👋 Welcome to the Predicted — the newsletter covering the business of prediction markets.

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In this piece, I:

1) Discuss the unit economics of sportsbooks
2) The Parlay (Combo) goldrush is taking Kalshi to the number 1 spot in Prediction Markets
3) Why the economics not identical
4) Why retail still loses

…But before we get into it, if you haven’t downloaded our Q1 2026 report - you should definitely do that. It’s totally free 👇

Parlays print money for sportsbooks.

They now generate the majority of sportsbook gross gaming revenue despite making up a much smaller share of bets.

In New Jersey, parlays were 72.5% of gross revenue in a recent month at a 24.2% hold versus 4.4% on non-parlay bets.

On FanDuel alone, they made up 70% of NFL and NBA bets in 2023, per parent Flutter Entertainment.

Eilers & Krejcik's December 2025 sports-betting market monitor pegs parlays at more than half of US sportsbook GGR overall.

Parlays are to sportsbooks what mortgages are to banks. The breadwinner. The product that always makes them money.

And, although prediction markets claim not to be gambling, the parlay product offering is exactly what is driving recent volume growth.

Prediction market weekly volume went from about $20 million in April 2024, to $2.5 billion at the November 2024 election peak, to roughly $6 billion in January 2026.

And it has attracted an incredibly diverse set of market participants.

And of late, Kalshi has become the dominant exchange, with their share of total notional prediction market volume rising from roughly a third in mid-2025 to around 60% by April 2026.

The reason for this is the same reason sportbooks print money.

Parlays.

Kalshi quietly introduced parlays in September. And the volumes have exploded since.

Total parlay volume on the platform was around $637 million in December.

It rose to roughly $1.2 billion in January, $1.3 billion in February, $2.1 billion in March, and $3.3 billion in April.

The first week of May alone did ~$1 billion.

In October, parlays were under 2% of Kalshi's total exchange volume. By April, they were 22%, as per Sportico.

Kalshi posted a record $14.8 billion in overall April volume, and most of the marginal growth came from parlays.

Per InGame data, Kalshi made about $3.7 million in parlay fees over the final three months of 2025.

Four months into 2026, Sportico's analysis finds Kalshi has booked about $35 million in parlay fees alone.

Whilst impressive on paper, it’s not apples to apples when comparing these fees to the gaming revenue of sportsbooks.

A sportsbook parlay is a single-counterparty bet. The book sets the line, takes the other side.

A Kalshi parlay is multi-counterparty by construction. The retail user requests a quote on a custom multi-leg combo. Market makers quoting through Kalshi's request-for-quote system price the bet. The user can take it or reject it. The hold (fee) gets split between the makers and the exchange.

Sportico's analysis of January through April 2026 found Kalshi's blended parlay hold was just over 10% before fees and nearly 15% with fees. Of the $117 million retail losses, about $82 million went to the makers, and about $35 million went directly to Kalshi as fees.

Two things stand out from those numbers. Kalshi's parlay hold is slightly lower than a typical sportsbook parlay hold. 15% versus 18% or more. On the headline number, the exchange structure is marginally fairer to the retail user.

Fee composition is another thing, however. Kalshi will never make as much money from parlays as a sportsbook does, because the product offering is fundamentally built for a centralised book. And because Kalshi shares fees with market makers, the counterparties are taking the risk.

Flutter's announcement this week makes things even more interesting.

On its Q1 earnings call, Flutter, the parent of FanDuel, told analysts it had begun trialling market-making services on a major third-party prediction market platform in April.

CEO Peter Jackson said "I want to make money through market-making and I want to acquire customers."

The marquee sportsbook parlay operator is now also the counterparty on prediction market parlays.

So not only are sportsbooks able to take their highest margin product direct to consumer, but they are also able to make money on consumers that are not their own via prediction markets.

Isaac Rose-Berman, a professional bettor and analyst, put it plainly in the Sportico piece:

“The reality is that for 99% of users, there is no difference between Kalshi and a sportsbook. They're logging on, and they're placing a bet with a negative expected value, that's just how it works.”

But right now, between 40-50% of Kalshi’s volumes come from states where sports betting is not legal.

So regulatory arbitrage, rather than the parlay product, is what is driving growth.

But what I struggle to reconcile is the following things:

(1) This setup might be better from a pricing perspective than a sportsbook. Users get fairer odds because more counter parties are competing to price the parlays.

(2) BUT a market maker has to be incentivised massively to make these combos (parlays). And so, will the product ever be as good or as seamless as a sportsbook? I doubt it.

(3) At the same time, Kalshi is telling everyone willing to hear that they are not a gambling platform and want to focus on institutional growth. Building a platform for institutions, concurrently with going all in on parlay growth, doesn’t seem conducive here.

(4) I don’t know what the regulatory set-up should look like, but users having fairer and more competitive pricing is better for speculative products. If people are hellbent on betting on non-value bets for entertainment, then we should welcome a competitive ecosystem that gets them the least worst bet.

(5) Churn is real. Retail users who bet on parlays are long-term losers. And I’m unsure if any of these platforms are set up for the churn to come. Especially when retail are constantly playing against professional traders and market makers. It’s incredibly hard to keep both sides of this equation happy, whilst increasing volumes and thus fees.

Disclaimers

This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.

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It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks associated with prediction markets include price volatility, loss of capital (the value of your position could drop to zero), illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. Therefore, please be aware that when you place funds on prediction markets, you may not be protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firm. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.