What is the difference between a prediction market and a sportsbook?

A sportsbook is a house-banked model where the operator sets odds and takes the opposite side of every bet, bearing directional risk. A prediction market is an exchange model where users trade with each other, and the operator earns transaction fees without exposure to outcomes. This makes prediction markets more capital-efficient for operators and allows coverage of non-sports events like politics, entertainment, and crypto. Many sportsbook operators now add prediction markets as a complementary product to increase engagement and diversify revenue.