What Are Prediction Markets

A prediction market is an exchange for opinions about the future. Instead of betting against a bookmaker at fixed odds, people buy and sell contracts on whether something specific will happen. The price is the crowd's probability.

This page is the starting point in prediction market basics. From here, read how prices work and how markets resolve, then the platform guides for Kalshi, Polymarket, and Novig.

A contract, not a ticket

The usual product is an event contract. It asks a yes-or-no question with a deadline and a source that decides the answer.

• If the event happens the way the rules define it, a "Yes" contract settles at $1.
• If it does not, that contract settles at $0.
• While the event is still open, the contract trades somewhere in between, usually from 1¢ to 99¢.

Kalshi's filings with the CFTC describe its event contracts this way: binary, cash-collateralized, settling at $1.00 if the event occurs and $0.00 if it does not, with the price reflecting the market-implied probability. Polymarket US and Novig use the same $1 / $0 settlement idea for a standard contract. Some markets have special cases (a push, a 50/50 settlement, or a last fair price) when the rules say the outcome cannot be determined. Those cases live in the contract terms, not in the headline.

You are not locked in until settlement. If you bought "Yes" at 40¢ and the price rises to 55¢, you can sell to someone else and take the difference, minus fees. If the price falls, you can sell and cut the loss, or hold and risk the contract going to $0.

The price is a probability

Because the contract pays $1 or $0, the price is an implied probability. A "Yes" contract at 62¢ means traders, in aggregate, are treating the event as about 62% likely under that market's rules.

That last clause matters. Two markets can look like the same question and still pay out differently if one resolves on a government release and the other resolves on a news headline. The price is the probability of the rules being satisfied, not the probability of the story you have in your head.

For the arithmetic, including a worked example and how fees change the number, see How Prediction Market Prices Work.

An exchange, not a house

On a sportsbook, the operator posts a line and books your bet. The odds include a margin (the vig) so the book expects to profit if action is balanced.

On a prediction market, the operator runs the exchange. Prices come from bids and offers. Someone who wants to buy "Yes" at 40¢ needs someone willing to sell it there. The platform's revenue is usually a trading fee, not a built-in edge on the line. Novig's help center states this directly: you trade with other users, not against the house, and there is no vig built into the price. Fees are charged separately, and only on some trades.

That structure changes how you should read a price:

• A tight market with lots of volume is a real argument among people risking money.
• A wide market with almost no trades can sit at a stale number because nobody has bothered to update it.
• You can be right about the world and still lose if you paid a price that already reflected your view, or if the rules resolve a different question.

Who regulates them

In the United States, the platforms in this guide that offer event contracts to US customers do so as designated contract markets overseen by the Commodity Futures Trading Commission.

• Kalshi (KalshiEX LLC) is a CFTC-regulated exchange. Its event-contract fee schedule is filed with the CFTC.
• Polymarket US operates under the Polymarket US Exchange Rulebook and settles contracts through Polymarket Clearing. It is a different product from the international site at polymarket.com.
• Novig received CFTC approval for its designated contract market, Ludlow Exchange, on June 16, 2026, according to CNBC. Novig's own help center describes the product as sports event contracts regulated under federal commodities law.

"Regulated" does not mean "available everywhere" or "identical rules." Kalshi's member agreement lists countries where event-contract trading is restricted. Novig's help center says trading is unavailable in Arizona, Michigan, and Nevada, based on where you are physically located. Age limits differ: Kalshi's help center requires 18 or older; Novig has described a 21+ limit.

The international Polymarket site resolves markets with an outside oracle (the UMA Optimistic Oracle), which is a different process from an exchange determination. Read How Prediction Markets Resolve before you treat those prices as the same kind of object.

What people trade

The question can be almost anything the exchange is willing to list and the rules can define cleanly:

• Macro and policy. Will the Fed cut rates at the next meeting? Will CPI print above a number?
• Elections and government. Who wins, whether a bill becomes law, whether a named official is still in the job by a date.
• Companies and culture. Earnings thresholds, awards, product launches.
• Sports. Game winners, series, futures. Novig is sports-only. Kalshi and Polymarket list sports alongside other events.

Each listing is its own contract. A "Fed cut" market might resolve on the Federal Reserve's statement, not on what futures markets do the next morning. A sports market might include overtime or stop at the end of regulation. The rules summary on the market page is the contract. The title is marketing.

What a prediction market is good for

Prices aggregate information from people who disagree and have money on the line. That is useful in three ways:

1. As a probability. A liquid 30¢ contract is a clearer statement than a pundit saying "unlikely."
2. As a research target. If you think the fair probability is far from the price, you have a reason to read the rules, the base rate, and the news. That is the job BetScan is built for: gather the sources, return a range, and let you check the evidence.
3. As a way to exit. You do not have to hold to settlement. If new information arrives, the price moves and you can trade out.

They are a poor tool when the market is thin, the rules are ambiguous, or you are treating a 62¢ price as a promise that the event happens 62% of the time in some deeper sense. It is the price to trade that contract today.

What to read next

• How Prediction Market Prices Work, including a worked example of implied probability and fees.
• How Prediction Markets Resolve, covering Kalshi, Polymarket US, and the UMA process on polymarket.com.
• How to Research a Prediction Market Before You Trade.

Sources

Facts above were checked on October 13, 2026. Fee numbers and eligibility change. Use the primary pages before you trade.

• Kalshi, CFTC filing describing binary event contracts: CFTC 39.5(b) filing (April 2026)
• Kalshi eligibility: Signing up as an individual
• Kalshi restricted jurisdictions: Member agreement (October 1, 2026)
• Polymarket US settlement: Market settlement and the Polymarket US rulebook (August 5, 2026)
• Polymarket international resolution: Resolution
• Novig product description: What is Novig?
• Novig CFTC approval, June 16, 2026: CNBC
• Novig availability: Eligibility and legality