A prediction market is an exchange where you buy and sell contracts on the outcome of a real event, and each contract pays $1.00 if its side is right. A contract costs between 1 and 99 cents. That price is the market's odds: Yes at 36 cents means traders put the chance near 36%. Other traders set the price, the exchange matches the orders and takes a fee, and you can sell any time before the result.
This guide covers one full trade in cents and dollars, the order book, what you can trade, who runs each venue, how prediction markets compare with sports betting, what everything costs and how to place a first trade. We run Rivo, the prediction market terminal for Kalshi, Polymarket, Polymarket US and Gemini, so the examples come from markets we read every day.
A prediction market in 60 seconds
Take the market "Will the Fed cut rates at its next meeting?" Yes trades at 36 cents and No trades at 64 cents. You think a cut is more likely than that, so you buy 100 Yes contracts for $36.00.
| What happens | You receive | Profit before fees | Profit after Kalshi's taker fee |
|---|---|---|---|
| The Fed cuts and Yes wins | $100.00 | +$64.00 | +$62.38 |
| The Fed holds and Yes loses | $0 | -$36.00 | -$37.62 |
| Yes climbs to 50 cents and you sell before the meeting | $50.00 | +$14.00 | +$10.63 |
| Yes drops to 20 cents and you sell to cut the loss | $20.00 | -$16.00 | -$18.74 |
Four facts sit inside that table:
- Your risk is what you paid. You put up $36.00 and can never lose more than that plus the fee.
- Your payout is fixed. A winning contract pays $1.00, so 100 contracts pay $100.00.
- The price is the odds. You paid 36 cents because the market put the chance at 36%.
- You can leave early. A position is worth its current price at every moment, and you can sell it to another trader for that price.
How a prediction market works step by step
1. Every market is a question with rules
A market asks one question: will this team win on Sunday, will the Fed cut, will Bitcoin close the hour higher. Its rules name three things: the event, the deadline and the source that decides the answer. The rules are the contract. Two markets on the same headline can settle differently because their rules name different sources or cut-off times.
2. Each question has a Yes side and a No side
A Yes contract pays $1.00 if the event happens. A No contract pays $1.00 if it does not. Exactly one of them pays, so the two prices add up to about $1.00. Yes at 36 cents and No at 64 cents are the same market seen from both sides. Buying No at 64 cents is the same position as selling Yes at 36.
Events with many outcomes work the same way. "Who wins the championship" is one Yes or No market per team, and the Yes prices across all teams add up to about $1.00.
3. Traders set the price on an order book
The exchange does not set odds. It runs an order book: a list of every price traders will buy at and every price they will sell at. Here is the Yes side of the Fed market:
| Yes price | Contracts buyers want | Contracts sellers offer |
|---|---|---|
| 38 cents | 1,200 | |
| 37 cents | 800 | |
| 36 cents | 400 | |
| 35 cents | 500 | |
| 34 cents | 900 | |
| 33 cents | 1,500 |
- The best ask is 36 cents. That is the lowest price anyone will sell Yes at, and the price you pay to buy right now.
- The best bid is 35 cents. That is the most anyone will pay, and the price you get to sell right now.
- The spread is 1 cent. The gap between the two is the cost of trading in and straight back out.
- Size has a price. A market order for 600 Yes takes 400 at 36 cents and 200 at 37 cents. You pay $218.00, an average of 36.3 cents.
You place one of two orders. A market order takes the best price on the book now, and you are the taker. A limit order names your price and waits, and you are the maker. Bid 35 cents with a limit order and you buy at 35 if a seller comes to you. Makers pay less on every venue: nothing on most Kalshi markets, and a rebate on both Polymarket exchanges.
4. The price is a probability
A contract that pays $1.00 in 36% of outcomes is worth 36 cents. Traders who think the true chance is higher buy, traders who think it is lower sell, and the price settles where the two groups meet. So you read any price as a percentage: 36 cents is 36%, 80 cents is 80%.
Your profit comes from disagreeing with the price and being right. Say you put the Fed cut at 45% and Yes costs 36 cents:
- Each contract is worth 45 cents to you and costs 36 cents.
- Your expected gain is 9 cents a contract before fees.
- Kalshi's taker fee at 36 cents is about 1.6 cents a contract.
- Your edge after the fee is about 7.4 cents a contract, or $7.38 on 100 contracts.
