A prediction market is an exchange where you buy and sell contracts on whether something will happen. Each contract pays $1 if the answer is yes and nothing if it's no, so a contract trading at 30¢ means the crowd puts the odds around 30%. You trade against other people, not against the house, and you can sell before the event is decided.
The contract
Everything on a prediction market is a question with a yes or no answer: Will the Fed cut rates in December? Will the Chiefs win on Sunday? Will it rain in New York tomorrow? Each question is a market, and each market has contracts.
A Yes contract pays $1 if the thing happens. A No contract pays $1 if it doesn't. Between now and then the contract trades at a price between 1¢ and 99¢, set by whatever buyers and sellers agree on. The two prices always add up to $1: if Yes is 62¢, No is 38¢.
Why the price is a probability
If you pay 62¢ for a contract that returns $1 when you're right, you only make money if the event happens more than 62% of the time. So anyone buying at 62¢ is saying the odds are at least that high, and anyone selling is saying they're lower. The price settles where the two sides balance, which makes it the market's live estimate of the probability.
That is the whole reason prediction markets exist and why news outlets quote them. Nobody is setting the odds; the price is what the crowd, with money at stake, actually believes.
How a trade works
- You pick a market and a side, Yes or No.
- You place an order at a price, say 40¢ for Yes. If someone is willing to sell at that price (or buy No at 60¢, which is the same thing), the trade fills.
- You now hold a contract. Its price moves as news comes in. You can sell it at any time at the current price.
- When the event is decided, the market settles. Contracts on the right side pay $1 each; the others expire at $0.
Because you can sell early, you don't have to wait for the result. Buy Yes at 40¢, watch the price go to 70¢ after some news, sell, and you've made 30¢ a contract regardless of what eventually happens.
Where the money goes: fees
The platform doesn't take the other side of your trade, so it doesn't profit when you lose the way a sportsbook does. It makes money from fees. Kalshi charges a trading fee that is highest on contracts priced near 50¢ and shrinks toward 1¢ and 99¢; Polymarket has historically charged no trading fee on most markets and makes money elsewhere. The exact numbers change, so each of our platform reviews works through the fee on a real trade.
Who runs them and who regulates them
In the United States, event contracts are treated as derivatives, which puts them under the Commodity Futures Trading Commission (CFTC) rather than state gambling regulators. A platform that wants to offer them has to be registered with the CFTC as a Designated Contract Market, the same legal category as a futures exchange.
- Kalshi was the first prediction market to get that registration, in 2020, and launched to the public in 2021. It won a court fight in 2024 that allowed it to list markets on election results, which is what put prediction markets on the front page.
- Novig is a sports-only prediction market. It started as a betting exchange, ran as a sweepstakes app, and relaunched nationwide in August 2026 as a CFTC-regulated market. It is the one major platform that requires users to be 21, not 18.
- Polymarket is the largest prediction market worldwide. It runs on a blockchain and settles in the USDC stablecoin. After a 2022 settlement with the CFTC it kept US customers out for years, and it has since been working its way back into the US under CFTC oversight. Our Polymarket page tracks where that stands.
- DraftKings Predictions and FanDuel Predicts are the sportsbooks' entries into the same category, launched to reach states where their sportsbooks can't operate.
Federal regulation is why Kalshi operates in states that have never legalised sports betting. Several of those states think that is an end-run around their gambling laws, and the lawsuits are ongoing. That is the live legal question in this industry, and it is why our state pages exist.
What a prediction market is not
It is not a sportsbook: there are no odds set by the house, no parlays in the traditional sense, and no promotions designed around you losing. It is also not a stock market: a contract is worth either $1 or $0 at the end, nothing in between, and it has an expiry date. The closest comparison is a binary option traded on an exchange, which is exactly how the CFTC classifies it.
The three things to understand before you trade
- Price is probability, and probability includes the fee. A contract at 50¢ needs the event to happen more than 50% of the time just to break even after fees. Thin edges disappear quickly.
- Liquidity matters. Big markets like elections or NFL games have tight spreads. Small markets may have nobody on the other side, so the price you see isn't always a price you can get.
- Settlement rules decide everything. Each market has written rules for what counts as yes. Read them. Most disputes on these platforms come from traders who assumed instead of reading.
Next: how each platform handles this in practice, starting with the one most people search for.
Platform reviews