Prediction market terms explained: 60 words every Kalshi and Polymarket trader should know, with examples

Prediction markets have their own vocabulary. Some of it comes from finance (bid, ask, limit order), some from betting (favourite, long shot, parlay) and some is specific to the platforms (event contract, combo, resolution source). This guide explains the terms you are most likely to meet on Kalshi and Polymarket, grouped by topic, with short examples. For quick look-ups, our prediction market glossary lists the definitions alphabetically.

Prices in the examples are illustrative unless a date is given.

Prices and probabilities

Contract. The thing you trade. On Kalshi and Polymarket, a contract pays $1 if an outcome happens and $0 if it doesn't. Polymarket calls them shares.

Price. What a contract costs, between 1¢ and 99¢. A contract trading at 63¢ costs $0.63.

Implied probability. The price read as a chance. A 63¢ contract implies about a 63% probability that the outcome happens. It is the market's estimate, not a guarantee.

Yes and No. The two sides of a binary market. If "Yes" trades at 63¢, "No" trades at about 37¢, because together they pay exactly $1.

Favourite and long shot. The outcome with the highest price is the favourite. A low-priced outcome, typically under 15¢, is a long shot.

Payout. What a winning contract returns: $1. Your profit is the payout minus what you paid and any fees.

Odds conversion. Sportsbooks quote American odds. A favourite at −200 implies about 67%; an underdog at +200 implies about 33%. On a prediction market, those are prices of about 67¢ and 33¢.

Expected value (EV). What a trade is worth on average: your probability times $1, minus the price and fees. If you think an outcome has a 70% chance and it costs 63¢, the EV is about +7¢ per contract before fees.

The order book

Order book. The list of all open buy and sell orders in a market, sorted by price.

Bid. The highest price someone is currently willing to pay. If you sell straight away, you get the bid.

Ask (or offer). The lowest price someone is currently willing to sell at. If you buy straight away, you pay the ask.

Spread. The gap between the bid and the ask. A market with a 62¢ bid and a 63¢ ask has a one-cent spread. Spreads are narrow in busy markets and wider in quiet ones.

Midpoint. Halfway between the bid and the ask. Often the best single estimate of a market's price.

Last trade. The price of the most recent fill. In a quiet market it can be stale; the bid and ask tell you more.

Depth. How many contracts are available near the best prices. A deep market can absorb a big order without the price moving much.

Liquidity. How easily you can trade without moving the price. High volume and narrow spreads mean good liquidity.

Slippage. The difference between the price you expected and the average price you actually got, usually because your order ate through several price levels.

Orders

Market order. An order to buy or sell straight away at the best available price. Fast, but you accept whatever the book offers.

Limit order. An order to buy or sell only at a set price or better. It may fill straight away, partly, or not at all.

Resting order. A limit order that sits on the book waiting for someone to trade with it.

Maker and taker. A taker's order matches an existing order straight away; a maker's order rests on the book and is matched later. Kalshi and Polymarket charge takers more than makers.

Fill. When an order is executed. A partial fill means only some of your contracts traded.

Cancel. Withdrawing an unfilled order. Free on both platforms.

Position. The contracts you hold in a market, on one side or the other.

Closing a position. Selling your contracts, or buying the opposite side, before the market settles.

Fees and costs

Taker fee. The fee charged when your order fills straight away. On Kalshi it is 0.07 × contracts × price × (1 − price), rounded up to the cent, which peaks at 1.75¢ per contract at 50¢.

Maker fee. The fee, if any, on resting orders. On Kalshi it is a quarter of the taker rate on markets that charge it, and nothing elsewhere.

Rebate. A payment some platforms make to market makers who provide liquidity.

Settlement fee. A fee on winning contracts. Neither Kalshi nor Polymarket charges one: a winning contract pays the full $1.

How the two platforms' fees compare in detail: Polymarket vs Kalshi fees.

Settlement

Resolution or settlement. When the outcome is known and contracts pay out: $1 to the winning side, $0 to the other.

Resolution source. The data or authority a market uses to decide the outcome, for example the Federal Reserve's statement, an official election result or a weather station's climate report.

Rules. The written terms of a market: what counts, which source decides, what happens in edge cases such as a postponed game or a delayed data release.

Fair price settlement. When an event cannot be decided normally, for example a game cancelled outright, some Kalshi markets settle at a "fair price" set under the rules rather than at $1 or $0.

Close time. When trading stops. Many markets close just before the event: Kalshi's Fed markets one minute before the announcement, its data markets one minute before the release.

