What Is a Prediction Market?
A prediction market is an exchange where people trade contracts on whether a real-world event will happen. Polymarket US's help center says its contracts "settle at $1 if the outcome happens, or $0 if it does not," and that a contract priced at 62 cents means "roughly a 62% chance." In the US, the CFTC regulates these markets.
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Event contracts are the thing being traded
The products on a prediction market are called event contracts. The CFTC's own explainer describes them as contracts that are often built on yes-no scenarios, with only two possible outcomes, a fixed payout that is usually $1, and an expiration at a set time or when the event ends.
The CFTC's example is a contract on "Will it rain tomorrow?" It says the price at purchase "reflects the market's expectation of the outcome (say, 70 cents for 'yes' and 30 cents for 'no')," that traders who correctly predict the outcome "would receive the payout when the contract settles," and that their profit is the difference between their initial investment and the payout. The CFTC adds that taxes and fees can change what a trader actually keeps.
Polymarket US's help center says each of its markets "asks a clear yes/no question," and that contracts "settle at $1 if the outcome happens, or $0 if it does not."
Why the price reads as a probability
Polymarket US's help center puts the price side plainly: "A contract priced at 62¢ means the market thinks there is roughly a 62% chance the event occurs."
Polymarket US's market-data page says prices "aren't set by Polymarket — they come from traders placing buy and sell orders against each other." The CFTC lists a similar feature of regulated markets: "A contract's price reflects traders' perceived probability of the event outcome," and in most cases order books show real-time customer bid and ask prices.
Our guide to how Polymarket US prices work walks through bids, asks and the spread in more detail.
Who regulates prediction markets in the US
The CFTC dates US prediction markets to 1988, when the Iowa Electronic Markets started as an academic program at the University of Iowa, and says they have been regulated by the CFTC since 2004. Exchanges that list event contracts must clear what the CFTC calls a stringent application process and face periodic examinations after that.
The CFTC also says regulated exchanges and intermediaries that provide access to prediction markets "do not take a side of the trade. They provide a platform for trading and are not competing against you."
Polymarket US says it operates as a designated contract market and a derivatives clearing organization under CFTC oversight, with all trading in US dollars. Our page on whether Polymarket US is legal covers what that status means.
What people use event contracts for
The CFTC gives two uses. One is hedging: its example is a citrus farmer who buys a weather contract to offset losses from a sudden freeze. The other is speculation, where traders take on risk in the hope of a payout. The agency is direct that taking part carries financial risk, especially when the subject is a future event.
It also notes that when many traders' views are combined, prediction markets can sometimes forecast outcomes better than polling, and that media, economists and pollsters increasingly cite market-based forecasts.
What you can trade on Polymarket US
Polymarket US lists markets on sports, including the NFL, NBA, NHL, MLB, MLS, college sports, tennis and golf, plus politics, crypto, economics, weather, tech and culture. Polymarket US's resolution page says markets resolve using "the specific sources listed in the rules." For sports, that's the result published by the governing league or competition organizer.
Polymarket US's help center says "you can close your position at any time" without waiting for a market to resolve, and "the proceeds are added immediately to your cash balance." It adds that as a market gets closer to resolution, prices can change quickly, which can affect the price you receive.
Your rights as a customer
The CFTC's page lists what a prediction market customer should expect: clear information about risks, fees and other costs; the contract terms, including how settlement is decided and by whom; accurate account statements; access to your funds; and the right to make choices without high-pressure sales. Complaints can go to the exchange, the National Futures Association or the CFTC at cftc.gov/complaint.
If you are new and want to try a market with a small first deposit, the Polymarket promo code page has the current offer for new Polymarket US accounts.
FAQ
Sources
- CFTC: Understanding Prediction Markets and Event Contracts: https://www.cftc.gov/LearnandProtect/PredictionMarkets
- Polymarket US: What is Polymarket US?: https://docs.polymarket.us/getting-started/what-is-polymarket-us
- Polymarket US: Learn home: https://docs.polymarket.us/learn/home
- Polymarket US: Market Resolution: https://docs.polymarket.us/learn/markets/market-resolution
- Polymarket US: Can I sell early?: https://docs.polymarket.us/learn/trading/basics/sell-early
- Polymarket US: Prices & Market Data: https://docs.polymarket.us/concepts/market-data
All sources read October 20, 2026.
PolymarketPartner · Paid partnership with Polymarket. Polymarket US is for people 18 or older. Nothing on this page is a recommendation to make any trade, and any list of markets is information only and not a view on any market.