Prediction-market prices follow a specific convention that differs from both traditional sportsbook odds and equity market quotes. A trader who is fluent in moneyline or decimal odds will find prediction-market notation initially unfamiliar. The conversion is straightforward but the practical implications, particularly for sizing and fee treatment, deserve careful attention. This article walks through the price-probability relationship, the math used to size trades, the spread mechanics that materially affect copy-trading returns, and the fee structures on Polymarket and Kalshi.
Price equals implied probability
Every prediction-market contract on Polymarket and Kalshi is priced between zero and one dollar. The price is directly interpretable as the market's current estimate of the probability that the contract will resolve YES. A contract priced at 0.34 reflects a 34 percent implied probability of a YES resolution; a contract at 0.62 reflects a 62 percent implied probability.
The reason the convention works cleanly is that each contract pays exactly $1.00 if it resolves on the winning side, and $0.00 if it resolves on the losing side. The present value of a contract is therefore the probability of winning times $1.00, less the time value of money. Because prediction-market contracts have short durations relative to interest rates, the time-value adjustment is usually ignored, and price and probability are treated as equivalent.
The implication is that a trader who buys a contract at 0.34 and holds to resolution makes $0.66 of profit per contract if it resolves YES, or loses the $0.34 of entry cost if it resolves NO. The payout is bounded above by $1.00 and the loss is bounded by the entry price; there is no scenario in which a contract owed to the trader exceeds the maximum payout of $1.00.
Sizing a position
Two equivalent calculations are used to size a position, and each is useful in a different context.
The first is in contract terms. A trader with $1,000 to deploy at a price of $0.40 per contract can buy 2,500 contracts. If the position resolves YES, the payout is 2,500 contracts times $1.00, or $2,500. The profit is $2,500 less the $1,000 of capital deployed, or $1,500.
The second is in payout-ratio terms. A trader risking $1,000 to make $1,500 is taking a payout ratio of 1.5 to 1.0. The implied breakeven probability for the trade is one divided by the sum of the payout ratio and one, or one divided by 2.5, which equals 0.40. The trader needs to believe the true probability of a YES resolution is materially better than 40 percent to take the trade as positive expected value.
The contract-count calculation answers the question of how much capital is at risk and how much is at stake. The payout-ratio calculation answers the question of how confident the trader must be to take the trade. Both are useful and the second is often underused by retail traders, who tend to focus on the absolute payout rather than on the probability threshold required to justify the position.
Cents notation and the conversion
Both Polymarket and Kalshi display prices in either decimal or cents notation depending on the surface. A contract priced at $0.34 is equivalently displayed as 34 cents, or 34¢. The two formats are identical in meaning and most traders develop a preference for one or the other depending on context. Cents notation is more common in sports-event contracts and decimal notation is more common in macro and crypto contracts, but both platforms support both.
The conversion to and from traditional sportsbook odds is straightforward. American moneyline odds of +200 are equivalent to a contract priced at $0.33 (a payout ratio of 2.0 to 1.0, or a breakeven probability of 33 percent). Decimal odds of 2.50 are equivalent to a contract priced at $0.40. Traders moving between sportsbooks and prediction markets benefit from internalizing the conversion, but the prediction-market notation is more transparent for thinking about expected value.
Fees on Polymarket and Kalshi
Neither platform charges a commission in the traditional sense of a percentage of trade value collected on entry and exit. Each, however, has its own cost structure that affects realized returns.
On Polymarket, the visible cost is the spread paid into the order book when entering at the offer or exiting at the bid. Beyond the spread, the only material additional cost is the gas fee for the on-chain transaction. Gas fees on Polygon are typically a few cents per trade and are negligible for any meaningful position size. Funding the account requires either a stablecoin bridge or a fiat on-ramp, each of which carries its own cost, but those costs are incurred once per deposit rather than per trade.
