Prediction markets vs sportsbooks

Exchanges and prediction markets let people trade with each other; sportsbooks set prices and take the other side. The differences that matter.

A sportsbook sets its own prices and takes the other side of your bet. A prediction market or exchange matches people who disagree: one buys "yes", another sells it, and the platform charges a fee instead of building a margin into the price.

What's different in practice

• Pricing: exchange prices come from the order book (best bid and ask), so they can be tighter or thinner than a book's.
• Fees: exchanges charge explicit fees per trade; books charge through the margin in their odds.
• Limits: exchanges don't usually limit winning customers the way books can, but there may not be much size available at a price.
• Regulation: in the US, some event-contract exchanges are regulated by the CFTC, while sportsbooks are licensed state by state. Availability differs by state.

Coconuts currently shows sportsbook prices only. Read the vig explainer to compare costs.