Prediction market
An exchange where people trade contracts that pay out based on whether a real-world event happens, so prices act as crowd-sourced probabilities.
A prediction market lists a question with a fixed set of outcomes. Each outcome is a contract that pays $1 if it happens and $0 if it does not. Traders buy and sell those contracts with each other, and the price settles where buyers and sellers agree. Because the payout is $1, a price of 64 cents is read as a 64 percent probability.
Unlike a sportsbook, the venue does not take the other side of your trade. It matches orders and charges a fee, so there is no built-in vig, though spreads, fees and thin liquidity still cost money. Polymarket and Kalshi are the two largest venues in 2026; Kalshi and Polymarket US are regulated by the CFTC as designated contract markets, while the offshore Polymarket is not open to US persons.
Markets exist on elections, interest rates, sports, crypto prices, awards and almost anything with a verifiable answer. The prices are not forecasts by anyone in particular; they are the point where money on both sides balances.
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Frequently asked questions
- What does "Prediction market" mean?
- An exchange where people trade contracts that pay out based on whether a real-world event happens, so prices act as crowd-sourced probabilities.
- Why does prediction market matter for prediction markets?
- Markets exist on elections, interest rates, sports, crypto prices, awards and almost anything with a verifiable answer. The prices are not forecasts by anyone in particular; they are the point where money on both sides balances.