If you put the chance at 36% or lower, there is no trade. More on reading prices and spreads in reading prediction market odds.
5. You can sell before the result
A position is never locked. While the market is open you can sell at the best bid, or post a limit order and wait for a buyer. A good jobs report moves the Fed market from 36 cents to 50 cents in minutes, and a trader who bought at 36 can sell at 50 and keep the 14 cents without waiting for the meeting. You never have to hold a position through the event.
6. The market settles and the right side gets paid
When the event ends, the market settles: each winning contract pays $1.00 into your balance and each losing contract pays nothing. Who decides the winner is the biggest difference between venues.
| Venue | Who decides the outcome | How long it takes |
|---|---|---|
| Kalshi | Kalshi's markets team, from the source named in the rules | Most markets within about three hours of the outcome |
| Polymarket US | The exchange, from the source named in the rules | Set per market. The result is final under the exchange rulebook |
| polymarket.com | A proposer posts the result through UMA's oracle with a bond, and anyone can dispute it | About two hours with no dispute. Four to six days when a dispute goes to a vote |
Read the rules before you buy. Phrases such as "by the end of the month" and "officially announced" decide payouts in the edge cases. The full process on each venue is in how prediction market resolution works.
What a price pays on $100
Cheap contracts pay many times your stake and win rarely. Expensive contracts win often and pay a little. The table shows what $100 buys at each price, before fees.
| Yes price | Implied chance | Contracts for $100 | Payout if right | Profit if right | Same as American odds |
|---|---|---|---|---|---|
| 5 cents | 5% | 2,000 | $2,000 | +$1,900 | +1900 |
| 10 cents | 10% | 1,000 | $1,000 | +$900 | +900 |
| 20 cents | 20% | 500 | $500 | +$400 | +400 |
| 25 cents | 25% | 400 | $400 | +$300 | +300 |
| 40 cents | 40% | 250 | $250 | +$150 | +150 |
| 50 cents | 50% | 200 | $200 | +$100 | +100 |
| 80 cents | 80% | 125 | $125 | +$25 | -400 |
A price is a good buy only when the true chance beats it. Yes at 80 cents on a team you expect to win makes money over time only if that team wins more than 80% of the time.
What you can trade on a prediction market
Anything with a clear answer and a public source. A single venue lists thousands of events at once, most of them split into one contract per candidate, price bracket or game line.
| Category | A real kind of market | What settles it |
|---|---|---|
| Sports | Will this team win Sunday's game. Also spreads, totals, player props and season futures | Official league stats |
| Elections and politics | Who wins a race, or which party controls Congress | The official result named in the rules |
| The Fed and economic data | Will the Fed cut at its next meeting. Will CPI come in above a set number | The agency's own release |
| Crypto prices | Will Bitcoin be higher in 15 minutes. Where does Ether close today | A published price index named in the rules |
| Weather | Will the high in New York top 80 degrees on Friday | The National Weather Service climate report |
| Culture | Who wins the award. Will a word be said during a broadcast | The source named in the rules |
Sports and short crypto markets trade the most often, because a result arrives within hours or minutes. Election and Fed markets run for months and move on every poll and data release. Kalshi, Polymarket and Polymarket US also sell combos, which join several outcomes into one position that pays only if every leg wins.
Who runs prediction markets
Two kinds of company. An exchange runs the order book, writes the rules and settles the markets. A broker app gives you a login and sends your order to an exchange. Polymarket is two exchanges: Polymarket US for US residents, in dollars, and polymarket.com, an international crypto exchange. They have separate accounts, balances, order books and rules.
| Venue | What it is | Regulator | Who can use it | What you fund it with |
|---|---|---|---|---|
| Kalshi | Exchange with its own clearinghouse | CFTC, as a designated contract market | US residents and most countries outside a list of 55. Court orders limit some categories in Nevada, Michigan and Washington | US dollars by bank transfer, wire, debit card or PayPal, or a crypto deposit |
| Polymarket US | Exchange and clearinghouse | CFTC, as a designated contract market | US residents, checked state by state in the app | US dollars by debit card, bank transfer or wire |
| polymarket.com | Crypto exchange that settles on Polygon | No CFTC license | Most countries outside the US. The US, UK, France, Germany, Australia and Singapore can only close positions | Crypto from your own wallet, held as pUSD |
| Gemini Predictions | Exchange (Gemini Titan) with an affiliated clearinghouse | CFTC, as a designated contract market | US residents 18 or older. Availability varies by location | Your Gemini account |
| Robinhood | Broker that sends orders to Kalshi, ForecastEx, Rothera and Nadex | CFTC, as a registered futures commission merchant | US residents 18 or older with an approved derivatives account | Settled cash in your Robinhood account |
| Coinbase | Broker that sends orders to Kalshi | CFTC, as a registered futures commission merchant | US residents outside Nevada | Settled US dollars or USDC |
DraftKings Predictions, FanDuel Predicts, Fanatics Markets and Underdog are broker apps too, and Crypto.com and Interactive Brokers trade on exchanges they are affiliated with. All of them are compared in best prediction market apps.
