What Is a Prediction Market: Prediction Markets of 2026 Explained

June 9, 2026

by James Pacheco

Prediction trading exchanges like Kalshi, Polymarket, and Robinhood have started to gain popularity in the US and they give customers the chance to trade contracts relating to popular real-world predictions for things like sports, the economy, and tech.

But what is a prediction market, and how does this process work? As this is still a relatively new experience, we’ve used our knowledge and testing to create an introductory guide below. If you read on, we’ll explain how prediction markets work, what you can do with them, and how you can get started at the top prediction exchanges.

Top Prediction Market Sites for 2026

What Is a Prediction Market? a Basic Introduction

Prediction markets are exclusively available to trade at sites like Kalshi, Robinhood, Polymarket, and Crypto.com. The term can also apply broadly to a particular category of predictions, such as sports prediction markets, but in this guide we are looking only at single prediction markets.

A Prediction Market Is a Single Real-World Proposition

“Who will be the largest company at the end of April?”

• NVIDIA – Yes (98c), No (1.7c).
• Apple – Yes (0.6c), No (99.5c).
• Alphabet – Yes (0.5c), No (99.7c).

This is a prediction market and there are several important components. First, we have the prediction itself which is usually framed as a question. In this case, we are predicting which global company will have the largest valuation at the end of a specific period.

Beneath that, we have three options, each of which have yes and no trade contracts with a relevant price listed in Cents.

The yes/no options are what you can trade with other customers via the peer-2-peer trading system that sites like Kalshi facilitate. For example, if you thought that NVIDIA was indeed going to be the largest company at the end of April, you could buy $1 trade contracts for the “yes” option at $0.98 each from customers who are selling their trade contracts at that price.

If you bought these yes trade contracts, you would then have the option to sell them to other customers if the price moved in your favor.

Or You Could Hold Them and Wait for The Prediction to Happen

At the end of April, if you still held your NVIDIA yes trade contracts, and the company met the settling criteria, you would get a $1 return for each contract, minus the costs of event trading which come in the form of trading fees.

This is the basics of prediction markets – you buy/sell/settle trade contracts relating to real-world predictions. Now, if you are asking, are prediction markets legal in the US, the answer is yes, provided that the trading exchange is regulated by the CFTC (Commodity Futures Trading Commission).

There Are Multiple Different Types of Prediction Markets

The next thing to realize about prediction markets is that there are a massive variety of different prediction categories. Once you start browsing top trading exchanges, you will quickly realize the scope of prediction trading. From our experience, the top sites typically feature these categories:

As you can see, there’s plenty of scope to invest in predictions relating to subjects you are familiar with. Also, we’ve found that simply browsing prediction sites can really boost your knowledge of the world and what’s going on with global and national events.

Typically, you will find that the predictions are split into two main categories – sports and events, and you can learn more about the latter in our guide on what are event markets.

Pros and Cons of Prediction Markets

There are some potential drawbacks to prediction markets that you need to be aware of too. Firstly, depending on the subject and type of prediction you may need to do a lot more background research and investigating before committing to a trade if you want to be effective. Also, there are the trading fees to consider which can impact your overall potential returns.

However, we believe there are plenty of positives, such as the simple trade contract process, the massive range of predictions, and the high trading volume which helps your liquidity.

Prediction Markets Explained – Live Examples from Top Exchanges

We think the best way to understand what prediction markets are is to see them in action. There are many top sites that provide these predictions, and you can read more about two of them in our Kalshi vs. Robinhood guide.

However, for a starting point, we’ve created the below table that shows some live prediction that you could have traded at the time we wrote this guide:

In this table alone we’ve covered everything from sports results and company takeovers to the price of crypto and the price of commodities.

Prediction markets are incredible in terms of their scope and variety and we think this is one of their main benefits – no matter what you are personally interested in, you should be able to find a prediction market to suit.

How Can You Get Started Trading Prediction Markets?

For those who want to trade predictions, an account is required at one of the legal prediction trading exchanges in the US. There will be various verification processes during this, and this could include a complete ID check.

Typically, to get signed up with an exchange, you can follow these steps:

1. Tap any of the prediction exchange banners on this page.

2. Click the relevant signup, register, or join buttons.

3. Follow the instructions.

4. Provide any requested personal details.

5. Accept T&Cs.

6. Do any verification steps.

7. Log in to your new account.

Once you are up and running, before you can make any trades, you will have to deposit money or crypto into your account. The top sites should accept a range of payment methods plus great payment security.

With your account credited, you can now start looking at the different prediction markets with the aim of making your first trade. Please make sure that you read the terms carefully, and understand any fees before you jump in.

Conclusion – Prediction Markets Are Things You Can Trade with Other Customers

So, what is a prediction market? To summarize, it’s a single proposition relating to a real-world event, such as an election, a sporting event, or even a company valuation.

With these trending prediction markets, you then have the option of buying and selling trade contracts from other customers through the peer-2-peer trading exchange that sites like Kalshi, Robinhood, and Polymarket offer.

Key things to be aware of when trading predictions include the trading volume, fees, and closing date of the market. A prediction with a higher trading volume will offer greater liquidity and it should be easier to move your trade contracts.

Fees should be accounted for when calculating your potential returns, and closing dates of prediction can affect price swings. If you think this is something you would like to get into, you can use any of the banners we have outlined on this page to get signed up at top operators.

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Prediction Market Sites Worth Checking Out

Prediction Market FAQ

1. 🤔 How do prediction markets work?

   A prediction market is a single question relating to a real world event. You then have yes and no options for that prediction – these are the trade contracts you can buy and sell from other customers relating to that prediction. You can also hold your trade contracts to try and settle them, and if you do so successfully, you’ll get a return based on your original trade market contract base value.

2. 📊 How accurate are prediction markets?

   There really isn’t an answer to this. The prices of trade contracts for prediction markets are based on people’s perception of the prediction, and which they think is the most likely outcome. Therefore the accuracy can vary from prediction to prediction and as with anything that isn’t certain, the most popular prediction trade contracts can be wrong.

3. ⚖️ Are prediction markets legal?

   Yes but the site has to be regulated by the Commodity Futures Trading Commission (CFTC) if it wants to operate legally in the US. We only recommend legitimate, legal prediction market trading exchanges.

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