Jannik Sinner is my peer
“Peer-to-peer” is about market structure, not skill level
I’ve played tennis for over 20 years now. I’m a decent club amateur, a “good 4.5”, as they say. I can hang with D1 players without fully embarrassing myself. My forehand is struggling since I toy with my grip too much, my backhand has gotten quite decent after a ton of work, but my real strength is my serve. When I’m dialed, I’ve clocked it at 125mph. And once in a blue moon, I’ll blast one that I’m fairly sure that no one in the world would be able return.
Even so, I have <1% chance to hold serve against Jannik Sinner. Most people wouldn’t call us “peers,” because we load that word with skill and status.
But as soon as we step on court, he’s my counterparty. In that moment, we’re in the same arena, striking the same ball, and breathing the same air. That’s the sense in which he’s my peer.
That’s how I feel about trading.
Citadel is better than me at stock options like Sinner is better than me at tennis. But, I’m better than both in predicting how many senators will vote for a cabinet nominee. Both of them are my peers as soon as I buy a call option or toss a ball for my serve, and if either of them want to bet on how Susan Collins (R-ME) feels about Kash Patel, I am their peer as well.
You may disagree with the analogy. Fair. My aim isn’t to win a semantics fight; it’s to compare and contrast exchange market structure with a sportsbook.
I truly believe that prediction markets are more than just “a sportsbook with extra steps”, even if that is what looks like right now. This is how I think about “peer‑to‑peer” and why it matters.
Culture clash, and an apology
Before the nitty-gritty, let’s clear the air.
There’s friction as PMs collide head-on with sports betting. Some of it is vocabulary: “vig” vs “fees,” “hold” vs “PnL,” “the house” vs “market makers.”
But there’s something deeper here… a “vibe gap.” Sportsbooks are culturally everyman; PMs can read as intellectual or tech-elitist.
We’re not gambling, we’re predicting. Our foundational texts don’t come from card counters like Ed Thorp, but from academics like Phil Tetlock and Robin Hanson. We’re not “degens”, we’re “Effective Altruists” and “futarchists”. Our conference is not on the Vegas Strip, but actually in a quirky Berkeley backyard.
It can be really annoying.
So when someone from the PM world tells you that you’re wrong, implies that you’re too dumb to read a long tweet, that everything anti-Kalshi is really just FUD spread by the entrenched gambling industry, and that you don’t really understand this because this is actually High Fenance and you’re just a degenerate, it’s insulting. I get it.
On behalf of PM people: sorry. We’ve crashed your party and often failed to introduce ourselves with humility. We can and have to do better with tone and medium1.
That said, this humble Substack post is both an olive branch and a full-throated defense: PMs are “peer‑to‑peer” in a way that matters. I’m just going to try not to be a dick about it.
Intermediation is why exchanges aren’t just fancy sportsbooks
Prediction markets are now being discussed through a sports‑betting lens. Many smart bettors are used to a “house” model, so when they see pro market makers and sports on exchanges, it looks the same, smells the same, and feels the same. At that point, “peer-to-peer” can sound like marketing spin. I get why that rubs people the wrong way.
In online sports betting, DraftKings is your broker, exchange, clearing and counterparty. It’s fully vertical, very opaque, and ripe for abuse2. In PMs, these are separated: brokers like Robinhood take your deposits and route your orders, exchanges like Kalshi match them to others, clearinghouses safeguard funds in the process, and counterparties are anyone on the orderbook.
The concept is called “intermediation”, and it’s the backbone of modern financial markets. That separation of duties creates anti-fragility, and it’s necessary to facilitate the transfer of trillions of dollars of risk and value.
It is also what enables “peer‑to‑peer” trading.
“Peer-to-peer” is a spectrum of market structure
If “peer‑to‑peer” (“P2P”) means “you and I can face one another directly, without a house taking the other side,” then it lives on a spectrum.
At one end is the purest form: a cordial handshake bet with a friend at the bar—no intermediary, just price and settlement between you and I.
Next is a central limit order book (CLOB) exchange.
Anyone can make or take at any price they like
The matching engine pairs the best bid and offer deterministically, according to price and time
Your counterparty could be anyone—an amateur, a pro, an “institutional market maker”
Crucially, the trading rules are the same for all of us3: price-time priority, transparent depth, and no one can “limit” you for being too sharp.
