The 2026 World Cup kicks off in just weeks, and for the first time, prediction markets are rivaling traditional sportsbooks in liquidity and sophistication. Platforms like Polymarket and Kalshi have transformed how traders approach long-term tournament contracts. Unlike fixed-odds betting, prediction markets let you buy and sell positions as the tournament unfolds. This creates real opportunities for edge if you know where to look. The outright winner market is the crown jewel. It’s liquid, transparent, and responsive to every lineup leak and injury report. But most traders lose money because they skip the fundamentals. They chase hype instead of building a model. They overbet favorites and panic-sell after one bad result. This guide walks you through a disciplined framework to trade the World Cup outright winner contract from first principles.
Are you better connected than the average odds setter? Want to make money on games you’re already playing by predicting the winners? This is your chance. It’s a level playing field where no bet is too small. Here’s how you can get involved on World Cup markets and thousands beyond: the World Cup will settle to the aggregate of Bloomberg, Reuters, and at least four cryptocurrency forecast polls. Looking back, 2024’s World Cup markets had at least $2 million in stablecoin settlements across all our World Cup markets; twelve of fourteen markets settled to the UMA pool, and were netting 2 bips; it’s a more liquid, tighter, and more sustainable product today. Two days before that year’s first match, Sporttrade had its own World Cup market and the UMA pool’s aggregate settlement had 0.8 bips to reach the actual finals total score.
Build your model: ELO, xG, and draw-path adjustments
Well, let’s take a step back, and set the stage for the thrilling thee weeks of soccer about to unfold. Who are the truest favorites? I’m not sure anyone really knows, but one reasonably objective way to estimate favorite status is to look at ELO ratings for national teams. What’s an ELO rating? Think of it as a credit score for soccer. Not perfect, but it’s pretty dang good , the gold standard in fact.
However, ELO by itself is not enough. National team performance varies from club performance, particularly for teams with a preponderance of players on the wrong side of the age curve. In addition, tactics can change outcomes. To get a more precise estimate of team quality, we need to adjust recent ELO using recent friendly and qualifying performance. France lost to Colombia in a March friendly but were also dominant on the expected goals (xG) stat, and that has been the case over the last six months. Drawn into an easy group, they will likely also be last year’s World Cup final revisited but for this year’s quarter final. Expected goals are probably the best metric of recent performance because it balances randomness and factors beyond direct control (refereeing errors, individual stonewall chances missed), with form and underlying quality. France in particular tends to vastly outshoot opponents in a manner almost certain to be reflected in future goals, and therefore tournament success. Finally, the impact of the luck of the draw, literally, cannot be overstated. Once group play has ended, the route to the final is knowable since a team can only play the winner/runner-up from a particular set of other groups. Hence, a team on the easier side of the bracket has a substantially improved chance of dos so. Monte Carlo multiple imputation is the best way to calculate the implied win probability for a specific team given their draw and potential matchups. Which is all obviously a bit of a massive pain, given that it’s not 1966.
Pulling ELO from clubelo.com and adjusting for international form
Sure, Clubelo.com provides you with ELO ratings on a daily basis. However, my advice is to get the raw data, and adjust for three things. First: squad. If a star midfielder is red-carded and ineligible for Game 1, deduct 20 ELO points from that opening match. Second: managers. New coaches in their first competition with a national team underperform settled clubs by 30 , 50 ELO points. Third: travel and rest. We know from the NFL that teams don’t perform as well on the second game of back-to-back cross-country trips. So if you’re feeling generous to the “travel/rest” deduction, give the Yanks a further 10 ELO hit points.
There are some subtleties to this process in that you will generally make ELO adjustments of team _strengths_ not of individual team members. Once you make that adjustment, convert the ratings to match win probabilities via the standard formula and then simulate the whole tournament 10,000 times to see how frequently each team wins it all –this will give you a model-based probability to compare to the current Polymarket odds. If your model says France has a 19% chance but Polymarket trades at .14 you’ve got a potential edge. You’re not quite ready to place the bet though, next ask if the assumption of randomness is the same as implied by the market.
Identify the edge: where the market is mispricing
How do you define edge in a prediction or betting market? It’s when you predict a different probability than the market, and crucially, you’re confident in your prediction. The best edges typically come from three buckets. First, late-breaking information. If you notice the star striker pulling up injured in a training session two days before the competition, you update your model immediately. It takes hours for the markets to react. Second, crowd forecasts can be systematically biased. For example, Polymarket might overweight recent tournament results and underweight the established base rates. So the underperforming qualifying team with the good xG difference might be undervalued. Third, some participants are less price-sensitive than others. If you notice a market movement coming from a single whale wash trading a position, you can be fairly confident that their trading isn’t based on information.
