:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2164152125-6b0c07778e9d45719ca0159263abacad.jpg)
Imagine if the headlines in your news feed also came with a live price tag—one that ticks up when new polls favor a candidate or down if a star quarterback tweaks an ankle. That’s the premise of prediction markets, exchanges where you can trade “Yes/No” outcome contracts on a range of future events.
These markets span from betting-style platforms to federally-regulated event contracts that trade like traditional investment options.
How Prediction Markets Work
In a prediction market, every contract lists a verifiable question—e.g., “Will Movie X open this weekend with a gross above $100 million?”—along with a settlement date and a public data source for verification.
The wagers are offered like stocks that can only be worth $1 or $0. Traders buy “Yes” or “No” shares, and both sides always add up to $1. So if a “Yes” share costs $0.63, that means the crowd thinks there’s a 63% chance the movie will hit that target (with “No” shares costing the remaining $0.37). When the weekend box office numbers come out, the contract settles—”Yes” shares become worth $1 if the movie succeeds, or $0 if it doesn’t.
Kalshi
Just like stocks, you don’t have to hold event contracts until the end. You can sell your position early if the price moves in your favor, keep it until the end, or even bet the other way to protect yourself from losses. The markets stay active because other traders are constantly buying and selling, as well as professional traders who try to profit through arbitrage when they spot price differences among different prediction platforms, such as Kalshi, PredictIt, or Polymarket.
The result is a live odds board that updates far faster than most polling averages or expert predictions.
What You Can Bet On Today
- Politics and elections: Platforms list questions such as who will win a specific election, the vote share of a political party, the timing of concession speeches, and the passage of particular bills.
- Sports: While traditional sportsbooks price point spreads, prediction exchanges greatly expand the scope of available sports bets.
- Entertainment: Box-office openings and the probability of Grammy wins.
- Technology and AI: Will ChatGPT reach one billion monthly users? When will the next major AI breakthrough happen? Which tech company will be the first to hit a $5 trillion market cap?
- Economics and finance: The monthly consumer price index or quarterly gross domestic product numbers, as well as the next fed funds rate decision, are among the markets offered.
Tip
The earliest online prediction market was the Iowa Electronic Markets, launched in 1988 as an experiment in market-based forecasting by the University of Iowa’s Tippie School of Business.
Regulation Risks and Rewards
In the U.S., prediction markets straddle two regimes: commodity derivatives overseen by the CFTC and gambling products policed by state gaming regulators.
KalshiEX LLC holds a designated contract market license, in line with its claim that event contracts are economically “hedgeable” just like corn futures. Initially, the CFTC fought to prevent Kalshi from offering contracts on political events, but the winds shifted with the second Trump administration. In January 2025, Kalshi announced that Donald Trump Jr., the eldest son of President Donald Trump, had joined the company as a strategic advisor, and five months later, the administration voluntarily dismissed an appeal to end its two-year challenge to political prediction markets. This made Kalshi the first federally regulated platform where Americans can legally trade on election outcomes.
Winning that fight emboldened Kalshi to push into sports and entertainment markets. But this triggered new court battles: seven states, including Nevada, New Jersey, Arizona, and Maryland, issued cease-and-desist orders, claiming Kalshi’s sports contracts violate state gambling laws. Kalshi then filed lawsuits in federal courts challenging these state actions, arguing that federal regulation preempts state law when it comes to CFTC-regulated derivatives.
Tip
In 2025, X and Polymarket launched “X Predictions,” which feeds live social media data directly into betting markets. The partnership tracks how much people are posting about events, analyzes whether the sentiment is positive or negative, and uses X’s Grok AI to summarize the buzz, all of which appears instantly on traders’ screens.
Bottom Line
Prediction markets turn headlines into tickers; a hunch into a tradable asset. For investors comfortable with the risk, event contracts can add some spice, a novel hedge, or simply a reason to follow the weekend box office or ballots more closely. But the asset class is still maturing—legally, technically, and culturally—so size bets modestly, stay on top of the rulebook, and treat the exercise more like a probability-weighted wager on how this market will unfold.
If you or someone you know has a gambling disorder, please call the National Problem Gambling Helpline at 1-800-GAMBLER (1-800-426-2537) or visit ncpgambling.org/chat to chat with a helpline specialist.
