A beginner's guide to trading on prediction markets
Prediction markets are exchanges where traders buy and sell contracts on future events. Each contract pays $1 if the event happens and $0 if it doesn't — making the price equal to the market's implied probability. This page shows you how they work, where to trade, and what the odds mean.
Prediction markets give OpenAI only a 14% chance of having the best AI by December. Claude leads at 97% today but drops to 48% by year-end. The full picture from Polymarket and Kalshi.
Record 102°F heat, a Secret Service evacuation of the National Mall, fireworks delayed for hours — America’s 250th birthday melted down. Days earlier, Kalshi and Polymarket weather markets had priced a hot, wet East Coast (17 of 20 rain calls right, two days out). What they couldn’t price: the chaos itself, and why — oracle risk.
As Iran holds Ali Khamenei’s funeral, $439M in still-open Polymarket and Kalshi markets price the aftermath of the 2026 war: a successor 83% likely to rule but only 13% likely to appear in public, a Strait of Hormuz just 18% back to normal by month’s end, and a nuclear deal at 24%. The shooting stopped. The markets say almost nothing else did.
Prediction markets are financial exchanges where you can buy and sell contracts on the outcomes of future events. If you buy a "Yes" contract at $0.60 and the event happens, you get $1.00 back — a 67% return. If it doesn't happen, you lose your $0.60.
Kalshi is a CFTC-regulated exchange where US residents can legally trade event contracts. Polymarket operates as a crypto exchange and is not available to US residents. Regulatory frameworks are evolving, with several states considering prediction market legislation.
Prediction markets have a strong track record, often outperforming polls and expert forecasts. A meta-analysis of prediction market accuracy shows they are well-calibrated — events predicted at 70% probability happen about 70% of the time.
The price of a contract equals the market's implied probability. A contract trading at $0.35 means the market assigns a 35% probability to that outcome. Prices move based on supply and demand as traders with different views buy and sell.
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