- The two biggest exchanges head to head: Kalshi vs Polymarket.
- What is open in your state or country: where can I trade prediction markets.
- How the broker route works: Robinhood prediction markets.
- Each exchange in depth: how does Kalshi work and how does Polymarket work.
Our pick: Kalshi is the best prediction market for most US traders, with the widest catalogue in one account and a public API. Polymarket US is the best second account for anyone who posts limit orders. Outside the US, polymarket.com is the largest market. An honest look at the first one is in our Kalshi review.
Regulated exchanges and decentralized prediction markets
A decentralized prediction market is one where you trade from your own crypto wallet and trades settle on a blockchain. polymarket.com is the main one. In practice the word means four things:
- Your own wallet. You deposit crypto from a wallet and your balance sits in your own smart wallet on Polygon. Polymarket never holds it.
- Crypto collateral. Balances are pUSD, a token backed one to one by USDC. Every share is paid for in full.
- Settlement on a blockchain. Polymarket's order book matches orders off chain, and each matched trade settles on Polygon.
- A public record. Every trade names a wallet, so any trader's full history is open to anyone. Results come through UMA's oracle, and disputes play out in public.
| Regulated exchange (Kalshi, Polymarket US, Gemini) | Decentralized market (polymarket.com) | |
|---|---|---|
| Who holds your money | The exchange's clearinghouse | You, in your own wallet |
| Currency | US dollars | pUSD on Polygon, backed by USDC |
| Sign-up | Identity check | Email, Google or a wallet, where your country is accepted |
| Who decides results | The exchange, from the named source | An oracle with a bond and a public dispute vote |
| Who can see your trades | The public feed shows size and price. Kalshi shows some traders by name on public profiles | Everyone. Each trade names a wallet |
| If you lose access | Your account stays with the exchange | Nobody restores a lost wallet |
| US residents | Yes | No new positions |
Regulated custody suits most people. Self custody suits a trader who already runs a wallet and wants nobody between them and their money. The public record is what makes polymarket.com the best venue for trader research: you can check a wallet's whole record before you follow a single trade.
Prediction markets vs sports betting and gambling
The difference is mechanical. A prediction market is an exchange where traders trade with each other. A sportsbook or casino is a house that takes the other side of every bet. Everything else follows from that.
| Prediction market | Sportsbook | |
|---|---|---|
| Who sets the price | Other traders, on an order book | The book, as a line |
| Who takes the other side | Another trader | The book |
| What it costs | A stated fee per trade, shown before you send | A margin built into the odds |
| Exit before the result | Sell at the market price any time the market is open | Cash out at the book's offer, when offered |
| Setting your own price | Yes, with a limit order | No |
| What it lists | Sports, elections, the Fed, economic data, crypto, weather, culture | Sports |
| Who oversees it | The CFTC, for Kalshi, Polymarket US and Gemini | State gaming regulators |
A sports example shows the fee side. A game priced as a coin flip trades near 50 cents a side on an exchange. A taker buying 100 contracts at 50 cents pays $50.00 plus $1.75 on Kalshi and collects $100.00 if right. A maker who posts a bid at 49 cents and gets filled pays $49.00 and no fee on most Kalshi markets.
The risk is the same kind of risk: you can lose your whole stake on a result you got wrong. The legal status of sports contracts is contested state by state. Court orders limit Kalshi's sports contracts in Nevada and Michigan and most of its categories in Washington, and broker apps publish their own state lists. This article describes how the products work, not what the law in your state says. Check your state on the prediction market access map.
