A contract that pays $1 if an event occurs and $0 if it doesn't. The price reflects the market's implied probability.
An event contract is a binary instrument traded on prediction market exchanges. You buy a 'Yes' contract at a price (e.g., $0.65) and receive $1 if the event occurs, or $0 if it doesn't.
The price directly reflects the market's implied probability: a $0.65 Yes contract implies a 65% chance. You can also sell or buy 'No' contracts, which pay $1 when the event doesn't occur.
Event contracts are regulated by the CFTC in the US and are legally distinct from sports betting. They cover politics, economics, weather, sports, and more.
Buy 100 Yes contracts at $0.40 each ($40 total). If the event occurs: receive $100, profit = $60. If not: lose $40. Break-even win rate = 40%.
An exchange where participants trade contracts based on the outcome of future events, with prices reflecting collective probability estimates.
CFTCThe US federal agency that regulates prediction markets. CFTC-regulated platforms offer legal event contracts in all 50 states.
Implied ProbabilityThe probability of an outcome implied by the odds. Includes the bookmaker's margin (vig).