What are prediction markets?
A prediction market lets you trade event contracts: shares that pay $1 if an outcome happens and $0 if it does not. The price, between 1 and 99 cents, equals the market's implied probability. That makes the price a live, tradable forecast, which is exactly what our college football model is built to price.
- A prediction market trades event contracts that settle at $1 if the outcome happens and $0 if it does not.
- A contract's price (1 to 99 cents) equals the market's implied probability of the outcome.
- Unlike a sportsbook, a prediction market is an exchange: prices come from supply and demand, not fixed house odds.
- You can usually buy either side (YES or NO) and sell before the event resolves.
- Because price equals probability, you can compare a model's fair value to the live price to spot an edge.
Event contracts, explained
An event contract is a simple instrument: it asks a yes-or-no question, such as "Will this team win the national title?" You buy YES shares if you think the answer is yes, or NO shares if you think it is no. When the event resolves, each winning share is worth exactly $1 and each losing share is worth $0.
Price equals implied probability
Because every share settles at either $1 or $0, the price is a probability in disguise. A contract at 22 cents implies roughly a 22 percent chance; a contract at 78 cents implies roughly a 78 percent chance. YES and NO prices for the same market tend to sum to about $1, minus a little for the spread and fees.
This is the heart of what we do: our model produces a fair-value probability for each college football outcome, and we compare it to the live market price. When the model's number is meaningfully higher than the price, that gap is the edge.
How settlement works
Suppose you buy a YES contract at 40 cents. If the outcome happens, the share settles at $1, a 60-cent gain per share. If it does not, the share settles at $0 and you lose your 40 cents. Your maximum risk per share is the price you paid; your maximum gain is $1 minus that price.
Prediction markets vs sportsbooks
- Who sets the price: a sportsbook posts fixed odds with a built-in margin; a prediction market price is set by traders buying and selling.
- Which side you can take: on an exchange you can buy YES or NO, effectively taking either side of the question.
- Exiting early: you can usually sell a contract at the current price before the event resolves, rather than being locked in.
- Transparency: the price itself is a clean, readable probability anyone can interpret.
Where to trade college football
The main venues are Polymarket, Kalshi and ProphetX. For a primer on how these markets are regulated and why that matters, see are prediction markets gambling and our legality by state guide.
Frequently asked questions
What is a prediction market?
A prediction market is a marketplace for event contracts: tradable shares that pay $1 if a stated outcome happens and $0 if it does not. The price you pay, between 1 and 99 cents, equals the market's implied probability of that outcome.
How does the price relate to probability?
Directly. A contract trading at 35 cents implies the market thinks the outcome has about a 35 percent chance. As traders buy and sell, the price moves, and so does the implied probability. This is why our model compares its fair-value estimate to the live price.
What does it mean that contracts settle at $1?
Each contract resolves to a fixed value once the event is decided: $1 if the outcome happened, $0 if it did not. So buying a YES contract at 40 cents that settles at $1 returns 60 cents of profit per share; if it settles at $0 you lose the 40 cents.
How are prediction markets different from a sportsbook?
A sportsbook sets fixed odds with a built-in margin and you trade against the house. A prediction market is an exchange: prices are set by supply and demand among traders, you can buy or sell either side, and you can often exit a position before the event resolves.
Can I sell before the event finishes?
Usually yes. Because contracts trade continuously, you can sell your shares at the current market price before settlement to lock in a gain or cut a loss, liquidity permitting.