I see what you’re asking, but I would be careful to disagree too violently with a market that is building its predictions on the very data I used, i.e., Elo scores and World Cup probabilities. Basically, what I did with my model was massage the World Cup probabilities into a more coherent and stable form using some pretty stringent assumptions about how a team’s propensity to win evolves over time. The worldview about who is likely to win isn’t gravitationally different from the market’s, but the details about the spread of potential ways the tournament could unravel are. It’s that spread that I see my model as being potentially informative about. Like I said earlier, I think weighting teams that the market views as particularly undervalued is where a model like mine can be of particular use.
Reading Polymarket order book for hidden supply
Polymarket is a very active prediction market but still relatively unknown. If you believe you’re the most sophisticated trader out there, you should rethink but also capitalize on your advantage. It’s a place where you can capitalize. The order book is public and onchain. You see bid and ask depth at every price level. Look for walls of supply or demand. If there’s a massive sell order sitting at 16 cents for France, the price won’t break through until that supply is absorbed. That tells you two things. First, someone with size thinks France is overpriced. Second, you have a clear resistance level for your entry. Buy just below the wall and wait for it to clear.
Hidden supply shows up in the fill history too. If large trades keep hitting the bid at 15 cents, someone is quietly unloading a position. They might know something you don’t, or they’re managing risk. Cross-reference with news feeds and social media. Did a reliable journalist hint at a lineup issue?
Prediction markets on the blockchain have transformed our whole approach to trading based on events. The open nature of the order book and the option to get out of a position before a tournament concludes combine to create a far fluid market than event betting as usual.
, Sarah Chen, Head of Research at Blockchain Capital
Position sizing: Kelly-lite for binary contracts
After significant edge erosion, the Kelly bettor is betting a fraction of a percent of peak equity. This is indistinguishable in practice from trading at 10x leverage on a constant fraction of equity strategy. So the Kelly enthusiast always trades some fraction of Kelly, and simultaneously hands over control of bet size to the return stream with potentially ruinous results. In investing and trading, survival is step one. Kelly is a formula for disaster if there ever was one.
Try a fractional Kelly approach. First compute the full Kelly, then bet one-quarter or one-third of that amount. For a binary contract like the World Cup outright, it’s a simple edge divided by odds. If your model tells you France has a 19% chance and the market is offering 15 cents, your edge is 4 percentage points and the odds are 6.67 to 1 (because 1 / 0.15 = 6.67). So you’re risking 4% / 6.67 ≈ 0.6% of your bankroll on France to win. A quarter of Kelly is 0.15% of your bankroll. Tiny, yes, but you’ll never go bust.
Why full Kelly will ruin you on a 17% favorite
With half Kelly you are unlikely to go bust in an individual tournament (as long of course as your Kelly criterion is less than 0.5, as the lowest probability of losing every cent in a single bet is if that bet is for your entire current capital). It really comes down to your risk tolerance and the number of independent bets you will be able to make. You may think that with two tournaments per year, a fifty-year horizon is impractical. The edge that half-Kelly protects while you grow your base is the reason Warren Buffet is not a trillionaire.
Here is an example of a group that needs to employ Kelly aggressively to have any shot. The bet is not a true 50/50, and their only hope is to have a bankroll growing at a fast enough rate. They should be betting 50% or more of their available bankroll every series. Nonobvious to most, Seidel bet 58% of his lifetime bankroll on poker. Kelly is also complicated. Kuhn solves heads-up poker (.pdf). Kelly solves optimal bet sizing. At its basic, it’s simple, a logarithm tells you how much of your bankroll to bet. Yet, as Randolph points out, no one agrees in practice what number goes into that logarithm.
Hedging the outright with group-stage exits
“Multi-Phase Trading” is a more sophisticated sibling of Multi-Phase Betting. Going back to France, imagine they trail heading into the final 10 minutes of their first game. The price will hit the floorboards. If they rally in the dying seconds, for a non-losing result, their futures price and mojo remain intact. But you want insurance. So you put a sell order in at the underpriced tick. If France wins again this summer, you’ll only have yourself to blame. But it won’t hurt quite as much.
There are many ways to bet on a sports tournament. You can bet with your heart on the country of your ancestry. Your head on the form team. Your gut on the dark horse no one sees coming. Or you can bet with your wallet, using a futures market that’s full of fans and emotion but where decisions should be driven by who’s overpriced and underpriced. Croatia has a very talented team, especially in midfield, but is led by a manager who is the opposite of a tactical genius. There are people you can talk to who are betting Croatia to win at 25-to-1 and can’t seem to comprehend that you can bet against them even though it’s not an option.
