Prediction Markets FAQ
Everything you need to know — getting started, platforms, trading, and legality.
Getting Started
What is a prediction market?
A prediction market is a platform where people trade contracts on the outcome of future events. The price of each contract reflects the crowd's estimated probability. If a contract trades at $0.70, the market implies a 70% chance the event happens.
Are prediction markets accurate?
Yes — prediction markets are consistently more accurate than polls, expert panels, and most forecasting methods. Because traders have financial skin in the game, they are incentivised to be right. Academic research has repeatedly shown markets outperform other forecasting methods, especially for elections and economic indicators.
Do I need crypto to use prediction markets?
Not necessarily. US-legal platforms like Kalshi and Robinhood Prediction Markets accept USD bank deposits — no crypto required. International platforms like Polymarket use USDC (a stablecoin). Play-money platforms like Manifold and Metaculus require no money at all.
What is the minimum to get started?
You can start with as little as $1 on Robinhood or $5 on Kalshi. Polymarket has no formal minimum. Play-money platforms like Manifold are completely free.
Platforms
Which prediction market is best for US residents?
Kalshi is the top choice for US residents — it's fully CFTC-regulated with no position limits, USD deposits, and a mobile app. Robinhood Prediction Markets is a new 0%-fee alternative. PredictIt is also legal but has higher fees and a $850 per-market cap.
Which prediction market is best for international traders?
Polymarket is the clear leader for non-US traders: 0% fees, the deepest liquidity, and thousands of markets. Futuur and Insight Prediction are good alternatives if you prefer fiat currency or a different interface.
What is the difference between Polymarket and Kalshi?
Polymarket is the world's largest prediction market (0% fees, crypto/USDC, not available in the US). Kalshi is the leading US-legal platform (7% fee on winnings, USD deposits, CFTC-regulated). They serve different audiences. See our full comparison.
Are there any free prediction markets?
Yes — Manifold Markets and Metaculus both use play money (no real money at stake). They're excellent for learning how prediction markets work and for practising forecasting without financial risk.
Trading
How do I make money on prediction markets?
You profit by identifying markets where the probability is mispriced. If a contract trades at 40% probability but you believe the actual probability is 65%, you buy YES contracts. If you're right, you profit the difference. Consistent profitability requires research, discipline, and calibration.
What are the fees on prediction markets?
Fees vary widely: Polymarket, Robinhood, and Futuur charge 0%. Kalshi charges 7% on winnings. PredictIt charges 10% on profits plus a 5% withdrawal fee. Betfair charges 5% commission. Always factor fees into your expected value calculations.
Can I lose more than I invest?
No — prediction market contracts are capped at $1.00 per contract. You cannot lose more than your initial stake. There is no leverage or margin trading on prediction markets.
How do markets resolve?
Each market has a defined resolution source and criteria set at creation. When the event occurs (e.g. an election result is certified), the platform's resolution team or an oracle verifies the outcome and settles the market. YES holders receive $1.00 per contract; NO holders receive nothing (or vice versa).
Legality & Regulation
Are prediction markets legal in the US?
Real-money prediction markets are legal in the US when operated under CFTC oversight. Kalshi and Robinhood Prediction Markets are fully CFTC-regulated. PredictIt operates under a no-action letter. Polymarket is not available to US residents.
Do I have to pay taxes on prediction market winnings?
In most countries, yes. In the US, winnings are generally taxable as ordinary income or may qualify for Section 1256 treatment (Kalshi). In the UK, Betfair and Smarkets winnings are typically tax-free for private individuals. See our full Regulation & Tax guide for details.
Are crypto prediction markets safe?
Established platforms like Polymarket use audited smart contracts and hold funds in USDC (a regulated stablecoin). The main risks are platform risk, smart contract bugs, and lack of regulatory protection. Only use amounts you can afford to lose, and stick to platforms with a proven track record.
Still have questions?
Our guides cover prediction markets in depth.