What Are Prediction Markets?

Reviewed August 18, 2026. Platform availability, fee language, and New York eligibility in this guide were re-checked against each operator’s own published pages and the CFTC’s public filings on this date. Anything that changed since the last review is reflected in the copy below.

Every prediction-market contract is binary. It pays $1 if the outcome resolves 'yes' and $0 if 'no'. The price between those two numbers is the market's implied probability — a contract trading at 62¢ means the crowd, in aggregate, is willing to pay 62 cents for a dollar of upside, so it's pricing roughly a 62% chance.

You don't have to hold to settlement. Prices move as new information hits — a poll, a press conference, an injury report — and you can sell your position at any time, just like a stock. That's why traders watch them: a moving line tells a story in real time, and the timestamp on the tape is often ahead of the news cycle.

Under the hood, US venues are structured as event contract exchanges regulated by the CFTC, the same agency that oversees futures and derivatives. That's what makes them legally distinct from a sportsbook.

The clearest way to understand prediction markets is to line them up against the two things people already know — the stock market and the sportsbook. All three price expectations, but the structure, counterparty, and payoff shape are different.

In the US, the two names that matter most are Kalshi and Polymarket. Kalshi is a CFTC-registered Designated Contract Market — the same license class as CME futures — and offers everything from Fed-cut markets to Knicks series odds. Polymarket returned to the US in mid-2025 through a CFTC-regulated affiliate and is currently live for US iPhone users.

Crypto-native platforms like OG offer event-style markets settled on-chain (up to $100 in bonuses with code NYPREDICTS — travel-only for New Yorkers). Player-prop pick'em sits adjacent: Sleeper and Chalkboard let you pick over/under lines on individual athletes, closer in structure to DFS than to a true prediction market.

For a fuller breakdown, see our platforms comparison or our NY legality guide.

The academic case for prediction markets — laid out in Wolfers and Zitzewitz's oft-cited Prediction Markets paper for the Journal of Economic Perspectives — is that when people bet real money, they aggregate information faster than polls, pundits, or committees.

That's not a guarantee they're right. Thin markets can be manipulated, and every US election cycle produces at least one high-profile mispricing debate — the *New York Times* DealBook and *Sportico* have both covered how Polymarket and Kalshi lines diverged from polling in 2024 and again in the 2026 NYC mayoral race.

The right posture is the one a trader takes: the price is a hypothesis, not a verdict. Read it, disagree with it, and let the size of the disagreement tell you how confident to be.

New York is already a market town. The same crowd that argues about Knicks playoff odds, mayoral races, and the next Fed cut now has a venue to put numbers on those arguments — and to disagree with the price.

New York access is broad for the CFTC-regulated venues: Kalshi is live for NY residents, and Polymarket's US iOS app works statewide. State-specific product availability can shift quickly, though; the ongoing CFTC-vs-New York suit is worth tracking.

Pick a venue that fits what you follow. If you already watch macro, start with a Fed or CPI contract on Kalshi. If you follow city politics, the mayoral and gubernatorial markets on Kalshi and Polymarket are the deepest.

Fund small. First-timers routinely misjudge how much a 10-cent move stings on a big position. Trade an amount you'd be genuinely okay losing while you learn how each market resolves — the resolution source and the exact 'yes' criteria are where surprises live.

Read the settlement language before you click buy. Every reputable exchange publishes it up front; if you can't find it, that's your answer.