The Takeaway: Kalshi Hits $2B In Sports Trading Volume, But What's That Mean?
Every Thursday in The Takeaway, The Closing Line provides commentary on trends and news in the gambling industry.
Editor’s note: I ran out of time to include a full roundup today. The Closing Line will be back on Sunday with The Cashout, including a gambling news roundup.
Kalshi trumpeted on social media that it just surpassed $2 billion in “sports trading volume.”
That’s a big number, and certainly worth some attention. But what does it actually mean, how does it compare to sports betting, and what else can we glean from this data? Let’s break it down.
Trading volume =/= sports betting handle
These numbers are worth knowing and reporting on, but let’s understand that this is NOT a direct comp for sports betting handle.
Here’s a piece I published from the folks at the sports betting exchange Sporttrade explaining the dynamic. (Sporttrade also has its own newsletter — BLSH.)
The quick version: Some amount of the trading volume comes from market makers like Susquehanna. Because of the presence of Susquehanna, it’s difficult to argue $1 trading volume is the same as $1 of sports betting handle; they are acting like the sportsbook and providing liquidity. We don’t know how much volume is actually coming from Susquehanna, but it’s certainly meaningful.
The economics of exchanges/prediction markets vis a vis sportsbooks are also wholly different. If you want to read more about that, go read this excellent piece from BLSH.
But in any event, volume and handle are not the same things, and we shouldn’t use the terms interchangeably or as one-to-one comps.
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OK, I know trading volume isn’t handle. But can we compare them anyway?
Do you promise that you understand this concept? Do you pinky swear? OK, then we’ll compare it to handle, just so you can get an idea of the scale of all this:
Kalshi launched sports betting late January, so that $2 billion came over roughly six months, a couple of weeks before the Super Bowl.
What did regulated US sports betting do in handle in that time frame? We don’t have July figures, but for January through June, sportsbooks did more than $70 billion in handle. (That won’t include Florida, where we have no insight into metrics, or some of the other states that trail in reporting sports betting data. So in reality, that number is much higher.)
And again, we’d expect $1 of handle to represent more bettor activity than $1 of trading volume, since some of the time that volume comes from an institutional market maker.
There are also still some huge caveats to comparing handle at sportsbooks to trading volume at Kalshi:
Kalshi is just one operator (more on some operator-level data in a bit), although it is effectively the only operator for federally regulated sports betting; Crypto.com has a relatively small sports offering.
Kalshi’s markets are also listed on and traded via Robinhood.
Kalshi is in every state, including California and Texas. Sportsbooks are in a far smaller number of states for full online sports betting. Kalshi’s addressable market, as a result, is much bigger.
There is a much larger betting menu at any state-regulated sportsbook. Kalshi pretty much only offers futures and moneylines, and none of the rest of the staples like player props, point spreads and parlays. At least not yet.
Kalshi is very new to this, and the betting menu has increased a lot over the past six months. Expanded legal online sports betting has been growing over the past seven years.
We could argue whether a single sportsbook is a fair comp for Kalshi, but for the sake of comparison:
FanDuel and DraftKings have each done north of $20 billion in handle for the first six months of the year.
ESPN Bet, which is the No. 6 sportsbook in the US by most metrics, has done about $2 billion in handle.
I don’t love these comparisons, but they’re inevitable. So let’s do them with full context.
So how much is being traded/bet on everything else?
Sports is the dominant bucket for trading at Kalshi, and it’s not even close. By some tracking I have behind the scenes, sports has accounted for 70% of all volume at Kalshi. If you follow my weekly tracking of trading volume at The Event Horizon, that won’t come as a surprise.
That means everything else has accounted for less than a third of Kalshi’s volume. About half of the remaining volume came on economic markets. Politics and entertainment/culture capture the rest.
When you look at it that way, you understand why Kalshi is ready to throw a parade for the $2 billion in sports trading volume. If sports went away tomorrow, so would two-thirds of its current business.
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