How do prediction markets make money
From trading fees. The exchange matches a buyer with a seller and charges for the match. It holds no position, so it earns the same whichever side wins. The four exchanges Rivo connects all use one formula for the trader who takes a price:
fee = rate x contracts x price x (1 - price)
The fee peaks at 50 cents and shrinks toward 1 and 99 cents. A 30 cent contract and a 70 cent contract pay the same fee.
| Venue | Taker fee on 100 contracts at 50 cents | Resting (maker) orders |
|---|---|---|
| Kalshi | $1.75 | Free on most markets |
| Polymarket US | $1.74 | Earn a rebate |
| polymarket.com | Free to $1.75 by category. Politics $1.00, geopolitics free | Free, plus a share of taker fees |
| Gemini Predictions | $1.75 | $0.44 |
| Broker apps | Flat cents per contract or a share of the payout, on top of the exchange fee | Varies by app |
- Long shots cost more than they look. The fee on 100 contracts at 10 cents is $0.63 on Kalshi, which is 6.3% of a $10 stake. At 90 cents the same $0.63 is 0.7% of $90.
- Deposits can cost more than trades. Kalshi charges up to 2% on card deposits and nothing on bank transfers or wires. Polymarket US and polymarket.com charge nothing to deposit or withdraw.
- Cash can earn interest. Kalshi pays 3.50% on balances of $250 or more for US accounts.
Every rate and worked example is in Kalshi fees explained and Polymarket fees explained.
How traders make money on prediction markets
A trader makes money by buying a contract for less than it turns out to be worth. There are five ways to do that.
- Price the event better than the market. You put a game at 45% and the contract costs 36 cents. Repeat that edge across many markets and the wins outweigh the losses.
- Trade the move. Buy before news you expect and sell into the price change. The Fed trade above made 14 cents a contract without waiting for the result.
- Rest orders. Post bids and asks, collect the spread and pay the lower maker fee or earn the rebate.
- Follow traders with a winning record. Every polymarket.com wallet has a public history, and Kalshi shows some traders by name. A record over dozens of settled markets tells you who to watch.
- Automate it. A bot applies the same entry price and size to every trade, including the ones that print while you sleep.
The winning habit is price discipline. Many of the most profitable traders on the Kalshi leaderboard lose more trades than they win and still profit, because they buy cheap sides where one win pays for more than one loss. The full playbook, with the costs that decide whether an edge survives, is in how to make money on Kalshi.
Are prediction markets accurate
A price on a busy market is a good estimate of the odds, because being wrong costs money and correcting a wrong price pays. If a team with a real 60% chance trades at 50 cents, every trader who sees it can buy a 60 cent contract for 50. They keep buying until the price reaches 60. Nobody has to be told to fix the price. The profit does it.
That mechanism needs traders and money to work, so accuracy follows the depth of the book.
| A price is strong when | A price is weak when |
|---|---|
| The book is deep and the spread is 1 or 2 cents | The book is thin and the spread is 5 cents or more |
| Many traders are active and the last trade is recent | The last trade is hours old |
| The contract trades between about 10 and 90 cents | The contract is a long shot at a few cents, where one price step covers a wide range of true odds and the fee is a bigger share of the stake |
| The result is close, so money is tied up briefly | The result is months away, so few traders will lock up cash to fix a small error |
| The rules name one clear source | The rules leave room for argument, so the price reflects the rules as much as the event |
Use the price as the starting estimate and check the book behind it. A headline number on a market with a 15 cent gap between bid and ask tells you less than a 1 cent market does.
The risks of prediction markets
- You can lose your stake. A wrong contract pays nothing. Size every position as money you can lose in full.
- Thin books cost money. On a wide spread a market order gives up cents on the way in and again on the way out.
- Rules differ by venue. The same event on two exchanges can settle differently. Read the rules of the market you are buying, on the venue you are buying it on.
- Access differs by state and country. What you can trade changes with where you live, and it changes when a court or a venue changes a rule.
- Self custody is on you. On polymarket.com a lost wallet is a lost balance.
How to start trading prediction markets
- Pick a venue open to you. Check your state or country on the access map. In the US that is Kalshi first for most people.
- Fund it the cheap way. Bank transfer or wire on Kalshi. Card, bank transfer or wire on Polymarket US.
- Pick one category you already follow. One league, the weather in your city or the Fed. Your edge is what you know that the price has not caught up to.
- Read the rules of the market. The source and the deadline decide the payout.
- Start small. Ten trades at $10 teach you more than one trade at $100.
