Event contract
A derivative that settles to a fixed amount depending on whether a specified event occurs, which is the legal form prediction market contracts take in the US.
In US law, the Yes and No shares traded on Kalshi or Polymarket US are "event contracts," a type of swap or future on the outcome of an event rather than on a commodity price. The CFTC supervises designated contract markets that list them, and the fight over whether states can also regulate them as gambling is the central legal question of 2026.
An event contract usually pays $1 if the event happens and nothing otherwise. Its price before settlement is the market's probability. Multi-outcome questions are split into one binary contract per outcome.
The term matters because it decides which rulebook applies: commodities law treats the contract as a hedging and price-discovery instrument, while gambling law treats the same trade as a bet. Courts have split on it.
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Frequently asked questions
- What does "Event contract" mean?
- A derivative that settles to a fixed amount depending on whether a specified event occurs, which is the legal form prediction market contracts take in the US.
- Why does event contract matter for prediction markets?
- The term matters because it decides which rulebook applies: commodities law treats the contract as a hedging and price-discovery instrument, while gambling law treats the same trade as a bet. Courts have split on it.