Dispute. On Polymarket, a challenge to a proposed resolution, handled by its oracle system. Kalshi settles markets itself as a regulated exchange.

Oracle. A system that reports real-world outcomes to a blockchain. Polymarket's global markets use UMA's optimistic oracle.

Market types

Binary market. A single Yes/No question: "Will the Fed hold rates in October?"

Multi-outcome market. A question with several possible answers, each its own contract: "Who will win the Nobel Peace Prize?" Only one can win.

Bracket or range market. Outcomes defined by ranges, such as a city's high temperature in two-degree bands.

Ladder ("above X"). A series of markets on one number with different thresholds, such as "CPI above 0.4%", "above 0.5%", "above 0.6%".

Futures. In sports betting slang, a long-dated market such as the World Series champion or the MVP.

Combo or parlay. A single contract that pays only if several outcomes all happen. Kalshi calls them combos; how they work and what they cost: parlays on Kalshi and Polymarket.

Mention market. A market on whether someone will say a word or phrase in a speech or broadcast.

Perpetual. A contract with no expiry that tracks a price or index, offered by some exchanges alongside event contracts.

Trading concepts

Arbitrage. Profiting from a price difference for the same outcome on two platforms, or from prices in one market that add up to less than $1. Gaps rarely last long (prediction market arbitrage).

Hedging. Taking an opposite or related position to reduce risk.

Calibration. How well prices match outcomes over time. A well-calibrated market's 70% favourites win about 70% of the time.

Brier score. A measure of forecast accuracy: the average squared gap between probabilities and outcomes. Lower is better; always guessing 50% scores 0.25.

Long-shot bias. The tendency for long shots to be slightly overpriced, because traders like big payouts.

Kelly criterion. A formula for how much of your bankroll to stake given your edge. Most traders use a fraction of it.

Volume. The number of contracts traded. Kalshi reports it in contracts, each with a $1 face value.

Open interest. The number of contracts currently held and not yet settled.

Regulation and the industry

CFTC. The Commodity Futures Trading Commission, the federal regulator of US futures and event contract exchanges, including Kalshi and Polymarket US.

DCM. A designated contract market: an exchange registered with the CFTC. Kalshi is one.

Event contract. The regulatory term for a contract whose payout depends on whether an event happens.

Swap. A type of derivative regulated by the CFTC. Whether sports event contracts count as swaps is central to the legal fight between exchanges and states.

Pre-emption. The legal principle that federal law overrides state law in some areas. The exchanges argue that federal commodities law pre-empts state gambling laws for their contracts.

Geofencing. Blocking users in certain locations, for example where a court has ruled against an exchange.

KYC. "Know your customer": identity checks that regulated platforms run when you open an account.

Polymarket US vs Polymarket. Polymarket runs a CFTC-regulated exchange for US users and a separate global platform that settles in crypto. How the two differ and where each is legal: is Polymarket legal in the US?

Putting it together

Here is a sentence that uses a dozen of these terms: "The Yes side was bid at 62¢ and offered at 63¢, so I placed a resting limit order at 62¢ as a maker, avoided the taker fee, and held the position to settlement, when it resolved Yes and paid $1."

If that sentence makes sense, you know enough to read any Kalshi or Polymarket market page. For a full introduction to how these markets work, see how prediction markets work, and for the two biggest platforms side by side, Kalshi vs Polymarket.

In this week's news

On 9 October the CFTC adopted an interim final rule saying casino-style gambling products, including sportsbook wagers, are not swaps, and proposed a rule that would expressly make event contracts on sports, politics, culture and weather swaps under its jurisdiction. Both terms, swap and pre-emption, are likely to appear in prediction market news for months.

Key points

• A contract pays $1 or $0, and its price is the market's probability.
• Buy at the ask, sell at the bid; the gap is the spread.
• Limit orders save money, because makers pay less than takers.
• Read the rules and the resolution source before trading any market.
• Regulatory terms such as CFTC, DCM, swap and pre-emption explain most prediction market news.

FAQ

What does a 70¢ price mean? That the market puts about a 70% chance on the outcome. A contract bought at 70¢ pays $1 if it happens, a 30¢ profit before fees.

What is the difference between Yes and No? They are the two sides of the same question. Their prices add up to about $1.

What is a maker? A trader whose order rests on the order book and is filled later. Makers pay lower fees than takers.

What does "resolution source" mean? The authority or data a market uses to decide the outcome, such as an official result or a government statistic.

Is Kalshi regulated? Yes. It is a designated contract market regulated by the CFTC (is Kalshi legit?).

This guide reflects how Kalshi and Polymarket describe their products as of October 2026. Not investment advice.