How to read a prediction market contract

A prediction market contract is settled under its written rules. Check the qualifying event, deadline, source of truth, and treatment of exceptional cases before you look at its price. Check written contract rules, account eligibility and total costs. Trading involves risk, including loss of money.

Which event determines the contract outcome?

“Will a policy happen?” could mean a public announcement, a signed document, or an effective date. Those events can happen at different times. Translate the rule into a plain sentence: this contract resolves Yes if this specific thing happens by this deadline.

Which deadline and time zone apply?

Look for the exact closing time and time zone. Trading may stop before the event is resolved. The time you can last place an order and the time a result becomes official are not necessarily the same.

Which source determines settlement?

A contract may refer to an official agency release, a competition’s governing body, or another specified publication. A television headline or social post is not automatically the settlement source. Read how conflicting or revised reports are handled.

What happens with cancellations or unusual outcomes?

Check postponements, cancellations, ties, delayed data, and corrections. Do not assume every contract has only the ordinary $0 or $1 result under every possible circumstance. Special settlement or cancellation provisions can matter.

How can you check that you understand the contract?

Suppose a hypothetical contract asks whether a named station reaches a specified temperature. A hot reading at another station does not answer the contract. This is why two markets that sound alike can have different results.

How do you calculate payout and profit?

For a standard binary contract, 100 shares bought at 40 cents cost $40 before fees. If those shares settle at $1, the gross payout is $100 and profit is $60 before fees. If they settle at $0, the purchase price is lost. Our calculator lets you change those assumptions without placing a trade.

Sources

• Kalshi (opens in a new tab) market FAQs — checked September 26, 2026
• Kalshi member agreement — checked September 26, 2026
• Polymarket US (opens in a new tab) market integrity and rulebook — checked September 26, 2026

Frequently asked questions

Is the headline the full contract?

No. The full resolution criteria and platform rules determine settlement.

Can settlement take place after trading closes?

Yes. Trading close and settlement are different steps. The official result may need confirmation after orders stop.

What is a prediction market contract?

It is a contract tied to a defined event. Read its resolution criteria, deadline, settlement source and exception rules.

Does a $1 payout mean $1 profit?

No. Profit is payout minus purchase cost and applicable fees. A losing contract can lose the amount paid and fees.