A prediction market exchange just out-priced every major U.S. sportsbook during March Madness — and the numbers come straight from a Wall Street equity research desk. Citizens Capital Markets analyst Jordan Bender published a pricing analysis showing Kalshi posted a blended vig of just 4.12% across the 2026 NCAA tournament, undercutting DraftKings, FanDuel, and Fanatics on the metric that matters most to bettors: what they actually pay to place a wager.
KEY FACTS AT A GLANCE
- Best overall pricing: Kalshi posted a 4.12% blended vig — lowest of any operator during March Madness 2026
- Sportsbook comparison: DraftKings came in at 4.34%, FanDuel at 4.45%, and Fanatics at 4.48%
- DraftKings led early: DraftKings had the best pricing during the First Four games (4.57% vig), but Kalshi took over from Round 1 onward
- Record volume: Kalshi processed $2.34 billion in March Madness trading volume in just four days, generating $25.5 million in fees
- In-game dominance: In-game contracts made up 73–76% of Kalshi’s volume vs. an estimated 55–60% at sportsbooks
The Pricing Breakdown
Citizens Equity Research analyst Jordan Bender evaluated pricing across four operators — Kalshi, DraftKings, FanDuel, and Fanatics — using implied margin (vig) as the benchmark. The vig represents the built-in cost a bettor pays on every wager. Lower is better.
Across the full tournament, blending moneyline and over/under markets, Kalshi posted a 4.12% vig. DraftKings came in second at 4.34%, followed by FanDuel at 4.45% and Fanatics at 4.48%. Bender noted that other prediction markets operated by DraftKings, Fanatics, FanDuel, and Robinhood were not keeping pace with Kalshi on the pricing front.
Related tools: Vig Calculator · No-Vig Calculator
From Worst to First: Kalshi’s Round-by-Round Turnaround
The picture was not always favorable for Kalshi. During the First Four games, DraftKings posted the lowest vig at 4.57%, followed by FanDuel at 4.64% and Fanatics at 4.68%. Kalshi came in last at 4.89% — nearly a full percentage point above where it would finish.
But as the tournament deepened and liquidity grew on the exchange, Kalshi’s pricing tightened. By the Sweet 16, Kalshi’s blended vig had dropped to 4.55%. In the Elite 8, it fell further to 4.42%. The trend tells a clear story: the more volume that flows through an exchange, the tighter the spreads become — and the better the price for bettors.
Why Kalshi’s Model Produces Better Prices
The structural explanation is straightforward. Traditional sportsbooks embed their margin directly into the odds — a standard -110/-110 line means you need to risk $110 to win $100, resulting in a built-in vig of roughly 4.5%. The sportsbook sets the price and acts as the counterparty to every bet.
Kalshi operates differently. As a CFTC-regulated exchange, it functions as a peer-to-peer marketplace where users trade contracts priced between $0.01 and $1.00. Instead of baking a margin into the price, Kalshi charges a transparent transaction fee — approximately $1.58 per 100 contracts in the Elite 8 and $1.65 in the Sweet 16, according to Bender’s analysis.
There is another factor driving Kalshi’s pricing advantage. Professional traders and sharp bettors often pay no transaction fee at all. Kalshi waives fees for these participants to incentivize them to provide liquidity to the marketplace, which helps maintain tight spreads. The result is an exchange where the effective house edge can be significantly lower than what traditional sportsbooks offer.
HOW PRICING WORKS: SPORTSBOOK VS EXCHANGE
Traditional Sportsbook
- Margin embedded in odds (-110/-110)
- Sportsbook is the counterparty
- Vig is fixed regardless of liquidity
- Sharps often limited or banned
Kalshi (Exchange Model)
- Transparent transaction fee per contract
- Peer-to-peer — users trade against each other
- Spreads tighten as liquidity increases
- Pro traders incentivized with fee waivers
In-Game Volume Tells the Story
One of the more striking data points from Bender’s analysis is the share of volume coming from in-game (live) contracts. On Kalshi, in-game contracts accounted for 76% of volume during the Sweet 16, 74% during the Elite 8, and 73% across the tournament as a whole. Traditional sportsbooks, by comparison, are estimated to see closer to 55–60% of tournament handle come from in-game bets.
