Kalshi Outperforming Sportsbooks in Pricing During March Madness, Analysis Shows

(AsiaGameHub) –   An analysis conducted by Jordan Bender of Citizens Equity Research indicates that Kalshi’s pricing for games in the “Sweet 16” and “Elite 8” rounds of the March Madness competition has been more favorable than that of its competitor in traditional sports betting, DraftKings. However, DraftKings still offered the most competitive pricing for the “First Four” games.

DraftKings Holds Out at the Beginning of March Madness – Kalshi Overtakes It Later

Bender stated, “DraftKings provided the best customer pricing for the initial four games, but Kalshi offered superior pricing for the subsequent rounds. When combining moneyline and over/under bets, Kalshi’s vig was 4.42% for the Elite 8 and 4.55% for the Sweet 16, followed by DraftKings, and then Fanatics.”

Kalshi has previously asserted that it does not operate as a sports betting platform but rather offers a superior customer-facing alternative that attracts players organically. What once seemed like an overly confident self-promotional claim now appears to be validated by Bender’s analysis.

It seems Kalshi is outperforming sportsbooks in their own arena, while also managing to stay ahead of their prediction market initiatives. Despite DraftKings, FanDuel, Fanatics, and Robinhood launching their own prediction markets, they are still struggling with their offered margins, as Kalshi is underpricing them.

Bender attributes this to the fact that sportsbooks do not have a vigorish to pay, which is the fee a sportsbook deducts from a wager to ensure profitability.

Prediction markets like Kalshi may reduce or even eliminate their transactional fees (which differ from vig) to encourage greater market liquidity and maintain attractive margins.

Bender elaborated, “Kalshi imposes a transaction fee on every contract traded on its platform, designed to encourage liquidity on the order book rather than its removal. In our analysis, this fee averaged approximately $1.58 per 100 contracts for the Elite 8 and $1.65 for the Sweet 16, which contributed to the improved pricing.”

Prediction Markets Far From Taking Out the Sports Betting Business

However, the company’s success during one of the United States’ most significant sports betting events does not automatically mean it will displace sportsbooks.

Bender believes the opposite is true. He suggests that prediction markets pose a limited threat to traditional sportsbooks, given the wider array of options available to players.

Kalshi, conversely, is concentrating on major events, while established companies are now seeking ways to reduce their margins and enhance the overall player experience.

Simultaneously, prediction markets continue to face increasing scrutiny from local gaming and state regulators.