Prediction Markets Expand Parlay Offerings in Bid for Sports Gambling Share

Kalshi and Polymarket are competing to build sufficient liquidity to offer multi-leg sports trades, as the prediction market sector accelerates efforts to challenge the $14 billion US sports gambling industry. 

These transactions, known as parlays in the US, offer higher payouts for a series of linked successful outcomes. While they are a central product for traditional gambling operators and the best sports betting sites, parlays are structurally complex for prediction markets to implement.

To facilitate these trades, prediction market apps must create specific liquidity pools for every individual leg of a contract. Conventional gambling companies, including DraftKings and Flutter (the parent company of FanDuel), avoid this requirement by bundling preset odds from their own bookmaking operations. 

“The current downfall [of prediction markets] is their inability to offer the same range of exotic bets that US gamblers love so much, like same-game parlays… but the market is beginning to find a way to serve certain sports,” Adam Rivers, a managing director at consultancy Alvarez & Marsal, told the Financial Times. 

Bank of America Merrill Lynch analyst Shaun Kelley also identified parlays as the primary economic driver of the sports betting industry, dubbing them the “killer app” of sports betting. He noted that they have so far transformed operator win rates and profit margins. 

While transaction-based fees make parlays less lucrative for prediction markets than for standard sportsbooks, the products serve as a tool to attract users from legacy platforms. Kalshi and Polymarket currently provide financial incentives to traders who contribute liquidity to their exchanges. 

Bank of America analysts estimated in November that prediction markets captured between 3% and 8% of the US online sports betting market. Strategic shifts have followed, with DraftKings and Flutter launching prediction products in states where standard online sports betting remains prohibited. 

Kalshi introduced its first customizable parlay feature in December, which CEO Tarek Mansour reported facilitated over $100 million in volume in a single week.

Institutional partnerships drive exponential volume growth

Kalshi's recent performance is giving it greater confidence to explore more options. The financial statements of Foresight Ventures indicate that Kalshi’s volume of trading per year increased from $300 million to $40-50 billion since August 2025.

This rapid scaling occurred despite various court challenges during the same period. In the final month of the year, the platform processed more than 27.6 million transactions, with football contracts for professional and college playoffs accounting for nearly all the activity.

Legal tension remains high, however, as officials in Nevada and Maryland argue that these event contracts are merely a different name for sports wagering. These states assert that such activities fall under the jurisdiction of local gaming boards rather than federal financial oversight. 

The company is facing class-action lawsuits due to the dispute, and it is also expected that other states and tribes will follow suit this year.