Prediction Market Answer Library
24 expert-curated answers on prediction markets, designed for fast insight, real-world decision-making, and market-intelligence workflows.
Browse Live Markets →How are contracts settled on Polymarket compared to Kalshi?
Fundamentals Kalshi contracts settle based on predefined, regulator-approved data sources, while Polymarket contracts rely on oracle mechanisms and platform-defined resolution processes.
Who can legally use Polymarket and Kalshi by geography?
Fundamentals Kalshi is legally accessible to eligible users within the United States, while Polymarket primarily serves non-U.S. users due to regulatory restrictions affecting U.S. participation.
What types of markets are listed on Polymarket versus Kalshi?
Fundamentals Polymarket lists a wide range of global markets, including politics, geopolitics, and cultural events, while Kalshi focuses on regulated, event-based markets such as U.S. economic data, policy decisions, and legally permissible political outcomes.
How do Polymarket and Kalshi differ in regulation and legal structure?
Marketplaces Polymarket and Kalshi operate under fundamentally different legal structures. Polymarket is a crypto-based platform operating outside U.S. financial regulation, while Kalshi is a U.S.-regulated exchange overseen by the Commodity Futures Trading Commission (CFTC).
What's the difference between Polymarket and Kalshi?
Marketplace Polymarket and Kalshi are both prediction market platforms, but they differ fundamentally in regulation, user access, and market structure. Polymarket operates globally using crypto infrastructure, while Kalshi is a U.S.-regulated exchange designed to operate within traditional regulatory frameworks.
What are the most common mistakes people make when using prediction markets?
Market Behavior The most common mistakes are overtrusting prices, ignoring liquidity and rules, and confusing probability with certainty.
How do fees and platform rules affect prediction market prices?
Fundamentals Fees and platform rules directly affect pricing by widening spreads, discouraging arbitrage, and biasing prices away from theoretical probabilities.
Why do prediction markets sometimes disagree with financial markets?
Market Behavior Prediction markets and financial markets price different things: discrete outcomes versus continuous economic impact. Disagreement often reflects different assumptions, time horizons, or risk premia.
What does a prediction market actually measure: belief, probability, or truth?
Fundamentals Prediction markets measure tradeable belief, not objective truth. Prices reflect what participants are willing to risk capital on under current information and constraints.
Why do some prediction markets stay mispriced for long periods?
Market Behavior Mispricings persist due to low liquidity, unclear resolution rules, capital constraints, and lack of arbitrage incentives—especially in niche or long-dated markets.
How should investors use prediction markets alongside traditional research?
Strategy Prediction markets work best as a complement to traditional research—providing probabilistic context, timing signals, and consensus checks rather than standalone answers.
Can prediction markets be used to forecast geopolitical events?
Market Behavior Yes—prediction markets are especially useful for geopolitical forecasting because they aggregate fragmented, asymmetric information that is difficult to model formally.
Why do prediction market probabilities change so quickly after news events?
Fundamentals Prediction markets react quickly because they reprice probabilities, not narratives. A single credible data point can materially shift expected outcomes, causing sharp price moves even when headlines seem incremental.
Are prediction markets accurate compared to polls or expert forecasts?
Market Behavior Prediction markets are often as accurate as polls and expert forecasts, especially close to resolution. Their strength comes from incentives, real-time updates, and the ability to aggregate diverse information into a single probability.
How do I handle correlated markets and avoid double-counting the same thesis?
Strategy Correlated markets move together because they share drivers (e.g., economic data affecting both rates and elections). If you hold multiple correlated positions, you may be taking much more risk than you realize.
What is arbitrage in prediction markets, and when is it actually possible?
Strategy Arbitrage is a low-risk profit from inconsistent prices (e.g., "Yes" + "No" priced below $1 combined). In practice, true arbitrage is rare because fees, slippage, limits, and timing risk often eliminate it.
Can I hedge real-world risk using prediction markets?
Strategy Yes—prediction markets can hedge exposure to discrete outcomes (policy changes, rate decisions, approvals, disruptions). The hedge works best when the contract outcome closely matches your real-world exposure and timing.
How does settlement and resolution work, and why do rules matter more than headlines?
Fundamentals Prediction markets settle based on the contract's written resolution criteria, not what people "meant" or what headlines imply. A market can resolve against popular intuition if the rules are strict or the outcome is defined narrowly.
What does "market manipulation" look like in prediction markets, and how can I spot it?
Market Behavior Manipulation typically looks like pushing the price with aggressive trades to shape perception, then reversing later. You can often spot it through sudden price jumps without new info, thin order books, and quick mean reversion.
Why do prediction markets sometimes look "wrong," even when they're popular?
Market Behavior Markets can be "wrong" due to new information not yet absorbed, biased participation, or structural frictions like low liquidity and fees. The displayed price is a tradeable consensus—not a guarantee of accuracy.
How do I calculate expected value for a trade in a prediction market?
Strategy EV compares what you expect to win on average vs what you pay. For a $1 "Yes" contract: EV = (your probability × $1) − price − fees.
What is liquidity, and why does it matter so much in prediction markets?
Fundamentals Liquidity determines how easily you can trade without moving the price. Low liquidity increases spreads, slippage, and exit risk.
How do I read a prediction market price as a probability?
Fundamentals For a standard binary contract, the price roughly equals the implied probability. A $0.73 price suggests about a 73% chance, assuming normal liquidity and rules.
What is a prediction market?
Fundamentals A prediction market is a marketplace where prices represent the crowd's implied probability of a future event. Unlike traditional betting (fixed odds set by a bookmaker), prediction market prices move dynamically based on supply and demand.
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