What Is a Prediction Market?
Prediction sites provide you with a platform to trade on the outcome of future real-world events, such as election results and sports predictions. All trades are in the form of binary outcomes (yes or no), with contracts costing between $0.01 and $0.99. Winning contracts are settled at $1, while losing contracts are settled at $0.
Unlike traditional sportsbooks, where the house sets the markets and odds, the value of every event contract at prediction market sites is based on the trades made by other traders on the likelihood of an event occurring.
Are Prediction Markets Legal in the US?
Prediction markets are legal
in the US, as these exchanges are not considered sportsbooks. Since there is no fixed odds betting, and instead you are trading on the likelihood of an event occurring, prediction market sites are legal. However, the industry is regulated, and all legal prediction market exchanges must be regulated by the Commodity Futures Trading Commission (CFTC). As long as the exchange is CFTC-regulated, you are allowed to sign up (provided you are 18 years and older) and start trading on various futures events.
Overview of Future Event Trading
When we compiled our
Kalshi vs Robinhood
guide, we shared that both prediction sites have similar future contracts. When you trade at regulated prediction sites, there are hundreds of contracts, each grouped into several broad categories of future events, such as sports predictions, economic forecasts, election results, and pop culture outcomes. You are allowed to buy and sell contracts, provided that there is sufficient market volume for a contract.
The table below details the main prediction market future events, and a few examples of the relevant contracts:
| Future event |
Contract description |
Contract example |
| Sports predictions |
You can buy and sell contracts on specific global sporting events, and the performances of athletes for specific events. |
- Will Brazil win the 2026 FIFA World Cup?
- How many goals will Erling Haaland score in the EPL season?
|
| Economic forecasts |
Purchase shares on what political decisions will be announced. |
- What will the Fed decision be in March?
|
| Election results |
Election contracts can be bought for domestic and global elections. |
- Who will be the US presidential election winner in 2028?
|
| Culture predictions |
Contracts can be traded on all pop culture and entertainment events, including award shows and music charts top performers. |
- Who will win an Oscar in 2026?
- Will Taylor Swift top the Spotify list for the year?
|
How to Read Market Prices As Probabilities
As you can see, there are various options for trading. If you have read our
Kalshi vs Polymarket
guide, you will know how important it is to understand how to read market prices as probabilities when buying and selling contracts. Below is an example of how a typical sports prediction contract works and the process involved when purchasing a contract.
The Buffalo Bills are trading at $0.75 to make the NFL playoffs. This means that traders think that there is a 75% chance of the Bills qualifying for the post-season. If you also believe that the Bills will reach the playoffs, you can buy a ‘Yes’ contract for that outcome at $0.75. If you buy a ‘Yes’ position for $100, you will receive 133.33 contracts ($100/0.75). If the Bills do make the playoffs, your contract is settled at $1, and you will win $133.33 ($33.33 in profit). However, if the Bills do not qualify for the playoffs, you will lose your initial trade of $100.
Pros and Cons: Event Contracts
Pros and cons
- Several future event trading options
- Can close positions early
- Easy access to real-time updates
- Market volume plays a pivotal role in trading
Conclusion - No to Event Betting; Yes to Event Trading
That wraps up our guide. Remember, there is no such thing as event betting when using prediction market sites. Instead, you can trade on real-world events contracts by buying and selling contracts. Just remember that trading is only possible if there is an equal number of traders for both sides of a contract. Hence, market liquidity is an important factor to consider when buying and selling contracts.
If you want to trade on sports predictions or election results, browse the banners on this page to find your preferred prediction site. Remember to be responsible and have fun!
1.
What Are Event Trading FAQs
🤔 What Is a Prediction Market?
Prediction markets provide you with a platform to trade on the outcome of future events, such as election results and sports predictions. All trades are in the form of binary outcomes.
❓What Types of Events Can I Trade On?
You can buy and sell contracts on several events, including sports predictions, election results, political outcomes, award show outcomes, economic forecasts, and more.
💰Can I Close My Position Early?
As long as there is sufficient market liquidity, you are allowed to close your trades early before the real-world event concludes. By closing your positions early, you can take out your profits or mitigate your losses.
For guidance on responsible trading and risk awareness, the following free official resources are available:
To make sure you get accurate and helpful information, this guide has been edited by
Mac Douglass
as part of our fact-checking process.
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