What is an event contract?

An event contract is a binary financial instrument that resolves to $1 if a specified event occurs and $0 if it doesn't. They are regulated by the CFTC as commodities derivatives.

How is price related to probability?

The price of a Yes contract, in cents, equals the market's implied probability of the event occurring as a percentage. A contract at 62¢ means the market thinks there's a 62% chance the event happens.

Can I sell my contract before the event resolves?

Yes. On all major prediction market platforms, you can sell at any time at the current market price, locking in profit or limiting loss without waiting for resolution.

What fees do prediction markets charge?

Most platforms charge a small per-contract fee, typically a fraction of a cent or 1-2% of the trade. This is dramatically lower than the 5-10% vig built into sportsbook lines.

How is this different from sportsbook betting?

Sportsbooks set the price, build in margin, and pay only at resolution. Prediction markets are exchanges where prices are set by traders, fees are transparent, and you can exit any position at any time.

What happens if there's no liquidity in a market?

Bid-ask spreads widen and you may not be able to enter or exit at favorable prices. Always check spread depth before trading thinly traded markets.

Can I lose more than I invested?

No. Your maximum loss on a long event contract is the price you paid. A contract bought at 40¢ can fall at most to 0¢, capping your loss at 40¢ per contract.

Basics · 10 min read

How event contracts work

By Catie Di StefanoPublished January 10, 2026Updated August 6, 2026

Price equals probability. A contract at 40¢ means the market thinks there's a 40% chance. Here's the full mechanic, with a Lakers walk-through.

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Independent educational guide. Not affiliated with, endorsed by, or connected to FIFA or any official World Cup body.

Sources

Every figure on this page is checked against primary sources — regulator filings, exchange documentation and official results. Prices and rules change; verify with the operator before trading.

1.Kalshi Help Center — fees, funding and account rules — Kalshi
2.Kalshi market listings and contract rulebooks — Kalshi
3.Polymarket documentation — markets, fees and resolution — Polymarket
4.Polymarket Learn — how the exchange works — Polymarket
5.Customer advisories and investor protection notices — U.S. Commodity Futures Trading Commission
6.Designated Contract Markets (DCMs) — U.S. Commodity Futures Trading Commission

Basics

Frequently asked questions

What is an event contract?: An event contract is a binary financial instrument that resolves to $1 if a specified event occurs and $0 if it doesn't. They are regulated by the CFTC as commodities derivatives.
How is price related to probability?: The price of a Yes contract, in cents, equals the market's implied probability of the event occurring as a percentage. A contract at 62¢ means the market thinks there's a 62% chance the event happens.
Can I sell my contract before the event resolves?: Yes. On all major prediction market platforms, you can sell at any time at the current market price, locking in profit or limiting loss without waiting for resolution.
What fees do prediction markets charge?: Most platforms charge a small per-contract fee, typically a fraction of a cent or 1-2% of the trade. This is dramatically lower than the 5-10% vig built into sportsbook lines.
How is this different from sportsbook betting?: Sportsbooks set the price, build in margin, and pay only at resolution. Prediction markets are exchanges where prices are set by traders, fees are transparent, and you can exit any position at any time.
What happens if there's no liquidity in a market?: Bid-ask spreads widen and you may not be able to enter or exit at favorable prices. Always check spread depth before trading thinly traded markets.
Can I lose more than I invested?: No. Your maximum loss on a long event contract is the price you paid. A contract bought at 40¢ can fall at most to 0¢, capping your loss at 40¢ per contract.

Next steps

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Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.