Slide further away from “P2P,” and you hit the online sportsbook. Yes, their prices are informed by a global ecosystem of sharps, quants, feeds, and risk teams, but when you press “place bet,” your sole counterparty is the house, every time.
Keep sliding and you reach table games like blackjack, where you face the house through a non‑discretionary dealer, and further still you get slots, where your “counterparty” is literally a random number generator.
Ordered that way - handshake → exchange → sportsbook → blackjack → slots - the dispute isn’t whether exchanges are P2P, but how P2P they are relative to the “house” model. By structure, exchanges sit firmly on the P2P side4.
“Peer-to-peer” isn’t about skill
This is where the confusion creeps in. Anyone would reasonably conflate “peer” with “equal skill,” if only because that’s how the word is used colloquially. On an exchange, your counterparty might be better capitalized, faster, or more informed - just as Sinner is better than me at tennis.
But skill distribution doesn’t change market structure. The book is still open; anyone can quote or trade with you; and identity of the parties doesn’t alter the matching rule. In practice, professional participation often makes a better product for the user: tighter spreads, deeper size, faster fills, and visible prices that you can undercut or improve with your own orders, which is my point here!
If what you care about is outcome—did you get the best available price? could you rest at your price and get filled?—then the relevant axis is structure, not skill. If what you care about is the identity of your counterparty, then exchanges are not for you.
If we’re judging by orderbook openness, matching rules, and who can be your counterparty, prediction market exchanges are peer‑to‑peer in the ways that matter: you’re not captive to a house; you can meet any willing counterparty at a common price; and the path to better execution is the same for pros and weekend traders—post, improve, get filled.
Put differently: if you value sovereignty over your price and the ability to compete for liquidity, you will have to step on the same court as Jannik Sinner.
Total aside, but this is perhaps the most important lesson I learned last week: the medium is the message.
I went on Novig’s new podcast and discussed the same exact issue that Sara addressed in her twitter post. We have the directionally same position and stance on the issue.
But one medium was a long twitter post appears like a crash-out that very few will read, and the other was three guys being dudes, ribbing each other and speaking from experience.
It’s no surprise that the latter was far better received even if the message was largely the same.
In my view, limiting sharp bettors and encouraging problem gamblers is abusive and antithetical to my philosophy of risk-taking.
I’m aware of the idea that some market makers are treated “more equal” than others by way of compensation through rebates, salary, and equity. I literally was a market maker for Kalshi who benefitted from these, to a life changing degree in fact.
At the same time, I don’t believe that aspect is actually relevant to the question here, which is whether or not on-exchange trading is “peer-to-peer”.
I do have thoughts to share about the role of market makers, “fairness” therein, and why affiliated market makers like Kalshi Trading need to exist for burgeoning asset classes, but that is for a follow-up post.
It’s also worth noting that prediction markets have historically been extremely peer-to-peer. There were no “institutions” on InTrade and PredictIt, it was just a bunch of nerds getting after it in the order book. So I think living in that world for years has colored my POV in a significant way. If you’re coming from only ever thinking about beating DraftKing’s trading team, that will color your POV as well, and understandably so.
Adhi,
I appreciate your work and passion. I'm coming at this as someone who has both filed as a professional gamber betting at sportsbooks for the past three years + who gladly uses Kalshi.
One thing that gets under my skin about all of this is that PMs, as you call them, and sports betting ... they're the same thing. It's all the same thing. Your language attempts to differentiate the two, and on a molecular level, sure there's a difference. Counterparties, limiting, etc. But in the end, predictions backed by fiat is the same thing as betting. It's like referring to it as marijuana instead of weed. Libations instead of liquor. You're just advertising it in a different way because of the stigma or whatever else.
No, it's not me vs. the house. It's me vs. some other institution or person. But at Kalshi, I'm still paying vig, it's just in the form of fees off the top. Which in some ways is actually worse, because that comes off win or lose. They'll need to get their shit together when Polymarket goes live in the US, because I'm taking my money there immediately.
Anyway, the point is this. We are family. I got all my sisters with me. We are family.