The following guest article was submitted by Mikheil Shengelia, Research Analyst at Eagle Alpha, an alternative data aggregation platform providing supporting advisory services for data buyers and vendors. It was written in collaboration with HoldCrunch, a platform specializing in prediction markets and sportsbook data.
The Rise of Prediction Markets
Prediction markets have evolved from academic concepts into increasingly important financial venues, with platforms such as Kalshi and Polymarket at the center of this shift. These markets allow participants to trade contracts tied to real world outcomes including elections, economic indicators, policy decisions, and sporting events. By translating uncertainty into tradable prices, prediction markets convert expectations about the future into continuously updated probabilities.
At their core, event contracts function as binary derivatives. Each contract pays a fixed amount if a defined event occurs and nothing if it does not. Prices therefore reflect the collective judgment of market participants rather than a single forecast or analyst view. Unlike traditional financial instruments linked to company performance or asset valuation, prediction markets trade directly on outcomes themselves.
For investors and research teams, prediction market pricing represents a new form of alternative data generated directly from collective behavior rather than surveys or static models. Institutional interest increasingly reflects recognition that the data produced by these markets may be as strategically valuable as the trading activity itself.
The expansion of prediction markets has intensified comparisons with sports betting because both involve forecasting outcomes. However, prediction market pricing emerges from continuous trading activity and open market participation rather than bookmaker odds. Supporters argue that this distinction places event contracts closer to financial derivatives since they enable price discovery and risk transfer rather than entertainment wagering.
This debate has important implications for regulation and market structure. If event contracts are treated primarily as derivatives, federal oversight could reshape how outcome based markets operate across jurisdictions. The growing participation of brokerages, fintech firms, and trading platforms suggests that industry participants increasingly view prediction markets as a developing asset class integrated into mainstream financial infrastructure.
HoldCrunch
HoldCrunch provides a unique mix of prediction market handle data, price gaps and product analysis. Everyone is monitoring Kalshi volumes, but what’s the correct conversion into an Online Sportsbook (OSB) equivalent handle, particularly for parlays? What are the price gaps that are meaningful between Kalshi and OSBs where customers would actually switch? How can we tell who has the best product?
HoldCrunch is led by Tom Johnson, a former Flutter Entertainment executive with 18 years at the company, including experience at Betfair before launch and during the expansion of prediction market liquidity, as well as subsequent roles at FanDuel. HoldCrunch provides a unique blend of data and expertise for buy side investors wanting to understand the prediction market and broader OSB space.
Case Study
Kalshi ‘OSB equivalent sports handle’ (not volume) w/e 1/18 was $660m, similar to last week’s $654m. Polymarket was $284m, up on the previous week’s $225m. The increase was college basketball.
Kalshi and Polymarket combined are on track to be 80% the size of the OSB college basketball straights market in January. That’s double NFL and NBA where they’re on track to be 41% and 35% the size of OSB straights:
Table 1: Kalshi + Polymarket Straights Handle Size as a % OSB Straights in January 2026 Cannibalization?
Possibly, but only 1% to 2% of OSB handles if any. College basketball is ~7% of OSB handle in January. Kalshi+Polymarket are not 200% the size of the OSB market, they’re 80%. Outside OSB customers their addressable market is enormous: 50% of the population, 14 million 18-, 19- and 20-year-olds across all states (97% of the OSB market is 21+), and everyone in OSB states who can’t bet on in-state teams. Some of those states are significant; NY, NJ, IL, VA (table below from DK’s site). Polymarket has zero fees and average odds are -103 compared to the books’ -109, so price may be a factor for some, but Polymarket’s NFL has not risen WoW.
HoldCrunch research showed that Kalshi’s handle growth remains broadly aligned with the sports calendar, and its fee structure results in pricing that is very similar to traditional sportsbooks. The price gaps also differ materially from those seen between Betfair and UK sportsbooks during the early expansion of prediction markets.
HoldCrunch does not view current trends as evidence of cannibalization driven by pricing, nor do handle sizes suggest meaningful displacement of sportsbook activity. Instead, the data indicates that Kalshi and Polymarket are likely attracting customer segments that online sportsbooks (OSBs) have historically struggled to reach, with NFL and NBA markets appearing even less susceptible to overlap.
NFL and NBA handle sizes represent approximately 41% and 35% of OSB straight-bet equivalents, respectively. Research showed that if these figures exceeded 100%, cannibalization concerns would become more credible, as activity would extend beyond roughly half of the U.S. population. At current levels, prediction markets likely account for only around 1–2% of OSB handle.
Consistent with prior analysis, slowing handle growth trends are more likely attributable to market maturation across U.S. states rather than competitive pressure from prediction markets.
Here’s the DK college restrictions table. It can be accessed in their support pages:
Table 2: DK College Restrictions
Kalshi/Polymarket as a % of NY
HoldCrunch is estimating NY handle for the market to be $565m w/e 1/18. That makes Kalshi’s $660m 117% of NY, in line with the last two weeks’ 119% and 117%. Polymarket’s $284m means they’ve jumped from 41% the size of NY w/e 1/11 to 50% w/e 1/18:
Kalshi w/e 1/18 was 19% the size of the OSB market, Polymarket 8%, up from 7% the previous week:
Table 3: OSB Equivalent Handle w/e 1/18 ($m)
Here are the sports splits: 28% of Kalshi and Polymarket’s combined handle was NFL, 28% NBA and 20% NCAAB. Those were the top 3 sports. OSB NCAAB straights are less than half NFL straights in January. College basketball is overweighted just like college football has been. Here’s Kalshi’s $m handle with NFL at the top, a record week at $238m (orange line) which is in keeping with the strong playoff schedule, NBA (green line) follows the usual pattern, 51 games last week, 59 the previous week so it dips slightly, NCAAB is up again (blue line) on the back of popular conference games:
Here’s Polymarket. The notable data point is NCAAB (blue line) rising sharply and now well above NFL (orange line). NBA (green line) remains popular and about half the size of Kalshi:
Kalshi vs Polymarket
Polymarket grew college basketball 49% WoW from $30m to $44m vs Kalshi’s 12% from $130m to $146m. I don’t think that’s Polymarket taking from Kalshi, they both grew by almost the same $m amount, Polymarket $14m, Kalshi $16m. HoldCrunch believes that it is non-OSB audiences signing up to bet on popular conference games because they can’t bet with OSBs. Here’s the table showing the gap between Kalshi and Polymarket narrowing sharply in NCAAB:
Table 4: Kalshi Handle as a Multiple of Polymarket in Sports
Parlays
Kalshi beat their previous best week for parlays, w/e 12/28. This was perhaps helped by Robinhood adding custom parlays Friday. Kalshi volume was 19% of total sports volume, handle was 4% of total sports handle. The volume to handle ratio was higher than the average ~9x, 13.3x. As Kalshi parlays tick up, be wary of big volume announcements. It’s not the same growth as the key audience of small stakes customers who are happy to spend over time in the hope of a big win:
Table 5: Kalshi Sports w/e 1/18
Here’s the recent history of parlays as a % of volume and as a % of handle:
Table 6: Parlays as a % of Sports
Summary
HoldCrunch analysis suggests that any potential cannibalization of online sportsbook (OSB) activity by prediction markets remains limited, likely representing no more than 1–2% of total OSB handle. Current handle trends therefore appear less indicative of competitive displacement and more consistent with natural market maturation across established U.S. states, alongside ongoing shifts in betting behavior driven by parlay mix dynamics.
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