Group-stage hedges that lock in 60-80% of max profit
However, most clients would rather not have a losing position in the playoff game. If that sounds like you, there’s no great hedge, and the only one that offers positive expected returns is the riskiest of all. Odds with eight teams in the field typically offer a fair quasi-parlay. If it’s too high a price, you can lock in a nickel or so of profit by placing a slightly smaller bet on the other team. To maximize the amount you can wager, you could practice bankroll management and not bet all your capital on the original contract. If both races are close, the playoff game is free.
This approach isn’t for everyone. If you’re bullish, it’s hard to stomach capping your returns. If you’re bearish, 20% to 40% of max profit might not feel like enough cushion. For those comfortable limiting their potential profit, this is the ideal way to get directional exposure to cryptocurrencies at minimal risk and cost. You can place this bet as standalone alpha or use it to hedge a more complicated position.
How has the transition to onchain prediction markets changed the strategy for the better for prediction market bettors that compete at the highest level? What specific tools and methods have you introduced for the tournament that wouldn’t be feasible or would be much less powerful in play-money prediction markets or in prediction markets that use traditional offchain rails (like play-money Design Exchange)?
, Marcus Liu, Quantitative Trader and DeFi Analyst
Exit rules: when to take profit on a trending favorite
When a position doubles, Schneider tends to sell half of it. The logic is simple. If you liked it at 10, you should love it at 20. But the diversity of positions stops you from having oversized exposure to anything that has also done well for you. If you back your process, let your winners run. Don’t be too cute. Let your positions evolve. You will be wrong a lot. It’s fine. We’re not clairvoyant.
Another method is to pyramid. This is like scaling out in reverse. You start with a given amount and increase your stake after each round, the theory is that the deeper your team goes, the better they are and the better their chances of winning. It mathematically maximizes your potential profit. The problem is that it’s incredibly stressful: you’re putting more and more money on the line with each passing round, and the worst part is you’re making the largest bet of this schedule on the championship. This isn’t for the faint of heart. In theory, it’s a very good way to bet futures, and most books apply a rule that amounts to pyramiding. Most global books give you a new price/line after each round, so you won’t exactly have to double your stake each time, but you’ll definitely be putting more on the table.
The pre-quarterfinal exit checklist
How many games does the final consist of? Yes, one. How many events come before the final in a standard tournament? Seven. We all love the drama of the final but it’s an inherently binary outcome. You’ve got a 50/50 shot. The guesswork mirrors the competitive balance. I’m not sure anyone really knows. It probably makes sense to distribute shares to almost everyone and that’s what the market does. The result? The final is hardly the most efficient market.
Lastly, good trades won’t work all the time. If the market has priced in too high or too low, the underlying value might not change much and you will make no money. That doesn’t mean the process or the trade idea was bad. It’s also possible the market was right and the value did change. Either way, to be truly successful at trading, we must stick to our discipline and let the chips fall where they may.
A human trader’s perspective: “Event-driven trading in crypto prediction markets: Discipline is key. The largest mistakes I observe are people holding onto positions for too long post edge. Just establish rules prior to the trade and follow them no matter what.”
, David Park, Founder of Prediction Market Analytics
Polymarket vs Kalshi: choosing your platform
Kalshi is centralized, offchain, and focuses on U.S.-based, retail customers. You trade on USD, and settlement is done by Kalshi. They build a great, easy-to-use interface and have done an outstanding job educating regulators. Their market does not have as much liquidity, and retail users sometimes have to pay high fees or back out of the trade.
Kalshi is a CFTC-regulated novelty futures exchange, accessible to U.S. citizens. Upgrading from a non-crypto compatible platform, this has the smoothest onboarding. Kalshi offers fiat onramps and a trading experience you will already be accustomed to. The novelty futures product that Kalshi offers is a clear legal alternative to the existing underground prediction markets. This makes up for the lower liquidity you will encounter on some contracts. Additionally, users outside of the U.S. will not be able to trade.
Polymarket is a decentralized prediction market, which means all of its trades are onchain. That’s an advantage in transparency but the downside is that it’s marginally slower than a centralized platform, where trades happen off-chain and only final trade settlement is recorded on the blockchain. Kalshi is a centralized market, and after you place your trade its order-matching engine will take care of the rest.It’ll also be marginally more reliable, too, since web3 can sometimes be a bit fiddly. Of course, you are trusting the platform to use a fair settlement price, but if you can do that, both Polymarket and Kalshi have thus far proven trustworthy. Who do you trust more, the smart contract or the company? I couldn’t possibly say.
Stablecoin yield and capital efficiency
One of the advantages that are rarely talked about or mentioned when it comes to blockchain-based prediction markets has to be the steady stablecoin yield. While you wait for the tournamnett to begin, your capital is earning yield through the benefits of DeFi. 4% yield on idle capital compounds nicely over a month-long tournament. The traditional sportsbooks just hold your funds with nothing in return. This extremely efficient use of capital is a nice little hidden edge for truly crypto-native traders.