Prediction market liquidity and optionality are inherently limited in scope compared to a traditional bookmaker.

Since each event requires two participants to agree on a price (probability), matching becomes increasingly difficult the more obscure the event is.

Is this actually any more true of prediction markets than sportsbooks? Most sportsbooks outsource their odds for the more obscure "in-play" bets (e.g. Erling Haaland to score and receive a yellow card in the 2nd half) to 3rd-party providers and also cap the bet amounts on these plays given the high variance.