What is an event contract?
A standardised contract that settles to $1 if a real-world event happens and $0 if it doesn't. On regulated US exchanges they're treated as financial derivatives and supervised by the CFTC.
How event contracts work
Contracts trade on order books between 1¢ and 99¢. The price reflects the market's implied probability. You can hold to expiry for $1 settlement or sell early at the prevailing market price.
Examples
- "Will the Fed cut rates in December?" — settles $1 if a cut happens, $0 otherwise.
- "Will candidate X win the 2028 nomination?" — settles $1 if they're nominated.
- "Will the high temperature in Chicago exceed 95°F on July 15?" — settles $1 if it does.
Risks
You can lose 100% of your premium. Contracts can be delisted or have rules clarifications that affect settlement. Liquidity can vanish in volatile periods. Trade only where legally permitted.
Questions
Frequently asked questions
What does an event contract pay out?+
$1 per contract if your side resolves. The maximum loss is the price you paid.
Can I sell before settlement?+
Yes, at the current market price. You don't have to hold to resolution.
Are event contracts legal in the US?+
Federally regulated event contracts on CFTC-designated exchanges (like Kalshi and ForecastEx) are broadly legal, with some state-level restrictions on specific contract types. See our state legality guides.