The addition of sports parlays by prediction markets could be the one factor that exacerbates the already fierce rivalry between them and conventional bookmakers.

Although they don't yet provide parlays, companies like Kalshi and Polymarket presently offer yes/no contracts on athletic events, which are similar to moneyline bets.  But they might have strong cause to enter the legged sports betting market.

Sports parlays are one of the areas prediction markets should diversify into, according to a recent analysis by cryptocurrency venture capital firm Pantera Capital. The report characterizes these bets as "high leverage" affairs that provide "high market outcome value" and entice traders to return.

On the other hand, Pantera classified sports wagers as low leverage/low market result.  According to Pantera, daily fantasy sports (DFS), which haven't been mentioned much as a potential market for prediction exchanges, are more profitable than moneyline wagers. However, DFS isn't expected to be as profitable for prediction markets companies as parlays.

 

Parlays May Play a Key Role in Forecasting Market Performance

Given that parlays have a proven track record of increasing profits and revenue for traditional sportsbook operators, it is reasonable to believe that this trend will extend to prediction markets.

"Users want to have high leverage or stack odds to increase payouts. Parlays, perps, intraday event markets –– all of these prediction market products have the potential to increase demand for prediction market events,” notes Mason Nystrom, junior partner at Pantera.

Prediction markets can capitalize on the gamification of trading and betting that younger market participants have come to adore by providing parlays, particularly those of the sports sort. They may also realize better economics by building a more devoted clientele.

“Having more recurring markets will also create better economics for the platforms, enabling them to list more markets, pay for customer acquisition, or otherwise be more competitive,” adds Nystrom. “This already occurs in sports betting, where platforms like DraftKings utilize DFS (daily fantasy sports) as a valuable acquisition and retention tool to foster habitual user behavior.”

 

Value at High Outcomes Is Important

One of the main reasons prediction markets became popular in the US was probably because of election betting, and some of the operators, like Polymarket, are skilled at making money off of viral events.  However, since elections are infrequent and contentious or viral events are short-lived, prediction market operators are probably forced to concentrate on growing their services that yield high result value.

Sports parlays check the high result value box, along with intraday events and climate markets, among other things.  A new wave of prediction market adoption, increased regulatory scrutiny, and increased rivalry from the gaming industry could result from Kalshi, Polymarket, and pals entering the parlay market.

“The rebirth of prediction markets will leverage efficient markets to generate valuable prediction insights and offer a form of leveraged entertainment to the same customers who trade individual stocks or bet on sports,” concludes Nystrom. “We’re about to see an explosion in the types of markets and things that people will bet on. Markets for everything are coming.”