Prediction markets, explained without the fog

Data: official Kalshi settlements

A prediction market is an exchange for a very specific kind of question: will this defined event happen, yes or no? Will the Fed cut rates in March? Will this team win tonight? Will bitcoin close the next 15 minutes higher than it opened? Each question becomes a contract that trades between $0.01 and $0.99 and, when the event resolves, settles at exactly $1 if it happened and $0 if it didn't.

The one idea that explains everything: price = probability

A contract trading at 63¢ is the market saying "about a 63% chance". That is not a metaphor — it is the arithmetic of the payout. If the true chance were higher than the price, buying would have positive expected value; if lower, selling would. Thousands of traders pushing on both sides are what keep the price honest, and over large samples the prices of these markets are strikingly well calibrated: events priced at 70¢ happen roughly 70% of the time.

How a trade actually works

• You pick a side: YES (it happens) or NO (it doesn't). Both sides are contracts; the YES price plus the NO price hovers around $1.
• You can exit early: sell your contract at the current price any time before settlement, or hold to the end.
• Settlement follows a written rule: each market names its official source and its exact resolution rule in advance. That rule, not anyone's opinion, decides the $1/$0.
• Fees apply: exchanges charge per contract traded, usually a formula based on the price (highest near 50¢, tiny near the extremes).

The main arenas in the US

• Kalshi — a CFTC-regulated exchange (a Designated Contract Market) with markets on economics, politics, climate, culture and crypto, including 15-minute crypto windows.
• Polymarket — the largest global venue, settled in crypto; its regulated US arm is Polymarket US.
• Robinhood — event contracts inside the Robinhood app, routed through Kalshi's exchange: same contracts, friendlier front door.

Head-to-head detail: Kalshi vs Polymarket compared.

The fastest classroom: 15-minute crypto windows

Most prediction markets resolve in weeks or months, which makes learning slow and feedback rare. Crypto windows compress the same mechanics into 15 minutes: a defined question (will BTC close this window up or down?), a price that is a probability, and an official settlement four times an hour. That speed is exactly why we built Crypto Predicción around them — every signal we publish is settled in public within the hour, so the record cannot hide. See the nine assets' 15-minute markets and their full public track record.

Short answers

What is a prediction market, in one sentence?

A market where people trade contracts on whether a specific future event will happen, priced between $0 and $1 — and that price reads directly as the probability the market assigns to the event.

How do prediction markets make money for winners?

A contract that settles on the correct outcome pays $1. Buy at 40¢ and be right, and you receive $1 per contract minus fees; be wrong and the contract settles at $0.

Are prediction markets legal in the US?

The main venues operate as CFTC-regulated exchanges or under CFTC oversight structures. Rules differ by platform and by state, and the area is actively debated — check each platform's terms and your state's position.

Educational content only — not financial advice. Prediction markets can lose you money: every contract that settles against you is worth $0. Adults 18+ only.