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What Are Event Contracts and How They Work
What Are Event Contracts and How They Work
By
James Thompson,
Last Updated on 21.09.2026
What are event contracts? That’s a question that most people have when starting to get to grips with prediction markets. For good reason: it’s something you will need to know in order to use these instruments correctly.
Event contracts are a way of translating uncertainty into prices, offering a framework for trading on interpretations on events that can happen in a number of fields, from politics to sport and from entertainment to science. We’ll cover them in more detail just shortly, but rest assured, by the end of this guide you will know how event contracts work.
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- Buy Yes or No contracts for sports events
- Live graph allows you to track prices
- There are moneylines, totals, spreads, and more
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18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading involves high risk and may result in loss of your entire investment. See polymarket.us/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated derivatives exchange and clearing organization.
- Hundreds of daily markets for 13+ sports
- Covers game winners, team performance, and outcomes
- Prices change based on sport-related events
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Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at http://kalshi.com/tc/55. 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.
- Sports data on demand
- Fast contract execution speed
- Toll-line phone support
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4.
- Trade on live and futures sports events
- Covers 15 sports and major competitions
- Markets include team and player predictions, plus tournament winners
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5.
- Major sports available
- Live trading supported
- Popular markets, including spread, winner, and totals
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6.
- Coverage for popular US pro leagues.
- Dedicated prediction sections for major events like the soccer World Cup.
- A mix of outright winner and futures sport predictions.
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- Moneylines, spreads, props, futures, and parlays
- Major U.S. sports and other competitions
- Ability to buy and sell positions
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Restrictions & requirements apply. Not available in all states. 21+. Event contract trading involves risk & is not appropriate for all. Consider if it's appropriate for you in light of financial circumstances. See novig.com/terms for information.
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- Coverage of all major football tournaments
- Support for esport markets
- Also covers niche options like racing
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Open Polymarket
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- Provides a variety of sports prediction markets
- The operator offers parlay-style trading
- Eligible sports prediction markets feature moneyline, spreads, totals, and props
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Open Polymarket
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18+ If you or someone you know has a gambling problem, call 1-800-GAMBLER Prediction is an event contract that is a derivatives product offered by Crypto.com: Buy, Sell & Trade Crypto with a Trusted App | Derivatives North America (CDNA), a CFTC-regulated exchange through OG technology. Trading on CDNA involves risk and may not be appropriate for all. By trading you risk losing your cost to enter any transaction, including fees. You should carefully consider whether trading on CDNA is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk. Terms apply. Trading involves risk of loss. Bonus credits cannot be withdrawn immediately.
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- Sports prediction contracts for soccer, football and basketball
- Can close prediction positions early
- High market volumes and liquidity
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- Futures sports prediction market
- Prediction Parlays
- Combo feature
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Open Polymarket
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Trading involves risk, including total loss on positions. Trading decisions and their consequences are your sole responsibility. Nothing on underdogexchange.com constitutes a recommendation, solicitation, or offer to buy or sell any financial instrument. UDX is subject to CFTC regulatory oversight. Promotion issued by affiliate.
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- Trade predictions on tennis, soccer, Mixed Martial Arts, Golf, Formula One, and Sailing.
- It provides a Combos feature where you can link several sports outcomes into one event contract.
- Prediction markets for major sports leagues like the NBA and the NFL
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Open Polymarket
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- Offers a wide variety of contract questions
- Easy to understand contract question
- Covers major sporting leagues
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Table of Contents
- What are event contracts?
- Event contracts pros and cons
- How do event contracts work?
- Where can you trade event contracts?
- Event contracts vs traditional assets
- How do you succeed with event contracts?
- Learn More About Prediction Markets Through Our Detailed Guides
- Conclusion: Are event contracts for you?
- Event contracts FAQ
What are event contracts?
So let’s first of all cover the most basic point: what exactly are event contracts? They are a financial instrument that pays out (or doesn’t) based on the outcome of a specific event. Each contract typically resolves to a fixed value, typically $1 or $0, depending on whether the event occurs.
As a way of understanding them, event contracts transform uncertainty into a measurable probability. To drill down into what that means:
- If a contract trades at $0.65, that implies a probability of 65% that the event will happen
- If the event happens, the contract settles at $1
- If it does not, the contract settles at $0
This binary structure distinguishes event contracts from other forms of trading, where a stock or asset rises or falls in value between two points and can be bought or sold at any time. Here there is a definitive beginning and end, a final Yes or No. Event contracts are found within prediction markets, where participants buy or sell them based on expectations of future outcomes.
Event contracts pros and cons
Pros and Cons
- Clear, binary outcomes
- Real-time probability signals
- Incentivizes accurate forecasting
- Transparent market structure
- Steep learning curve
How do event contracts work?
Understanding how event contracts work requires breaking down their lifecycle, starting with creation and ending with settlement. Let’s start at the beginning:
Contract creation
Each event contract is built around a clearly defined question, such as:
- “Will inflation exceed 3% this quarter?”
