What are prediction markets?
Prediction markets are something you can trade at popular exchanges like Kalshi, Crypto.com, and Robinhood. The term can be used in two different ways. Firstly, and most commonly, you can use it to refer to a single prediction on a real-world event. Secondly, we sometimes use the term to refer to groups of predictions, for example, prediction markets on NBA games.
Prediction markets are yes and no contracts for real-world events
So, what is event trading and how is it related to prediction markets? Event trading is basically what you do with prediction markets. As explained above, you can buy, sell and even hold event contracts, which is the basic principle of trading. We’ll explain more below.
“Will the price of Gold hit $4,300 by the end of March?”
- Yes - 25c
- No - 79c
This is a prediction market. It has three components:
- The proposition/prediction which is usually formed as a question relating to something specific that might happen in the world.
- A “Yes” option - you can buy trade contracts for the “yes” option if you agree with the prediction.
- A “No” option - you can alternatively buy trade contracts for the “no” option if you don’t think it will happen.
This is a basic prediction market, and as mentioned in any comprehensive Kalshi or Crypto.com review you can find online, you can find multiple different prediction market categories, such as:
- Sports
- Crypto
- Politics
- Election
- Climate
- Culture
- Finances
- Geopolitics
Buying or selling contracts in any of the categories above is event trading. You can do it across different prediction market sites of your choice.
You can buy, sell, and hold trade contracts for prediction markets
We’ve touched on this already, but there are three things you can do with trade contracts relating to specific prediction markets:
- Buy: If you see a prediction market you like, you can buy yes or no trade contracts for it, usually at a price of less than $1 per contract.
- Sell: You can potentially sell your prediction market trade contracts to other traders for more than you bought them for.
- Hold: If you are confident in your trade contract choice, you can also hold them until the event settles. If then, you got the prediction right, you’ll usually get a $1 return minus any fees.
This is the basis of what you can do with prediction markets and how you can potentially make a return. If you are wondering, are prediction markets legal in the US? They are, provided that the operator is regulated by the Commodity and Futures Trading Commission.
100% up to $20
- Sports event trading is the core of Polymarket’s US offering
- Predict outcomes of NBA, NFL, NHL, MLB, and MLS fixtures
- Live and upcoming fixtures covered
$10 Bonus
+3
- 15+ sports and esports categories
- Game winner, totals, spreads, props, and futures
- Live sports event trading
100% up to $250
+2
- Great support for different sports
- Single game predictions for the outright winner of matches
- Futures predictions for leagues or event champions, and end of season awards
Pros and cons of prediction markets
We think that prediction markets offer more versatility compared to one-track systems. You can trade in many more different markets and virtually any proposition you can think of. On top of that, prediction market sites don’t set the probabilities of each event contract, and the transparency is excellent as you are buying and selling trade contracts directly from other traders. However, there is more to learn, and we think that to be effective, you will need to put a lot more effort in researching the different predictions and relating real-world news, events, and processes.
- More trading variety
- P2P transparency
- Simple trading processes
- Regulated in the US
- More learning and research involved
Examples of prediction markets available at top-rated exchanges
So you can gain a clearer idea of how trading works, and the differences between predictions markets vs sportsbooks, we’ve picked out a variety of actual predictions that we found at popular trading exchanges:
| Prediction Market | Yes Contract | No Contract | Exchange |
| Who will be the NBA Eastern Conference Champion? (Boston) | 37c | 65c | Kalshi |
| Will Bitcoin be above $200k by next year? | 8c | 92c | Robinhood |
| Largest company at the end of March? (NVIDIA) | 99c | 1c | Polymarket |
| Top US Netflix Movie This Week? (Peaky Blinders: The Immortal Man) | 82c | 22c | Kalshi |
| Will Gavin Newsom be the next Democratic Presidential Candidate? | 25c | 75c | Polymarket |
| Who will win from the San Diego FC vs. Real Salt Lake game (SDG) | 48c | 30c | Polymarket |
| Will the IMF Declare a Global Recession Before 2027? | 26c | 77c | Kalshi |
In most instances, a prediction will either have a single yes and no trade contract option, or it might have multiple potential options, each with their own yes and no trade contracts.
Prediction markets will only get better from this point onwards
That’s your guide on what are prediction markets complete and we hope we’ve answered all the questions you had. To recap - a prediction market is mainly a single proposition that you can buy and sell yes or no trade contracts for on P2P exchanges from other customers. If you want to give this a try yourself, all you need to do is click the links or banners we have on this page for our recommended operators and get signed up.
Explore the best sports prediction markets sites
100% up to $20
- Sports event trading is the core of Polymarket’s US offering
- Predict outcomes of NBA, NFL, NHL, MLB, and MLS fixtures
- Live and upcoming fixtures covered
$10 Bonus
+3
- 15+ sports and esports categories
- Game winner, totals, spreads, props, and futures
- Live sports event trading
100% up to $250
+2
- Great support for different sports
- Single game predictions for the outright winner of matches
- Futures predictions for leagues or event champions, and end of season awards
Trade to get up to $100 in Bonuses!
+6
- 7+ sports for predictions
- Parlays and same-game parlays
- Live sports event trading
200% up to $100
- Predict the outcome of sports such as tennis, soccer, and more
- Major sports leagues and tournaments are covered
- Multi-team predictions are available
Prediction markets FAQs
Are prediction markets the same as betting?
No. You must understand the difference. Betting involves odds set by the operator and you are betting against the house. With prediction markets, you are trading yes or no contracts with other customers via a P2P network and there are no odds or house edge involved.
What is a prediction market?
Typically this is a single prediction made on a real world event, such as, “Will the Oklahoma City Thunder win the 2026 NBA Finals?” You would then have a yes or no option for this prediction that customers can buy and sell trade contracts against.
️ Are prediction markets legal in the US?
Yes, provided that the exchanges are regulated by the CFTC. We also expect high levels of transparency about their operations, extensive verification measures for new customers, and anti-insider trading measures.
