How prediction markets work, and what a 0.62 price means

A prediction market sells shares in an outcome. A Yes share pays $1 if the event happens and $0 if it does not, so a price of 0.62 means you pay $0.62 for a chance at $1. This guide covers how the price forms, how Polymarket and Kalshi differ, and where resolution can go wrong.

How a binary share works, with a worked trade

Each market asks a question with two outcomes. Yes and No shares trade between $0 and $1, and the two prices add up to about $1. Kalshi's help center says the combined investment of the two sides must equal $1, so a Yes at 70 cents pairs with a No at 30 cents. At resolution the winning side settles at $1.00 and the losing side at $0.00, Polymarket US's docs say.

Prices come from an order book, not from a bookmaker. Both Polymarket US and Kalshi match bids and asks on an order book. Kalshi says you always trade against another member, never the exchange itself. The gap between the best bid and the best ask is the spread, and a tighter spread means more liquidity.

Now the trade. Assume a market on a hypothetical event, with Yes priced at 0.62. You buy 1,000 Yes shares for $620. If the event happens, they pay $1,000, a profit of $380, or 61.3 percent on cost. If it does not, they expire worthless and you lose $620.

The same logic runs on the other side. A No share at 0.38 costs $380 for 1,000 shares and pays $1,000 if the event does not happen, a profit of $620. The two positions are mirror images, which is why the prices sum to $1.

Fees move the break-even. Polymarket US charges takers 0.0695 times the number of contracts, times the price, times one minus the price. For 1,000 contracts at 0.62 that is about $16.37. Your cost becomes about $636.37, and the break-even price rises to about 0.636. This assumes you hold to resolution and pay the fee once. Kalshi and Polymarket's international product set their own fee rules, so read each schedule.

What 0.62 does and does not mean

Both platforms describe the price as a probability. Polymarket US's docs say it represents the market's collective belief about how likely an outcome is, and Kalshi's help center ties price to probability the same way. Those are the platforms' own descriptions. In our reading, 0.62 is the break-even odds for a buyer at that price, and it matches a 62 percent chance only when traders weigh gains and losses evenly, fees are zero and settlement is quick.

It does not mean the event will happen. A 62 percent price says the outcome fails about 38 times in 100 on identical terms, and any single event either happens or does not.

It does not mean you can trade at 0.62. Depending on the site, the number shown can be the last trade or the midpoint of the book. Suppose the best bid is 0.60 and the best ask is 0.64, so the midpoint is 0.62. Buying 1,000 shares at the ask costs $640. Selling them at once returns $600, a $40 loss, or 6.25 percent of what you paid.

It does not say when the money comes back. Capital stays locked until resolution, so 0.62 on an event settling next week is a different deal from 0.62 on one settling next year.

It also depends on who is trading. A thin market can move on one large order. Kalshi's help center says pricing becomes more efficient as more users take part. That is a claim about large markets, and the World Cup evidence below shows it does not make most participants profitable.

How Polymarket and Kalshi differ

Both list yes-or-no event contracts on an order book. They differ in legal structure, custody and who decides the outcome.

Regulation sets the US picture. A 2024 CFTC order registering Kalshi's clearing arm noted that its affiliate KalshiEX is registered as a designated contract market. Oversight is active. On July 14, 2026 the CFTC stayed a KalshiEX rule change and ordered it to fulfill open trades, after a Michigan state court directed it to cancel executed trades involving state residents. The CFTC said cancelling executed trades risks a cascading effect on the whole marketplace.

The agency is also writing rules. On June 10 it proposed amendments to Regulation 40.11 for event contracts involving enumerated activities, including terrorism, assassination, war and gaming, with a 90-day comment period. A July 24 advisory told exchanges not to file broad template certifications and to analyze settlement methodology and data sources. On August 28 the CFTC ordered a White House teleprompter operator to pay $172,000 for trading presidential mention contracts on KalshiEX with advance knowledge of speeches.

Polymarket's international product works differently. Its exchange contract, deployed on Polygon, is described as hybrid-decentralized, with an operator matching orders off-chain and settlement happening on-chain. Markets resolve through an adapter that asks UMA's Optimistic Oracle. If no trader disputes a proposed answer during a liveness period of about 2 hours, it becomes the result. A first dispute resets the request. A second goes to UMA's token holders, and the adapter README says that vote returns data after 48 to 72 hours.

UMA's own docs describe two 24-hour phases, commit and reveal, and require a 65 percent majority of staked UMA. The two descriptions differ on timing. Polymarket's perps product, launched on September 3, is offered internationally where legally permitted, as our launch report covers.

The practical difference is who you rely on. At Kalshi and Polymarket US, an exchange team applying a rulebook decides, under CFTC oversight. On Polymarket's international markets, a bonded proposer and an on-chain vote decide. Neither removes ambiguity in the question itself.

What the World Cup final and other record markets showed

The Crypto Times reported on July 15 that Polymarket's World Cup winner market had reached $4.25 billion in lifetime volume, a figure it said eclipses even the 2024 presidential election market. Our report covers how it built. Spain beat Argentina 1-0 in the July 19 final, The Block reported.

The first lesson is that liquidity follows the calendar. The Block put combined Kalshi and Polymarket open interest at nearly $1.8 billion in the week ending July 5. It was around $1.5 billion by the week ending July 19, a fall of about 20 percent from the early-July peak. Sports made up roughly 80 percent of both platforms' volume, and fewer markets stayed open as the bracket narrowed. Kalshi's sports volume fell 55 percent and Polymarket's nearly 70 percent.

The second lesson is that volume is not an edge. Among 194,000 addresses that traded the winner market, roughly two-thirds lost money. Among them, 54 gained more than $100,000 each, five of them over $1 million, while 43 lost more than $100,000. A market can price an outcome well and still be a poor trade for most participants, because the price already holds the crowd's view and every trade pays a spread or a fee.

The third is resolution risk, and the winner market was the easy case. Polymarket US's docs say sports markets resolve from results published by the governing league or competition organizer. A match score is hard to dispute. The harder markets rest on wording. Kalshi's help pages say a market is not re-settled just because an event appears to have ended while trading was open, and that determination can take from one hour to more than twelve hours after close.

Regulators point at the same weak spot. The July 24 CFTC advisory is about settlement methodology and data sources. Hyperliquid has proposed a different answer for its own outcome markets: a 500,000 HYPE bond per deployer, which validators can slash if a market is badly defined or settled incorrectly, CoinDesk reported. We follow the token side on the Polymarket tracker and the design on the HIP-4 report.

What to check before you trade

A price is a quote on a contract's wording, set by whoever is trading that day. Five checks cover most of the risk:

• Read the contract rules and name the source that decides the outcome.

• Look at the spread and the depth of the book, not only the headline price.

• Count the days until resolution and the cost of locking capital that long.

• Work out break-even from the fee schedule, as in the worked trade above.

• Confirm which product your jurisdiction can use, and whether insider rules apply to you.

Polymarket US bars people who hold confidential information about an outcome, or who have authority over it, from trading that market. The CFTC order above shows that insider trading on Kalshi draws enforcement too. For a perpetual-futures counterpart to this guide, see how a perp DEX works.

This page describes mechanisms and risks. It is not advice to trade, and the 0.62 trade is arithmetic on a hypothetical event.