How do prediction markets work? A user guide for 2026

Quick facts about “How do prediction markets work?”

• Prediction markets offer Yes-or-No contracts on real-world events in sports, politics, economics, culture, and more.
• If your prediction matches the event outcome, you receive the stated payout for each contract.
• Some of the leading prediction markets include PrizePicks Predict, Robinhood, and Interactive Brokers Prediction Markets.

Pros and cons of prediction markets

We've traded event contracts on several regulated prediction sites, and here are the pros and cons we observed about them:

Pros and Cons

• Outcomes are based on real-world events
• Prediction trading is easy to understand
• Correct predictions let you benefit from your knowledge

• Some sites may offer fewer prediction markets

How do prediction markets work? – All you should know

Prediction markets let you trade Yes or No contracts on real-world topics, such as sports, economics, culture, cryptocurrency, climate, and politics. If your prediction matches the event outcome, you receive the stated payout. Wrong predictions give nothing once the event contract expires.

Moreover, you don't have to hold on to your position until the contract expires. Some prediction markets let you sell your position before resolution so you can lock in profit or reduce potential losses.

When it comes to prediction market pricing, each contract's price shows traders’ collective belief about whether an event will occur. So if a Yes contract has a higher price, say 60¢, it suggests the market believes there's about a 60% likelihood the event will occur. This is only an estimate.

Sometimes the displayed Yes or No contract price won’t match the implied probability due to spreads and fees. The displayed percentage reflects the last trade. On the other hand, Yes and No prices show live order-book quotes.

Prediction markets also let you trade contracts on live events. Some sites feature a live tab that you can click to view and trade ongoing event contracts. Sports, esports, and crypto markets often feature live events. Many prediction markets may charge trading fees when you buy or sell contracts. Check the fee schedule before trading.

If you're wondering whether prediction markets are gambling sites, they're not and are regulated event-contract markets in the US. In fact, the Commodity Futures Trading Commission regulates trusted US prediction trading sites.

Prediction markets explained – Available categories

As part of answering the question, “What are prediction markets and how do they work?”, we'll explain the available market categories. Here are the categories prediction markets can offer event contracts on:

Top three prediction sites to try

Now that we've answered the question “How do prediction markets work?”, let's look at some of the leading prediction markets you can try. We selected these sites based on criteria such as legitimacy, usability, market presence, customer support, and more.

PrizePicks Predict – Best for mobile prediction trading

PrizePicks Predict: Pros and Cons

• Downloadable mobile apps on iOS and Android
• Fixed trading fees of $0.02 for most event contracts
• The site is a regulated platform for prediction markets trading in the US

• No promotion for traders on prediction markets

PrizePicks Predict features event contracts from Kalshi. It lets you trade contracts through its Team Picks and Culture Picks sections available in its mobile app. The Team Picks section focuses on sports event contracts, including basketball, football, soccer, tennis, golf, and esports.

For the Culture Picks, you'll find contracts on crypto, politics, culture, economics, and climate. PrizePicks Predict is best suited for traders who prefer buying or selling Yes/No contracts via a dedicated mobile app. Moreover, we consider PrizePicks Predict one of the best inflation prediction market sites due to its number of contracts in this category. For instance, we traded on “How high will inflation get this year?”

Robinhood – Find over 1,400 events

Robinhood: Pros and Cons

• Free stocks welcome bonus
• Available downloadable app
• Coverage of over 1600 events

• Limited climate markets

At the time of our review, Robinhood listed over 1,400 events on its mobile app, including sports, politics, culture, economics, education, technology, crypto, and climate. Under crypto, we could trade predictions on BTC, ETH, HYPE, SOL, XRP, DOGE, and BNB. In the elections category, Robinhood mainly focuses on US state elections, while the international market features only elections in Brazil and the UK.

Robinhood also ranks among our best stock market prediction market sites. During our review, we traded “Nasdaq-100 close price end of 2026?” We also found some markets in the S&P category.

Interactive Brokers Prediction Markets – Trade contracts from Kalshi, CME Group, and ForecastEx

Interactive Brokers: Pros and Cons

• No-deposit welcome bonus
• Mobile app for iOS and Android devices
• Event contracts from Kalshi, CME Group, and ForecastEx

• No sports or entertainment prediction markets

Interactive Brokers Prediction Markets lets you trade event contracts on a 3-in-1 prediction market site. It lists contracts from Kalshi, CME Group, and ForecastEx, and you can access them by registering on IBKR. During our assessment, we found that it offers contracts on topics such as economics, politics, climate, and technology. Unlike PrizePicks Predict and Robinhood, IBKR Prediction Markets doesn't feature contracts for sports and culture events.

One reason we rank the prediction market is that it lets you search for and compare event contract prices from three exchanges on a single site. IBKR Prediction Markets is also one of the best tariff prediction market sites. It provides contracts on tax events, such as “California Sales Tax Revenue.”

How to sign up at your preferred prediction market site

Now that you have the answer to “how do prediction markets work?”, here's how you can register on your chosen prediction market:

1. Click the banners on this page to visit your preferred prediction market.

2. Tap the Register button.

3. Enter your email and password.

4. Input your name, phone number, date of birth, and address.

5. Verify your email, phone number, and account.

Note that you have to meet the site's age requirement to be eligible to trade predictions.

Conclusion – Trade Yes-or-No event contracts on prediction sites

This article aimed to answer the question “How do prediction markets work?” We've explained that prediction markets let you trade Yes-or-No event contracts on real-world topics, such as sports, politics, crypto, economics, climate, and culture. If your prediction is correct, you receive the stated payout per contract; otherwise, the contract will offer no payout.

You can trade predictions on live events. During our review, we noticed that sports, esports, and crypto markets usually have frequent live events. Our top three prediction markets to try include PrizePicks Predict, Robinhood, and Interactive Brokers Prediction Markets. Both PrizePicks Predict and Robinhood let you trade on sports, climate, politics, culture, economics, and crypto.

However, IBKR Prediction Markets doesn't provide sports and culture prediction markets. Its advantage is that it lets you compare contracts from three different prediction sites on its app.

Click the banners on this page to visit your preferred prediction market and start trading event contracts.

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