Last year I placed a $100 bet on Drake Maye to win MVP at +6600 odds during the preseason. By late December, after Maye torched the Jets with five touchdowns, he’d become the favorite. Live sportsbook odds had him between +175 and even money.
The fair market value of my position? Between $2,400 and $3,350.
My cashout offer? Only $1,600.
I’d be leaving around $1,000 on the table just to cash in on my own winning position.
My only alternative? Hedge by betting other MVP favorites, which means paying more vig to sportsbooks and compounding their value extraction.
It was during that season, when prediction markets were rising in popularity, that I realized for futures bets, prediction markets provide something that trumps sportsbooks: the ability to trade at actual market prices instead of hoping for a likely horrible-value payout.…