- Use limit orders. Name your price, pay the lower fee and let the market come to you.
- Write down your price and your reason. Check both when the market settles. That record is how you find out whether you have an edge.
Want the reps before the money? You can place every one of those trades on paper first, against each venue's live order book, with prediction market paper trading.
Where Rivo fits
An exchange is where your account lives. A terminal is where you decide what to trade. Rivo is the prediction market terminal for Kalshi, Polymarket, Polymarket US and Gemini. It ingests every market and every trade on all four and puts them in one screen.
- One search across venues. Type a team, a candidate or a ticker and see every venue that lists it, each with its own order book.
- Live odds by venue. The market pages show one event priced on every exchange side by side, with Kalshi odds and Polymarket odds on their own pages.
- Trader leaderboards. The Kalshi leaderboard and the Polymarket leaderboard rank traders on settled markets, each with a profit curve and a win rate against the odds paid.
- Alerts. Follow a trader and get an alert when they buy, or set price alerts on a market, on your phone, your computer or Telegram.
- Bots without code. A prediction market trading bot copies a trader, runs a signal or watches one market's price. Backtest it, run it on paper, then go live through your own account inside per-trade and per-day limits. Build a bot.
- Paper trading. Place any order on paper against the live book, by hand or by bot, with no venue account. See prediction market paper trading.
- One order ticket and one portfolio. The ticket walks each venue's book and shows the exact fee before you send. Positions from every connected account sit in one portfolio.
Rivo is not an exchange and never holds customer funds. Orders go through your own connected account on each venue, and venue fees go to the venue. The whole terminal costs $9 a week or $15 a month.
Frequently asked questions
What is a prediction market?
A prediction market is an exchange where people trade contracts on the outcome of a real event. A contract costs between 1 and 99 cents and pays $1.00 if its side is right, so the price reads as the market's odds: Yes at 36 cents means traders put the chance near 36%.
What are prediction markets and how do they work?
They are exchanges for Yes or No contracts on events such as games, elections, Fed decisions and crypto prices. Traders post buy and sell orders on an order book, the exchange matches them, and the last matched price becomes the odds. You can sell any time before the result. At settlement the right side pays $1.00 a contract and the wrong side pays nothing.
How do prediction markets work?
Every market asks one question with a deadline and a named source for the answer. You buy Yes or No from another trader at a price between 1 and 99 cents. If you are right, each contract pays $1.00. If you are wrong, you lose what you paid. You can also sell before the result at the current price.
What is the definition of a prediction market?
A market where the thing traded is a contract that pays a fixed amount, usually $1.00, if a stated event happens, and nothing if it does not. US regulators call these event contracts. The price of the contract is the market's estimate of the probability.
How do prediction markets make money?
From trading fees. Kalshi, Polymarket US, polymarket.com and Gemini charge the trader who takes a price a fee of rate x contracts x price x (1 - price), about $1.75 on 100 contracts at 50 cents at a 0.07 rate. The exchange matches traders with each other and never takes the other side of your trade.
Are prediction markets gambling?
A prediction market is an exchange, and a casino or sportsbook is a house. You trade against other people at a price they set, the exchange earns a visible fee, and you can sell before the result. Kalshi, Polymarket US and Gemini are overseen by the CFTC as exchanges. The legal label for sports contracts is contested in some states, where court orders limit what is listed.
What is the difference between prediction markets and sports betting?
Who sets the price and who takes the other side. On a prediction market other traders set the price on an order book and one of them takes the other side of your trade. At a sportsbook the book sets the line and takes the other side itself. A prediction market charges a stated fee and lets you sell at the market price before the game ends.
What is a decentralized prediction market?
A prediction market where you trade from your own crypto wallet and trades settle on a blockchain. On polymarket.com your balance sits in your own wallet on Polygon, every trade names a wallet in public, and results come from an oracle with a public dispute process. polymarket.com does not accept new positions from the US.
What is the biggest prediction market?
Kalshi and Polymarket are the two biggest. Kalshi lists the widest catalogue in one US account, from sports to Fed decisions to weather. polymarket.com is the largest market outside the US, and Polymarket US is its separate exchange for US residents.
What is the best prediction market?
Kalshi for most US traders: the widest sports lineup, its own exchange, resting orders free on most markets and a public API. Polymarket US is the best second US account, with a rebate for limit orders. Outside the US, polymarket.com: self custody, low politics fees and free geopolitics markets.