As the 2022 FIFA World Cup drew to a close, Kylian Mbappé made history by scoring ten goals in a single tournament, becoming only the fourth player in history to achieve this feat, with the last being in 1970. Lionel Messi, another star of the tournament, netted eight goals as Argentina ultimately claimed the championship trophy.
In the betting world, bettors often flock to familiar names and favored outcomes, which can lead to significant financial implications for bookmakers. A recent run of favorable results for favorites in the NFL during late 2024 resulted in an estimated loss of $438 million in gross gaming revenue for Flutter, parent company of FanDuel.
Moreover, parlays, or multiple bets placed in a single wager, further concentrate this financial exposure. Sportbooks encourage parlays due to their potential for higher payouts, allowing bettors to transform a small wager into substantial wins while enabling bookkeepers to obscure profit margins.
The combination of recreational betting demand and appealing economics has made parlays the top-performing product for sportsbooks. In states like Illinois, New Jersey, and Colorado, parlays constituted about 27% of total wagers but accounted for an astonishing 56% of sportsbook revenue, according to The Wall Street Journal.
With sportsbooks burdened by costs related to taxes, licensing, and compliance, they prefer high-margin bets. For years, parlays seemed unassailable until Kalshi, a prediction market platform, launched a new offering, Combos, on September 29, 2025. The following day, stocks of DraftKings and Flutter fell by 12% and 10%, respectively, even as trading volumes were just beginning.
Kalshi's Combos introduced a competitive dynamic by allowing independent market makers to bid on customer orders, stepping into a space previously dominated by sportsbooks. This setup allowed Kalshi to extend its reach into states such as California and Texas, including those with current restrictions against online sports betting, although the future of this access is uncertain.
During the World Cup, Kalshi reportedly processed around $125 million in bets per match. Even on a quieter Sunday without a major sport, the platform handled approximately $945 million in volume, illustrating the scale of operations in this new marketplace. These figures reflect notional transactions rather than actual revenue collected, given the nature of exchange volume counting both sides of each contract.
Kalshi also saw an increase in daily combo creators from about 100,000 at the start of the World Cup to nearly 400,000 by July 6, according to White Swan Predicts. The key driver behind prediction market growth continues to be the NFL, with projections suggesting that for the opening week of the 2026 season, Kalshi might handle around $8 billion in market maker risk.
In prediction markets, customers create bets and request quotes, which competing market makers process. If a market maker accepts a bet, they take on the potential risk by posting collateral until the bet settles. For instance, a customer might create a combo bet on England winning, Kane scoring, and over 2.5 total goals in the match. The customer experiences it as a single accumulator, while behind the scenes, it operates like an auction for risk.
These prediction contracts now permeate fintech, cryptocurrency, and fantasy sports platforms, vastly expanding their audience. However, every bet still requires accurate pricing from market makers.
Capacity limits the degree to which market makers can accept risk. For example, a parlay priced at 17/1 ties up collateral for each dollar wagered until the bet settles. Timing can affect capital release, and thus the profitability of the bet hinges on both strategic pricing and how efficiently capital is managed.
In competitive scenarios, market makers must balance between pricing effectively to attract orders while managing risk. As outcomes in a match are correlated—where a comfortable win for France might increase the likelihood of Mbappé scoring—each leg cannot be priced in isolation. Market makers must account for the interplay of thousands of combinations in real time.
Professional betting syndicates, with their experience and expertise in pricing sports and managing risk, are well-positioned to take advantage of the opportunities within the prediction market space. Waterhouse VC is collaborating with a leading betting syndicate to exploit this potential, combining deep industry knowledge with advanced trading infrastructure. With sufficient capital, these organizations can offer meaningful pricing across more markets, enhancing their operational scale.
