Before the 2022 FIFA World Cup, only three players had ever scored ten goals in a single tournament, and none had done so since 1970. French forward Kylian Mbappé became the fourth player to reach this milestone, finishing the tournament with ten goals and securing his second Golden Boot. Meanwhile, Argentina’s Lionel Messi scored eight goals, and Spain ultimately claimed the championship trophy. Despite the tournament's expansion, the same familiar names continued to dominate the scoring charts.
In the sports betting world, casual bettors often gravitate toward recognizable names and favored outcomes. When these bets succeed, it can create significant liability for sportsbooks. A recent run of favorite-friendly outcomes in the NFL during late 2024 reportedly cost Flutter, the parent company of FanDuel, an estimated $438 million in gross gaming revenue.
Parlays are increasingly popular among bettors because they can turn a small wager into a substantial payout. For sportsbooks, the allure lies in the difficulty of discerning the individual margins when multiple bets are combined into one package.
In the context of open competition, parlays have evolved into the most lucrative product for sportsbooks, merging casual demand with attractive economic benefits. Statistics from The Wall Street Journal indicate that in Illinois, New Jersey, and Colorado, parlays accounted for about 27% of the total amount wagered, but represented a staggering 56% of sportsbook revenue.
Sportsbook operators face numerous expenses, including licenses, taxes, compliance costs, promotions, market-access payments, and payment shares to suppliers. This cost structure inherently favors high-margin, price-insensitive bets, making parlays an ideal offering.
For years, this product seemed untouchable until Kalshi introduced Combos on September 29, 2025. The very next day, DraftKings' stock price fell by 12%, while Flutter’s dropped by 10%, despite Combos having negligible trading volume at that point. This launch introduced a scenario where independent market makers could compete for each order, taking the opposite side of customer positions.
Prediction markets have made strides in states like California and Texas, where online sports betting remains illegal, raising questions about the sustainability of this access amidst legal challenges. Nonetheless, the demand for such markets continues strong.
Bank of America estimates that during the World Cup, Kalshi processed approximately $125 million for each match. Even on a recent Sunday devoid of major events, the platform generated nearly $945 million in trading volume, as per Ticker Tracker. Note that this figure accounts for both sides of every contract at face value, representing notional values that differ from sportsbook handles or revenue.
The volume of same-game parlay (SGP) risk per match in Kalshi during the World Cup surged. The number of daily combo creators on the platform skyrocketed from approximately 100,000 at the tournament's outset to almost 400,000 by July 6, as indicated by a seven-day moving average from White Swan Predicts.
As the NFL influences the landscape, it has propelled significant growth in prediction market volumes. For the opening week of the 2026 season, estimates suggest that Kalshi alone will handle around $8 billion in maker risk.
In a sportsbook, prices are set by the operator, who manages risks and determines whether to accept a bet. In contrast, on an exchange, customers create their own combos and submit requests for quotes. Competing market makers respond with prices, and the best offer wins. If accepted, the market maker takes the other side of the bet and must place collateral equivalent to their maximum potential loss until the bet is settled.
For instance, a bettor might select England to win, Harry Kane to score, and for over 2.5 goals to be scored. To the customer, this still resembles a traditional accumulator; however, behind the scenes, it functions as an auction for risk.
Prediction contracts are now available in fintech, cryptocurrency, and fantasy sports applications. This broad distribution allows for wider access to retail customers, but there is still a need for accurate pricing of each combo. Exchanges provide the distribution, while market makers supply the necessary capital and pricing expertise.
Capital constraints dictate how much risk a market maker can take on. For example, at a parlay price of 17/1 (18.0), each $1 stake ties up $17 in collateral until the settlement, which can occur hours later for same-day combos. Therefore, profitability depends on both pricing accuracy and how efficiently capital can be utilized.
Competition is critical; offering too low a price risks losing the order to competitors, while pricing too high allows savvy bettors to exploit the market. Unlike sportsbooks that set their own parlay margins, market makers on exchanges enhance their profits only on what remains after competitive quotes.
Furthermore, correlations complicate the modeling process as outcomes within a game influence one another. For instance, if France wins decisively, it becomes more likely that Mbappé scored, and that over 2.5 goals were achieved. Market makers must evaluate how each event alters the probability of related outcomes across numerous combinations in real-time. Simply mirroring sportsbook prices does not suffice as those already reflect the bookmaker’s margin and their market strategies.
Additionally, market makers generally take short positions on popular public favorites, which means a single game result can impact thousands of related bets simultaneously. The challenge lies in assessing the entire distribution rather than treating each leg of a bet as an isolated occurrence.
Financial market makers bring much-needed capital, execution infrastructure, and latency management but often lack the specialized sports models necessary for accurate pricing. In contrast, betting syndicates that have honed their skills over decades understand how to model correlation and manage risks across various markets. With adequate capital, these syndicates are ideally positioned to capitalize on the potential of prediction-market combos.
Waterhouse VC is collaborating with a leading professional betting syndicate to harness this opportunity. By merging decades of experience in pricing complex bets with proprietary sports models and trading infrastructure, they aim to address the burgeoning market. While capital must underpin every quote for collateralization, greater liquidity enables a market maker to implement their pricing advantage across more markets and on a larger scale.
