Prediction Market Comparison

Fees vs The Vig

A sportsbook hides its cost inside the price. When two people take -110 on opposite sides of a market, the vig is 4.76% which is the sportsbook's margin. You never see a fee, because the "fee" is built into the odds.

Most prediction markets charge a fee. The quoted contract price reflects what is currently available, and the prediction market charges a trading fee that gets added on. This has a significant consequence for anyone comparing the two: the prediction market price you see is not the price you pay, unlike a sportsbook where the price you see is the price you get.

Fees Are Uneven

Several prediction markets charge a fee that changes with the contract price. The fee peaks around 50¢ and falls away toward both extremes. The concept is that a contract priced at 0.50 carries the most risk for whoever is on the other side, while one priced at 97¢ is close to settled and carries less risk.

The effect is that a 50/50 market can cost more to trade than a heavy favorite on the same prediction market, and that a fee comparison run at one price does not necessarily hold at another. Run the comparison at different prices to see the impact.

How The Fee Impacts Odds

For the most part you can treat the fee as lowering the odds rather than as an expense you pay afterwards. A contract at 60¢ converts to -150, but once you include the fee the effective price might be equivalent to -155 or -160 depending on the prediction market and the number of contracts. If a sportsbook is showing -152 on the same outcome, the prediction market looked better before fees, but is actually worse once you consider the fees.

This is why the comparison matters more for prediction market trading than a vig calculation does for sportsbook betting. A sportsbook's hold is roughly stable across similar markets. Prediction market execution costs vary by venue, by price level, and sometimes by how the order fills, so the same trade genuinely does cost different amounts in different places.

All of the DarkHorse Odds bet finders calculate prediction market fees and adjust the trade amounts accordingly.

Fees Change

Prediction markets sometimes revise their fee structures so the fee you pay today might not be the same as what you pay in a few months.

Why Execution Fees Matter

Prediction markets frequently advertise their prices as cheaper than sportsbooks, and they might be, but the claim is usually made by comparing a contract price without the fee to a sportsbook. Once the fee is accounted for, the story often changes.

Common mistakes

• Ignoring Fees: The listed exchange price excludes the fee.
• Using The Wrong Price: Fees often scale with the contract price, a fee on 100 contracts calculated at 50¢ does not always equal the fee on 100 contracts at 85¢.
• Available Liquidity: Prediction market prices each have their own liquidity pool. If you are trying to trade more than is available at a given price your aggregate odds will worsen. DarkHorse Odds accounts for liquidity in all of our bet finders.
• Fees Change: Venues revise fees, always confirm them.