A prediction market is a contract that pays $1 if an event happens and $0 if it doesn't. The price — which trades between $0 and $1 — represents the crowd's implied probability that the event will occur.
If a market is priced at $0.65, the crowd thinks there's a 65% chance the event happens. If you think the true probability is higher, you buy YES shares. If you think it's lower, you buy NO shares.
The two main US-accessible prediction market exchanges are Polymarket and Kalshi. Polymarket is the largest by trading volume — decentralized, crypto-based, covering politics, sports, and more. Kalshi is CFTC-regulated and fully legal for US residents.
Well-calibrated on average doesn't mean right every time. High-probability events are often overpriced. Low-liquidity markets have wider errors. News-driven markets are slow to update. These are the inefficiencies that make prediction market analysis useful.
Are prediction markets legal in the US? Kalshi is CFTC-regulated and fully legal. Polymarket is decentralized and generally accessible but restricts certain categories for US traders.
Are prediction markets the same as sports betting? No. Sports betting is you vs a sportsbook with a built-in house edge. Prediction markets are peer-to-peer — prices are set by market forces, not a bookmaker.
Can you make money trading prediction markets? Yes, but it requires finding genuine edges — markets priced materially wrong relative to the true probability.
How to use Polymarket → WhenWin vs Polymarket →