Prediction markets and event contracts have been around since the late 19th and early 20th century where individuals at “bucket shops” could place bets on stock prices without actually owning shares. This practice and these bucket shops were eventually banned. With the legalization of sports gambling in the late 2010’s (FanDuel, DraftKings, BetMGM), Prediction markets and event contracts made a roaring comeback.
Prediction markets offer a platform to help the public forecast, hedge, wager, and even harness perceptions of future events. These events and agreements are collectively referred to as “event contracts” and can include a wide range of events including political elections, legislation and passing of specific bills, economic indicators, global news, military actions, geopolitics, entertainment awards, science and technology achievements, and sports or pop culture milestones.
The prediction market involves a collection of people speculating on a variety of events similar to a futures market. In futures markets, traders bid up or down the price of a future contract based on their expectation of what the future price of the asset will be. Prediction markets work in the same way where the future event being traded upon isn’t the value of a future asset, but rather whether or not this future event will occur.
The prediction market contract’s price reflects how likely market participants believe the outcome is. A contract price of .65 cents reflects a collective probability among participants that the event will occur with a 65% likelihood. If the event occurs, the contract holder is awarded $1 per a .65 cent wager. If the event doesn’t occur the losing outcome is worthless at $0. In other words, the event contract pays in a yes or no all or nothing format.
Below is a list of “contract events” in prediction markets that are current or have already occured:
- Federal Reserve rate decisions – “Will there be a fed rate hike in 2026”
- Entertainment – “Will Spider-Man: Brand New Day open box office at higher than $167/million”
- Business – “Will Nvidia be the largest U.S. company end of August 2026”
- Sports – “Will the San Francisco 49ers win the 2027 super bowl?”
Below are some of the most prominent prediction market websites and platforms.
Kalshi (regulated U.S. platform)
Chicago Mercantile Exchange (regulated U.S. platform)
Polymarket (crypto-based global platform)
This material is compiled from sources SST believes to be reliable. The possibility of error does exist. The material is intended only as educational and may omit information on exceptions, qualifications, definitions, and effective dates. The reader should not rely solely on this material but should review original sources to determine the law and applicability for each situation. Neither the author nor Solid State Tax Service, LLC will be responsible for any error, omission, or inaccuracy under any circumstance.