estimated 3% to 8% of the US online sports betting market. But valuations suggest investors believe that share will grow rapidly. Kalshi was recently valued at $11 billion, while Polymarket is reportedly seeking funding at up to $15 billion.
If platforms like Kalshi can continue to scale liquidity and navigate regulation, they could reshape how Americans bet on sports, replacing the house-driven model with open, transparent markets.
Bottom Line
The race to crack parlays marks a turning point for prediction markets. What began as a niche way to forecast elections is evolving into a serious challenge to the $14 billion US sports betting industry.
Kalshi’s Combos launch shows that multi-leg betting is no longer out of reach. The question now is whether prediction markets can sustain liquidity, survive regulatory scrutiny, and convince mainstream bettors to switch.
If they succeed, the future of sports betting may look less like a casino, and more like a financial exchange.
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