Have an opinion in regards to the S&P 500’s closing value on the finish of 2025? Or whether or not Treasury be aware yields will hit 5% this yr? Prediction markets provide the likelihood to place cash on these occasion outcomes and earn payouts for being proper.
Find out how prediction markets work, what the dangers are, and which platforms can be found within the U.S.
Be taught extra: Tips on how to begin investing: A 6-step information
Prediction markets are exchanges the place individuals can wager on occasion outcomes. The bets are normally made by buying binary contracts that pay out if the occasion unfolds the way in which you count on. On this context, binary means there are solely two outcomes — typically sure or no — and your contract bets on one in every of them.
The price of an occasion contract is lower than the payout. How a lot much less depends upon the chances, that are primarily based on contracts already bought.
Be taught extra: Robo-advisor: Tips on how to begin investing immediately
Take this query: Will gold outperform bitcoin this yr? Let’s assume a $1 contract payout. If 80% of customers imagine the reply is sure, the value on the “sure” place might be close to $0.80. And the “no” place would value about $0.20. Regardless of which place you purchase, you get $1 in case you are proper. Within the much less doubtless situation that gold doesn’t outperform bitcoin, your value is decrease whereas the return and the danger are larger.
Be taught extra: Trump has known as for a strategic bitcoin reserve. How it will work
-
Transaction charges. Prediction market platforms could make their cash on transaction charges or by leveraging the bid-ask unfold. Charges will be variable primarily based on how a lot you spend. The platform Kalshi normally costs $0.02 to purchase a $0.40 contract and $1.68 to purchase 100 $0.40 contracts. Competing platform Polymarket doesn’t cost charges and as an alternative earns on the distinction between the bid value and the upper promoting value.
-
Funding. Platforms sometimes require you to open and fund an account earlier than shopping for occasion contracts. The platform will specify your funding choices. Kalshi accepts deposits from financial institution accounts, debit playing cards, wire transfers, and cryptocurrency wallets. Polymarket accounts are funded with USDC, a stablecoin.
-
Curiosity. Some platforms could pay curiosity in your account stability. As of August 2025, certified accountholders on Kalshi can earn curiosity on their uninvested money and open positions.
-
Buying and selling contracts. In the event you lose confidence in your place, you possibly can promote contracts earlier than the occasion happens. For instance, when you personal “sure” contracts on gold outperforming bitcoin and you alter your thoughts, you possibly can promote these contracts for the market value — to the extent there are prepared patrons.
-
Orders. Prediction markets platforms sometimes help restrict orders. A restrict order specifies the value at which you need to purchase or promote a place.
-
Occasion subjects. Prediction markets can cowl occasions in sports activities, politics, tradition, local weather, expertise, world information, and extra.
Be taught extra: Can you purchase crypto with a bank card? See the professionals and cons.
Leo Chan, CEO and co-founder of decentralized AI platform Sportstensor, explains that “prediction markets are the embodiment of the wisdom-of-the-crowd phenomena however with monetary stake.”
Chan’s description factors to 2 the explanation why prediction markets are making headlines:
-
Crowdsourced insights. Prediction market odds gauge how individuals are fascinated about present occasions, and there’s proof that these odds will be correct. For instance, prediction markets predicted the result of the 2024 U.S. presidential election when the polls stated in any other case. “They’re an effective way to search out out the true chance of an occasion,” stated InGame’s enterprise and finance reporter Daniel O’Boyle.
-
Buying and selling for the plenty. With prediction markets, you possibly can wager on occasion outcomes that curiosity you, with the added incentive of a monetary reward for being proper.
The dangers of taking part in prediction markets embody monetary losses and questionable legality.
Occasion contracts are speculative. You possibly can simply be improper and lose what you’ve invested. Even worse, the playing cards could possibly be stacked in opposition to you if the opposite individuals are well-funded market makers who’re shopping for and promoting contracts on the identical occasions at totally different costs.
“There’s an excellent likelihood you’re not betting in opposition to one other small-time dealer like your self,” stated O’Boyle. “The market maker may even be owned by the identical firm that owns the trade.”
“Actual-money prediction markets that function within the U.S. are regulated by the Commodity Futures Buying and selling Fee (CFTC), the identical physique that regulates oil or corn futures,” explains O’Boyle.
In 2022, prediction markets operator Polymarket stopped accepting bets from U.S. customers on the CFTC’s request. The CFTC additionally fined Polymarket $1.4 million, claiming {the marketplace} was an unregistered derivatives platform.
Underneath the Trump administration, the CFTC investigation and one other Polymarket inquiry by the Division of Justice are actually closed. However state regulators proceed to query the legality of sporting occasion contracts, in response to Covers’ senior information analyst Geoff Zochodne, and several other circumstances in opposition to Kalshi are ongoing.
Prediction market platforms accessible to U.S. customers embody:
-
Kalshi. Affords a variety of occasion classes and a number of funding choices.
-
Crypto.com. The Prediction Buying and selling market affords $10 payouts.
-
Robinhood. It launched a prediction markets hub within the Robinhood app in 2025.
Polymarket gained CFTC approval to relaunch within the U.S. in September 2025. The platform additionally just lately bought QCEX, a licensed derivatives trade and clearinghouse.
Prediction market individuals purchase contracts that pay on specified occasion outcomes. The price of the contract aligns with the chances of that final result. The percentages can change because the occasion approaches and extra individuals take positions or new data turns into accessible. As soon as the occasion occurs, those that precisely predicted the result obtain their payout.
Specialists are divided on whether or not prediction markets facilitate playing. Leo Chan, CEO and co-founder of decentralized AI platform Sportstensor, stated intent differentiates prediction markets from playing.
In Chan’s view, the underlying intent of occasion contracts is to trade correct data, whereas playing is primarily leisure. Daniel O’Boyle, InGame’s enterprise and finance reporter, doesn’t see the excellence. As a substitute, O’Boyle believes staking cash on an occasion final result does represent playing.
Be taught extra: How sports activities betting taxes work and what you may owe
Robinhood now affords a prediction market hub inside their app — a market the place you possibly can commerce on occasion outcomes. Primarily, you should purchase contracts that would pay out if a sports activities sport, political election, or financial occasion seems the way in which you count on.
Be taught extra: Tips on how to make the most of Robinhood’s 3% IRA match and 1% on transfers
To commerce in prediction markets, first evaluate the contract prices for occasions that curiosity you. If a contract pays $1 and prices $0.20, that sometimes signifies a 20% likelihood the occasion will unfold because the contract specifies.
Then, resolve how you’re feeling in regards to the 20% odds. If the quantity appears too low, you may purchase that contract. If the chances rise earlier than the occasion occurs, you possibly can promote the contract at a better value or maintain your place to earn a payout when you assume the result will align along with your contract.
Jamie Younger and Tim Manni edited this text.
