Kalshi Event Contracts Explained: Trading, Pricing, and Settlement

Remember the kids back in school who always wanted to make predictions on something, like whether you would dare to ride a roller coaster? Those kids grew up and are now trading Kalshi event contracts to predict outcomes of events.

A quick explanation: Kalshi is a regulated platform that lets users trade on the outcomes of real-world events in categories such as sports, politics, technology, science, climate, celebrity culture and more. Traders typically take a position on a binary event, and then they can hold that position until the event ends or cash out early. Below is the full explanation.

What is a Kalshi event contract?

The event contract is a binary option (Yes or No) that users trade on to predict outcomes across specific events. For example, you might see an event such as:

• Which team will score first in a football game, the Green Bay Packers or the Chicago Bears?
• Will it snow in Boston tomorrow?
• Will the average gas price in the U.S. be above $4 or below $4 per gallon on Friday?
• Who will win the Oscar for Best Picture? (Each film option will have a Yes/No market for you to choose from)

These are just a few examples, as there are 700+ prediction markets available across a variety of categories. You can even make a series of predictions for events that are related to one overall event. For example, a football game may have a dozen small events for you to predict, such as the overall winner, who scores first, who gets a penalty first, and more.

How do traders take a position in a Kalshi event contract?

As mentioned, Kalshi positions are usually binary options such as Yes/No, Higher/Lower, and so on. There are also categorical options, which are basically multiple choice. For example, if the question is who will win the Oscar for best actor, traders can take a position based on different possible outcomes.

These event outcomes each have a price next to them, with the total price adding up to $1. These prices can be roughly understood as the probability that a certain outcome will occur, with the prices moving up and down as people take a position.

For example, you might see an event such as, “Who will score first in the football game?” and then the positions are listed like this:

• Green Bay, $0.40 on Yes
• Chicago Bears, $0.60 on Yes

These prices suggest that users think it’s more likely that the Chicago Bears will score first in the game (roughly a 60% probability).

Now let’s suppose that you think Green Bay is likely to score first. You can buy the “Green Bay” event contract for $0.40. The key point to understand is that if your prediction is wrong, you get $0. If your prediction is right, you get $1, so your profit would be $1 - [the price when you took a position, which is $0.40 in this example] = $0.60. Which brings us to the next point in this Kalshi review.

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How does a Kalshi event contract payout work?

You have two options once you take a position in an event contract:

1. End the contract early to cut your losses or to take a profit.
2. Wait for the final outcome.

Let’s go back to our football example, where the user takes the position that Green Bay will score first ($0.40). This value will change as others take positions on this outcome. Let’s suppose for this example, more users begin to take the position that Green Bay scores first, and now the contracts are priced as follows:

1. Green Bay, $0.70.
2. Chicago Bears, $0.30.

You can opt to end the contract early and take your profit. In this case, the profit is $0.70 (current) - $0.40 [the value when you purchased this contract] = $0.30 profit per contract for you.

The other option is to wait for the final outcomes. If your prediction is correct, you get $1, and then Kalshi will settle with you automatically. In our example, you purchased the contract at $0.40 and won $1, so your profit is $0.60 (minus any fees) per contract you purchased.

Do traders have an option to place an order on a Kalshi event contract?

Yes. One of Kalshi’s powerful features is that traders can place market orders (where speed is important) or limit orders (where pricing is important). Here’s the difference:

• Market order: Here’s where you ask the platform to execute your trade immediately at the best available price.
• Limit order: This is where you tell Kalshi to execute a trade when the market hits a specific price or better.

Note that a market order always happens instantly, while a limit order may go unfulfilled if your criterion isn’t met.

Are there any limits to trading on Kalshi event contracts?

Kalshi limits help keep markets fair

Position caps vary by event and volume

Yes. In most markets, the position limit is capped at a $25,000 potential payout for a single event. Some of this is due to regulatory oversight, but it also keeps those with deep pockets from being able to single-handedly move a market prediction in one direction or the other.

In addition, these limits also help low-volume events find people to take the opposite position, as traders are taking positions against one another rather than taking a position against “the house.” For example, a low-volume event such as “will it snow in Boston?” probably wouldn’t have enough traders on board to pair a $100,000 “yes” position with another trader who’s taking a $100,000 “no” position.

Take note that these limits aren’t in place across the board. Events that typically have a high volume of trading may have higher limits. Examples here include events such as a Super Bowl winner or the winner of a presidential election. In addition, some individuals with a high net worth as well as institutions can apply for a higher limit.

How does this compare to trading on stocks?

Some people find that it’s easier to understand what event contracts are when compared to something else familiar, such as trading stocks. This table will help you understand how they differ:

Pros and cons of taking a position on a Kalshi event contract

People who are new to this sort of prediction trading often wonder if Kalshi is legal, and the answer is yes. It’s legal in all 50 states, and it’s regulated by the CFTC. To give you a better overview on the platform’s strengths and weaknesses, here are the pros and cons:

Pros & Cons

• You can take a position on a wide variety of 700+ markets
• New traders can often get a bonus
• Traders can end a contract early

• Limited to purchasing $25,000 worth of event contracts

Final thoughts on participating in Kalshi event contracts

We find that predicting the outcomes of specific events to be entertaining, and we especially like that this is a regulated activity. We also like being able to exit a contract early to mitigate losses or to lock in a profit. If you’d like to jump in and start predicting event outcomes, then you can get started now by tapping the Kalshi banner on this page. If there’s a bonus available, you’ll see that info on the banner.

Sports Welcome Bonus

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$10 Bonus

T&Cs and 18+ apply

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Kalshi event contract FAQ