This gap matters because in-game betting is where the power shift between sportsbooks and prediction markets is most visible. Exchange pricing adjusts in real time based on supply and demand, making it particularly well-suited for live markets where conditions change by the minute.
The Bigger Picture
The pricing data arrives during a record-setting stretch for Kalshi. The platform processed $3.4 billion in total volume during the week ending March 23 — a new all-time high — and $800 million in March Madness trades during the opening weekend alone, nearly double the entire 2025 tournament total. The Duke-Siena game attracted $42.4 million in volume, the largest single game, while the tournament winner market drew $113.1 million.
For context, the American Gaming Association projected $3.3 billion in total sportsbook handle across the 2026 March Madness tournament. H2 Gambling Capital estimated prediction market exchanges could add another $530 million in handle-equivalent volume. Kalshi alone appeared to exceed that estimate within the first week.
Kalshi’s broader trajectory underscores the momentum. The platform generated $263.5 million in fee revenue during 2025, with 89% coming from sports markets. In December 2025, the company raised $1 billion at an $11 billion valuation in its Series E round. Weekly trading volumes now regularly exceed $1 billion.
“Price-sensitive customers are not getting superior pricing for the most liquid sports” on rival prediction market platforms.
— Jordan Bender, Citizens Equity Research
Despite the pricing advantage, Bender’s earlier research found the cannibalization impact on traditional sportsbooks remains limited. Prediction markets have led to roughly a 5% decline in legal sportsbook handle, which the analyst described as “by no means a downside catalyst” for publicly traded operators. However, bettors who try prediction markets see an 11% median decline in spending at sportsbooks within 90 days — though their overall gambling wallet actually increases by 9%, suggesting the two formats grow the total pie rather than simply splitting it.
Demographically, Kalshi skews younger: 24% of its users are under 25 with a median age of 31, compared to just 7% under 25 for DraftKings and FanDuel, where the median age is closer to 35. The average prediction market bet sits at $185, more than triple the $55 average at regulated sportsbooks. While prediction markets still face questions about their identity — with sports accounting for 90% of volume — the pricing data suggests the exchange model is at minimum competitive on the dimension that matters most to bettors.
KEY TAKEAWAYS
- Kalshi posted the lowest vig — Its 4.12% blended vig undercut DraftKings (4.34%), FanDuel (4.45%), and Fanatics (4.48%) across the full 2026 NCAA tournament
- Pricing improved with liquidity — Kalshi started with the worst pricing in the First Four (4.89%) but tightened to 4.42% by the Elite 8 as volume increased
- Structural advantage — The exchange’s transaction fee model, combined with fee waivers for professional traders, naturally produces tighter spreads than the traditional sportsbook vig model
- In-game volume leads — 73–76% of Kalshi’s tournament volume came from live in-game contracts, compared to an estimated 55–60% at sportsbooks
- Limited cannibalization so far — Citizens data shows only a 5% decline in sportsbook handle from prediction markets, though individual bettors shift 11% of spending after trying exchanges
Sources
- Kalshi Beating Sportsbooks on NCAA Tournament Pricing — Casino.org (Citizens Equity Research analysis)
- March Madness Helps Kalshi Make $25M In Fee Revenue In Four Days — Yahoo Finance
- Kalshi Fee Revenue In 2025 Was $263.5 Million — Yahoo Finance
- Prediction Market Impact on Sports Betting Stocks ‘Overblown,’ Analyst Says — Yahoo Finance (Citizens cannibalization analysis)
- Kalshi Raises $1B at $11B Valuation — TechCrunch
