Prediction markets: What is the latest scoop on these sites?
Okay first things first, let’s tackle everybody’s favorite question: are prediction markets legal? If you are in the dark about these platforms, I am pleased to share that prediction markets are legitimate, regulated trading sites. The Commodities Futures Trading Commission (CFTC) regulates derivatives markets, and CFTC-regulated prediction sites operate as Designated Contract Markets (DCMs).
DCMs are authorized to list futures, options, and commodity-based contracts for traders on their financial exchanges. Right, lock in and remember this important detail: in the US, if a prediction market site is CFTC-regulated, it can operate as a DCM in all 50 US states.
Future event contracts 101: How does event trading work?
Now that you have the 411 on the legality of prediction markets, let’s quickly unpack what you can do on these sites. Prediction markets allow you to trade on the outcome of real-world events. All trades are binary outcomes (Yes or No). Generally, prices range from $0.01 to $0.99, and winning contracts are settled at $1, while losing positions are settled at $0.
An important deet to remember is that prediction market sites are not sportsbooks. These platforms have no ‘traditional odds’; instead, the value of each contract is determined by the trades of other individuals on the likelihood of an event occurring. If many traders believe a specific event will occur, the Yes contract will trade at a higher price.
It is important that you understand how to read market prices, so, back to what I shared above, let’s say that a sports contract has the Minnesota Timberwolves at $0.75 to win the NBA Finals. This means the traders believe there is a 75% chance the Timberwolves finally shed their duck and win their first Championship.
If you are also in the camp of the Timberwolves, then you can purchase a Yes contract. If you buy $100 of Yes positions, you will receive 133.33 contracts ($100/0.75). If the Timberwolves go on to lift the Larry O’Brien Trophy, your contract will be settled at $1, and you will win $133.33 ($33.33 in profit). However, if the Timberwolves flop once again in the playoffs, you will lose your initial investment of $100.
Tuck into sports, election, pop culture contracts and much more
My example above is considered a type of sports futures contract. However, there is more to prediction markets than just sports options. Depending on the platform you use, you will be able to buy and sell positions on several future events, including sports outcomes, election results, climate forecasts, economic indicators and even pop culture predictions like whether Taylor Swift will get pregnant in 2026.
Crazy, I know, but yeah, in a nutshell, if there is sufficient market volume for a contract, you will likely be allowed to trade on that outcome, so who knows, maybe it is time to check Taylor’s socials for an upcoming pregnancy update.
Anyway, back to the various future event contracts. Check out the table below, which unpacks the popular future event trading options and examples of what type of contracts you will find:
| Future event | Types of contracts | Contract example |
| Sports | Game winners, Championship winners, MVPs |
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| Election/Politics | Domestic and foreign elections, Congress decisions |
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| Climate | Weather forecasts, natural disasters, climate change |
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| Economic | Fed decisions, unemployment rate, GDP, inflation, oil and energy |
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| Culture | Music charts, awards shows, celeb news, video games |
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Pros and cons of event trading
Thinking about trying out event trading? Here’s a quick look at the main pros and cons so you know what to expect before jumping in:
- Several future events available
- Can close positions early
- Most contracts have high liquidity
- Trading and non-trading event costs
Conclusion - It is time to lock in and start buying and selling contracts!
That is it for my event trading guide, y’all! By now, you should have the ins and outs of how prediction markets work and the different types of future event contracts available.
As you can see, buying and selling positions is simple at prediction markets, but it is important to understand how the full trading experience works. So, before you can jump in, remember that there are also trading fees involved, and that event trading generally involves two types of costs: trading fees and non-trading fees like withdrawal charges. Factor these costs before determining your potential returns.
If you are interested in buying and selling sports contracts, or maybe you want to dip your toes into some economic forecasts, you first need to join a reputable prediction site. Go ahead and browse the banners on this page to find legitimate prediction markets.
Our favorite prediction market sites of 2026
What is event trading FAQs
Are prediction sites legal?
Yes! The Commodity Futures Trading Commission regulates the sector, and CFTC-regulated prediction sites operate as Designated Contract Markets.
What types of event trading contracts are available?
You can buy and sell contracts on several future events, including sports, elections, crypto, climate, culture, politics and economic predictions.
Do prediction sites have any costs?
The cost of event trading includes trading and non-trading fees. These costs include exchange fees, slippage fees, and deposit and withdrawal charges.
