Prediction Markets
How prediction markets actually price an event
Contract prices are probabilities with a fee attached. Here is how to read them, and where the edge usually leaks away.
Adele Moreau, Markets Editor · 5 October 2026 · 9 min read
A price is a probability
On a regulated event exchange, a contract that settles at $1 if an outcome happens trades between $0 and $1. A price of $0.62 implies the market believes there is roughly a 62% chance of that outcome, before fees.
That framing matters because it lets you compare an exchange price directly against a bookmaker’s odds. Convert decimal odds to an implied probability, subtract the bookmaker’s margin, and you can see which venue is offering the better expression of the same view.
Fees decide whether a small edge survives
Exchanges charge per contract rather than baking a margin into the price. A one-cent trading fee on a $0.50 contract is a 2% cost, which is enough to erase most marginal positions.
Read the fee schedule before the marketing. In our reviews we recalculate every headline promotion as an effective cost per contract, because a fee waiver on volume you will never trade is worth nothing.
Settlement risk is the part people ignore
The single biggest structural risk on an event exchange is ambiguous settlement language. Before trading, check which named source resolves the contract, at what time, and what happens if that source revises its data.
Venues that publish this up front, and that keep a public record of past resolutions, score highest in our methodology.
Frequently asked questions
Does a $0.62 prediction-market price mean a 62% chance?
It is the market-implied probability before fees and spread, not an objective forecast or guarantee. Thin liquidity can make the last traded price less informative.
What should I check before buying an event contract?
Read the named settlement source, cutoff time, fee schedule, current bid and ask, dispute process and location restrictions before trading.
Who regulates US event-contract exchanges?
The CFTC regulates designated contract markets offering event contracts. Not every forecasting or prediction product is a CFTC-designated exchange, so verify the specific legal entity.
Sources and verification
Play Radar is funded by affiliate commission from some operators we list. Our analysts set ratings independently using the review methodology.