Sports betting is nothing new — predicting sports results and wagering on the outcome.
But what if you could wager on the outcome of any event? Say, if it’s going to rain tomorrow? Or if the Federal Reserve is going to lower interest rates?
With event contracts, you can do just that.
Event contracts are tradable financial contracts that let you speculate on the outcome of real-world events — from elections and economic data to sports and cultural moments. These contracts are offered through prediction markets, where each contract has a simple Yes or No outcome and is priced based on the market’s implied probability.
Event contracts are growing quickly in popularity, but they are also highly speculative. Before trading them, it’s important to understand how they work, what risks they carry and where they fit within a broader investing strategy.
Event contracts are a type of derivative that pays out based on whether a specific event happens.(1) Common examples include:
Each event contract typically settles at $1 if the outcome is correct and $0 if it’s incorrect. Contracts trade at prices between $0.01 and $0.99, which reflect the market’s collective estimate of the probability of that event occurring.
Prediction markets are the platforms that list and facilitate trading in event contracts.
When you buy a “Yes” contract, you’re betting that the event will happen. When you buy a “No” contract, you’re betting that it won’t.
For example, if a contract asking “Will inflation exceed 2.5%?” is trading at $0.48, the market is implying a 48% chance that inflation will come in above that level. As new information becomes available — economic data, news reports or expert analysis — the contract price moves accordingly.
You can usually hold the contract until settlement and receive $1 if correct, or sell the contract early if the price moves in your favor.
Your profit or loss equals the difference between your entry price and exit price, minus any applicable fees.
Most traders use event contracts for speculative trading, attempting to profit from correctly anticipating future outcomes before markets fully price them in.
Event contracts can also be used for hedging. For example, an investor concerned about how an upcoming election might affect their portfolio could take a position that offsets potential downside risk.
Event contracts and prediction markets are closely related but not interchangeable.
Event contracts are the individual tradable instruments. Prediction markets are the platforms where those contracts are traded.
In other words, you trade event contracts on prediction markets. Understanding this distinction helps clarify why some platforms focus on education and liquidity, while others focus on tools and trading access.
Event contracts are legal in the US when offered through regulated exchanges and brokers. Some platforms operate under oversight from the Commodity Futures Trading Commission, while others restrict access based on jurisdiction or regulatory status.
Availability can vary by state and by market type, so always confirm whether a specific contract is accessible where you live.
Event contracts aren’t traded on traditional stock exchanges. Instead, they’re offered through specialized prediction markets and select broker platforms.
If you’re interested in actively trading event contracts, it’s important to compare platforms based on regulation, fees, market selection and usability.
Event contracts offer a unique way to speculate on real-world outcomes using straightforward, probability-based pricing. While they’re easy to understand, they carry meaningful risk and should be approached carefully. By learning how event contracts work and choosing the right platform, traders can better decide whether this fast-growing market fits their goals.
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