Kalshi Volume for World Cup Winner Rises to $123 Million, But How Much Is Actually at Risk?
Gooooooooaaaaaaaaallllllll!
The World Cup is now underway, and as of midnight, Kalshi users had traded about 123 million event contracts on the tournament winner.
Prediction markets and the analysts that follow them would call that $123 million in “volume,” but the lopsided odds on those contracts present an opportunity to illustrate the problem with that metric. Although it’s true that $123 million represents the amount of money that participants have locked up, and which will ultimately be distributed, far less than that is actually going to change hands.
There are 48 teams participating in the World Cup, and even the heaviest favorites — Spain and France — are each being given less than an 18% chance of winning.
Meanwhile, a surprising amount of the volume has been wagered on extreme underdogs. Most notably, Haiti has been the ninth-most heavily traded team, with nearly 4.5 million shares bought. That puts it ahead of Brazil in volume. However, Yes shares for Haiti to win trade for just 0.1¢ apiece, compared to 8.8¢ for Brazil.
That means that Haiti backers have only about $4,500 on the line, compared to about $364,000 for those betting on Brazil.
Top World Cup Teams by Total Volume
- Portugal: $8,400,000
- Mexico: $8,200,000
- France: $7,500,000
- USA: $6,500,000
- Netherlands: $5,200,000
Top World Cup Teams by Yes Bettor Exposure
- Frace: $1,300,000
- Spain: $940,000
- Portugal: $860,000
- England: $520,000
- Argentina: $380,000
Actual Risk is Much Lower Than Volume
Of course, if Haiti does somehow win the World Cup, the No side will be on the hook for nearly $4.5 million. However, that’s unlikely to happen. More importantly, only one team can actually win, so only one group of No backers can take that kind of hit.
Because every team is an underdog in a tournament of this size, only about $5.4 million of that $123 million in volume is held by Yes bettors. The rest belongs to those holding No shares, and no matter who wins, most of that will be returned to its original owners.
A Mexico win would be the scenario leading to the greatest transfer of money. In that case, Mexico Yes bettors would collectively win $8 million off the No holders, and Yes holders for the other teams would collectively lose $5.3 million.
So, out of that $123 million in volume, there’s really only $13 million and change on the line.
In addition to that, it is highly likely that retail investors hold the bulk of the Yes action, while institutional liquidity-providers are holding No, especially on the extreme underdogs. Since those liquidity-providers are likely to be active in all 48 markets, their exposure is heavily hedged.
Volume Overstates the Threat to Sportsbooks
Volume works well as a metric for comparing one market to another, as long as the odds are somewhat close to 50-50 and there are retail speculators on both sides of the equation. It starts to break down even for such internal comparisons when there’s a significant amount of action on extremely unlikely scenarios, since the average amount of money that changes hands in such markets will be orders of magnitude less than the volume.
That problem is even more important when it comes to assessing the threat prediction markets pose to sportsbooks. Kalshi, Polymarket, and others are fond of boasting about big volume numbers on important events like the World Cup. It’s tempting to take those numbers and compare them to betting handle.
Yet, handle only includes bettors’ side of the action and hides what the sportsbook is putting up. In lopsided markets where the book is holding most of the short-odds side, sportsbook handle will seem tiny compared to the equivalent volume for a prediction market. That’s especially true for futures markets, where sportsbook users may not even be given the option to take the field against a particular team.
For instance, a sportsbook that booked exactly the same amount of action as Kalshi on the World Cup winner would be showing $5.4 million in handle, compared to that $123 million in volume for the prediction market.
That’s a point that seems to be lost on many of those who are foretelling doom for U.S. sportsbooks.
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