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How do prediction markets work? A user guide for 2026
How do prediction markets work? A user guide for 2026
By
James Thompson,
Last Updated on 21.09.2026
In this article, we'll thoroughly answer the question, “How do prediction markets work?” Well, a prediction market is a website or app that lets you trade Yes-or-No contracts on real-world topics, such as sports, crypto, culture, economics, climate, and politics.
If your prediction is correct, you receive the stated payout per contract; if not, your payout will be $0. Based on our research, PrizePicks Predict, Robinhood, and Interactive Brokers are some of the top sites for trading event contracts. In this article, we'll explain how prediction markets work and also review our top three sites.
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The Best Prediction Markets Apps and Sites this 2026
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- Good concentration on sports predictions
- Covers several different market categories
- Bonuses are available for traders
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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.
Hot Offer
- Large scale of daily events
- Numerous Yes/No Events
- Markets across numerous categories
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Hot Offer
- Explore a wide range of prediction markets
- Trade markets with strong liquidity and high trading volume
- Earn potential rewards through active prediction trading
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4.
- Large sports prediction section
- Covers other worldly events
- Intuitive interface for ease of use
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5.
- Wide range of prediction markets
- Advanced sports prediction features
- CFTC-compliant event contracts
Deposit Methods
Apps
License
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.
6.
- 12 broad market categories
- Contract prices range from $0.01 to $0.99
- Detailed settlement rules
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- CFTC-regulated sports prediction market
- Peer-to-peer event contract trading
- Mobile and desktop access
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Apps
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.
8.
- ProphetX is registered with the CFTC as a federally regulated platform.
- You can trade Yes or No outcomes on real events across sports and politics.
- You’re eligible for a $75 trading bonus as a first-time user on this platform.
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9.
- Wide range of event markets
- Clean, user-friendly trading experience
- Fast deposits and withdrawals
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10.
Draftkings Predict Review
New DraftKings Customers: Trade $5+ Get $200 in Bonuses
USA Players Welcome
- Wide range of prediction markets
- CFTC-regulated prediction trading platform
- Dedicated iOS and Android apps
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Event Contract Trading is offered by DraftKings Predictions, a CFTC-registered Futures Commission Merchant and NFA member. Trading involves substantial risk of loss and is not suitable for everyone. Market availability varies. Eligibility restrictions apply. 1 per new DraftKings customer. $5+ first-time trade req. Max. $200 issued as non-withdrawable Predictions Dollars that expire in 1 year. Reward issued as $50 in Predictions Dollars every 7 days via click-to-claim for 21 days. Click-to-claims expire 7 days after issuance. 7 days = 168hrs. Terms: dkng.co/predictionspromo. Ends 11/29/26 at 11:59 PM ET. Sponsored by DK.
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- Welcome trading bonus
- Wide range of prediction markets
- Simple mobile and desktop experience
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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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- CFTC-regulated prediction market
- Dedicated Android and iOS apps
- Wide range of event markets
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- Welcome bonus available
- Over 1000 event options
- More than 17 market categories
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Table of Contents
- Quick facts about “How do prediction markets work?”
- Pros and cons of prediction markets
- How do prediction markets work? – All you should know
- Prediction markets explained – Available categories
- Top three prediction sites to try
- How to sign up at your preferred prediction market site
- Conclusion – Trade Yes-or-No event contracts on prediction sites
- How do prediction markets work FAQs
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:
🏅 Sports
In the sports category, most prediction markets offer contracts on football, basketball, tennis, boxing, and golf. You might also find contracts on chess, pickleball, lacrosse, and Formula 1. Esports event contracts are also commonly available. They include Valorant, Counter-Strike 2, League of Legends, Dota 2, and more.
💻 Crypto
Crypto contracts let you trade predictions on several digital assets, such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Ripple (XRP), and Dogecoin (DOGE). Depending on the site, you can predict events such as launch date, airdrops, and milestones. Crypto prediction markets also offer time-based contracts. With these event contracts, you can predict whether the closing price of a cryptocurrency will be higher or lower than a specified target at a set period. For instance, BTC Up or Down 5m and ETH Up or Down 15m.
🗳️ Politics
In politics, a prediction market may list event contracts for local and international elections and also offer subcategories such as Courts, Epstein, Trump, and Trump Cabinet. For instance, we found markets like “Presidential Election Winner 2028,” and “Harvey Weinstein prison time?”
🎭 Culture
This category usually offers Yes-or-No contracts for entertainment, including art, music, celebrities, awards, movies, reality TV, and video games. For instance, “Will Banksy create a new mural or street artwork by December 31?” “Who will perform at the World Cup halftime show?” and “Nobel Peace Prize Winner 2026.”
💰 Economics
Prediction markets with economic event contracts feature topics such as Fed rates, inflation, macro indicators, GDP, global rates, taxes, housing, labor, and treasuries. Some of the markets we traded predictions on include “Fed Decision in July?” “Largest Company at the end of July?” and “How high will inflation get in 2026?”
🌍 Climate
Under climate, you can trade predictions on temperature, precipitation, natural disasters, and pandemics. For example, “The highest temperature in Hong Kong on July 14?” “How many tornadoes are in the US in 2026?” and “Hantavirus pandemic in 2026?”
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.
| Top prediction markets | PrizePicks Predict, Robinhood, and Interactive Brokers Prediction Markets |
|---|---|
| Mobile app | Available on Google Play Store and Apple App Store |
| Live trading | Supported |
| Early exit | Yes |
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:
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Click the banners on this page to visit your preferred prediction market.
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Tap the Register button.
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Enter your email and password.
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Input your name, phone number, date of birth, and address.
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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.
Our Favorite Prediction Markets
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.
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.