On Kalshi, the platform charges a per-contract fee that varies with the implied probability of the contract. The fee structure is designed to be roughly proportional to the expected gross profit on a trade, so a contract priced near 0.50 incurs a different per-contract fee than a contract priced at 0.10 or 0.90. The detailed schedule is published on the Kalshi website. The practical effect for a retail trader on a position of a few hundred dollars is a fee of a few cents to a few dollars, depending on contract size and price.
For the purposes of copy-trading, the fee impact on small-position retail traders is rarely the binding cost. The binding cost is the spread paid relative to the whale's executed price, which is examined in the next section.
Why spread matters more than fees
The spread between the bid and the offer on a prediction-market contract is the single largest determinant of realized return for a copy-trader. A market quoted at 0.34 bid and 0.38 offer has a four-cent spread, which is approximately twelve percent of the price. A trader who buys at the offer and is forced to exit immediately at the bid loses twelve percent of the entry value, before the underlying probability has moved at all.
Whales push through wide spreads regularly because their position thesis is strong enough to justify the cost. A copy-trader entering the same position with a substantially smaller stake is paying the same spread on a much smaller expected return. The arithmetic of copy-trading is unforgiving on this point: the larger the spread at the moment of the copy, the worse the expected value of the trade.
The defensible rule is to use limit orders rather than market orders when copying a whale, set at a price within two cents of the whale's executed level, and to accept that some copy-trades will not fill. The trades that do fill are the ones where the copy-trader has not already given up the majority of the edge to the book.
Multi-outcome events
Some prediction-market events have more than two possible outcomes. A market on the winner of a primary election, for example, may have ten or more candidates, each with its own contract priced between zero and one. The set of contracts in a multi-outcome event sums to approximately one in aggregate, reflecting the fact that exactly one outcome will resolve YES.
The pricing convention on each individual contract is identical to a binary market: a contract at 0.08 reflects an 8 percent implied probability that the candidate wins. The summation rule is a useful sanity check on market pricing; if the sum of contract prices across outcomes drifts meaningfully above one, the market has priced in either a high probability of an unlisted outcome or an arbitrage opportunity. In practice, market makers keep the sum close to one, with a small premium that represents the spread captured by liquidity providers.
Frequently asked questions
What does it mean when a contract is priced at 0.50?
It means the market currently assesses the probability of a YES resolution at 50 percent. The contract pays $1.00 on YES and $0.00 on NO, so the expected value of the position at the moment of pricing is $0.50, equal to the cost. A trader who believes the true probability is materially higher than 50 percent has positive expected value on a buy; a trader who believes the true probability is materially lower has positive expected value on a sell.
How do prediction-market prices compare to sportsbook odds?
Prediction-market prices are more transparent because they map directly to implied probability. Sportsbook odds embed a vigorish, or commission, that biases the implied probabilities upward across both sides of the market. The equivalent vigorish on prediction markets is the bid-offer spread, which is typically narrower than the equivalent vigorish on a sportsbook event.
Can I lose more than I put in on a prediction-market trade?
No. Prediction-market contracts have a maximum loss equal to the entry price per contract. A trader who buys a contract at $0.34 cannot lose more than $0.34 per contract; if the position resolves NO, the contract pays $0.00 and the entry cost is lost in full. There is no margin call mechanic and no scenario in which the trader owes additional capital after entry.
How quickly do prices update?
Prices update on a per-trade basis. Each executed trade is reflected in the bid-offer spread and the recent prints. Both platforms publish real-time order books and trade tapes, and most active markets see continuous price updates throughout the trading day. Rivo polls these feeds every few seconds and surfaces whale-sized activity within the same window.
What is the time value of a prediction-market contract?
Strictly speaking, the present value of a contract is slightly less than its implied probability times $1.00, because the payout is received at resolution and the capital is locked until then. The discount is usually negligible because the durations are short and the risk- free rate is small relative to typical contract movements. For practical purposes the time value can be ignored on contracts resolving within a year. For more on resolution mechanics, see how prediction-market resolution actually works.