- “Will [Candidate X] win the forthcoming election?”
The terms must include:
- A precise outcome definition (e.g. an election result, a specified award winner)
- A resolution source (the Dow Jones, a verified result)
- A settlement date (by the end of this quarter, within the next week)
Clarity is essential. Ambiguity would undermine the entire contract - what will happen, when will it happen, and who decides whether it has happened are all terms that must be defined.
Trading and pricing
Once listed, participants can buy or sell contracts based on their beliefs. Prices fluctuate based on supply and demand:
- Buyers push prices up when they believe the event is more likely
- Sellers push prices down when they believe it is less likely
This dynamic creates a continuously updating estimate of probability. A contract priced at $0.30 implies a 30% chance. If new information emerges the price may rise if it becomes more likely, or fall if it becomes less likely.
Settlement
Once the event outcome is determined, contracts resolve. If the resolution is “Yes”, they pay out $1; if it is “No”, they pay nothing. Settlement is based strictly on predetermined rules. In the case of a Presidential election, that might mean that the result is considered final, and the contract resolved, when the Electoral College confirms the result.
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18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading involves high risk and may result in loss of your entire investment. See polymarket.us/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated derivatives exchange and clearing organization.
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Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at http://kalshi.com/tc/55. 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.
Where can you trade event contracts?
There are multiple platforms which allow for the trading of event contracts, and each has its own structure and regulatory framework, meaning that you must familiarize yourself with these details as well as questions like “are prediction markets legal?” before beginning to trade.
Kalshi
Kalshi event contracts tend to focus on real-world economic and political events. It is one of the bigger names in the industry, and has grown in recognition in recent timesIt has:
- A regulated exchange structure
- Contracts tied to measurable outcomes
- An emphasis on compliance and transparency
Robinhood
Familiar to many as a mobile-based stock trading app, Robinhood has expanded its purview in recent years. Those people seeking Robinhood event contracts will notice it has:- A user-friendly interface
- Broad retail accessibility
- Integration with more traditional financial tools
Event contracts vs traditional assets
Here’s a quick look at the difference between event contracts and traditional assets:
| Feature | Event Contracts | Stocks/Commodities |
| Outcome | Binary (Yes/No) | Continuous price movement |
| Pricing Meaning | Implied probability | Market valuation |
| Time Horizon | Specified resolution date | Open-ended |
| Drivers | Event likelihood | Supply/demand |
| Settlement | Fixed payout ($0 or $1) | Price at sale |
How do you succeed with event contracts?
Success in event contract trading comes down to buying contracts at prices that underestimate the true probability of an outcome, or selling when they overestimate it. But that’s just words - how does this work in reality? Here’s an example:
Imagine a contract stating: “Will Candidate X win the French presidential election?”.
The price is $0.40, implying a 40% probability, but you believe the real probability is closer to 60%, so you buy ten contracts at 40 cents each. Total cost: $4
The election happens, and Candidate X wins. Each contract settles at $1, so you receive that amount for each contract, for a total of $10. Having paid $4, you profit by $6. If the candidate had lost, you would have lost the $4 you purchased the contracts for.
You may also sell contracts you are holding if they are yet to resolve. If you still have those 10 contracts at $0.40 apiece and the probability rises to meet your expectations, or above, you can sell as long as you find a buyer. So if the price rises to $0.75 and you’re not totally confident of the outcome - or just want to realize a quick profit, you can sell at $0.75 per contract. Total price = $7.50, profit = $3.50.
Learn More About Prediction Markets Through Our Detailed Guides
Need more context before comparing prediction market sites? The prediction market guides below explain how they work, how event contracts are structured, how to read market prices, and how major platforms compare. Use them to understand the basics before choosing where to trade.
| Prediction Market Guides | Check the Guide Here |
|---|---|
| What Is a Prediction Market | What Is a Prediction Market and How It Works |
| Prediction Markets in the US? | Are Prediction Markets Legal in the US? |
| Kalshi vs Polymarket | Kalshi vs Polymarket: Which Prediction Market Is Best For You |
| Kalshi vs Robinhood | Kalshi vs Robinhood: Which Prediction Market Is Best For You |
| Event Contracts | What Are Event Contracts and How They Work |
| Prediction Markets vs Sportsbooks | Prediction Markets vs Sportsbooks: Differences Explained |
| How to Read Market Prices | How to Read Market Prices as Probabilities |
| The Hidden Costs of Event Trading | The Hidden Costs of Event Trading Explained |
Conclusion: Are event contracts for you?
By converting real-world outcomes into tradable instruments, event contracts allow participants to express their expectations in a measurable and transparent format. Their simplicity, combined with strong incentives, makes them an effective tool for leveraging information. If you feel like this is something you would like to explore, feel free to click our banners and links to get started.
The most trusted prediction sites in October
18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading involves high risk and may result in loss of your entire investment. See polymarket.us/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated derivatives exchange and clearing organization.
Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at http://kalshi.com/tc/55. 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.
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