Binary Prediction Markets [2026]

Binary prediction markets are platforms where users trade yes/no contracts on real-world events. Each contract pays $1.00 if the predicted outcome resolves correctly and $0 if it does not. The current market price reflects the consensus probability of the yes outcome based on aggregate user trading.

The binary structure is the most common prediction market format. CFTC-regulated platforms including Kalshi and Robinhood Predict use exclusively binary contracts. Polymarket also uses binary contracts as its standard format. The binary format is structurally simpler than alternatives and easier to price, settle, and understand.

Binary contracts trade between $0.01 and $0.99 per share. The current trading price implies probability: a $0.65 contract implies a 65% probability of the yes outcome. If you buy at $0.65 and the market resolves yes, you earn $0.35 per share at settlement (the difference between the resolution price of $1.00 and your purchase price). If the market resolves no, you lose your full $0.65 per share stake.

For broader background on prediction market mechanics see our how prediction markets work guide. For the leading regulated US binary contract platform see our Kalshi review.

Resolution is the process of determining whether a binary contract resolves yes or no based on the underlying event outcome. The resolution mechanism varies by platform but the core principle is the same: the platform applies pre-published resolution rules to the official outcome and settles all open contracts to either $1.00 or $0.

On CFTC-regulated platforms (Kalshi, Robinhood Predict), resolution follows clear pre-published criteria. Election markets resolve based on major network calls and certified state results. Economic indicator markets resolve based on official BLS or BEA data releases. Sports markets resolve based on official league results. The resolution process is automated where possible and reviewed by platform staff for ambiguous cases.

On Polymarket, resolution uses the UMA Protocol oracle. UMA token holders can dispute resolutions and vote on contested outcomes. The mechanism is designed to be secure as long as the cost of attacking the oracle exceeds the value of contracts being resolved. In practice, more than 95% of Polymarket markets settle without dispute, with the remaining 5% going through structured dispute resolution that typically completes within 48 hours.

Resolution speed varies by event type. Sports markets typically resolve within hours of the final whistle. Economic indicator markets resolve within minutes of the official data release. Election markets resolve within hours of major networks calling races. Markets with longer resolution windows or ambiguous outcomes can take 1-7 days for full settlement.

Concrete examples make the binary structure tangible. Five common binary market types illustrate how the format works across different event categories.

Election outcome markets ask whether a specific candidate will win a specific race. The 2024 US presidential market on Polymarket and Kalshi paid $1.00 for shares of the eventual winner and $0 for shares of the eventual loser. Trading prices through the cycle ranged from around $0.40 to $0.65 on the eventual winner before settling at $1.00.

Federal Reserve rate decision markets ask whether the FOMC will adjust rates by a specific amount at the next meeting. A market on whether the Fed will cut by 25 basis points in March pays $1.00 if the FOMC announces a 25 basis point cut and $0 otherwise. Trading prices reflect the market's probability estimate of each scenario in the days before the meeting.

Economic indicator markets ask whether a specific data release will fall within a defined range. A CPI market might ask whether headline year-over-year inflation will be above 3.0% in the next release. The contract pays $1.00 if the BLS reports CPI above 3.0% and $0 if not. Resolution is automated to the official BLS release.

Sports outcome markets ask whether a specific team will win a specific game or championship. A Super Bowl market pays $1.00 for shares of the winning team and $0 for shares of the losing team. Game-level markets resolve at the final whistle. Championship futures resolve at the end of the season.

Weather markets ask whether a specific weather event will occur within a defined window. A hurricane landfall market might ask whether a named storm will make landfall in a specific US state within a specific date range. The contract resolves yes or no based on National Hurricane Center reports.

Binary prediction markets have clear advantages and limitations compared to alternative market structures. Understanding the trade-offs helps you decide which markets to use for which purposes.

Pros include simplicity, clear payoff structure, and capped downside. The yes/no format is intuitive: you predict an outcome, you win or lose a fixed amount per share. Maximum loss per share is the entry price (capped at $1.00 in the worst case). Maximum gain per share is the difference between $1.00 and your entry price. Position sizing and risk management are mathematically clean.

Pros also include straightforward resolution. Binary outcomes (yes or no) are easier to verify than continuous outcomes (specific final scores or specific stat totals). The pre-published resolution criteria can typically be applied unambiguously to the official event outcome, which reduces dispute frequency compared to more complex contract structures.

Cons include limited expressiveness. A binary market on whether the Fed will cut by 25 basis points cannot capture views on whether they will cut by 50 basis points. To express that more granular view, you need either multiple binary contracts (Fed cuts 25, Fed cuts 50, Fed holds, Fed hikes) or a different contract structure that captures the full distribution.

Cons also include extreme outcome challenges. Markets on very low probability events (1-3% chance of yes) and very high probability events (97-99% chance of yes) can have wide bid-ask spreads that erode trading economics. The structural friction is largest at the extremes where small price moves represent large probability shifts.

Beyond binary markets, prediction platforms also offer scalar markets and categorical markets. Each format suits different event types and information structures.

Scalar markets pay based on a continuous outcome rather than a yes/no binary. A scalar market on the final S&P 500 level might pay proportionally based on where the index closes within a defined range. Scalar markets capture more nuanced views but are harder to price and settle than binary markets. Most major prediction platforms primarily use binary contracts and offer scalar markets only for specific event types.

Categorical markets resolve by which of multiple outcomes occurs. An election market with three or more candidates might use a categorical structure where each candidate has a separate contract that pays $1.00 if they win and $0 if any other candidate wins. The structure is effectively a series of binary markets on the same underlying event with the constraint that exactly one of them must resolve yes.

For most user purposes, binary markets are the simplest and most efficient way to express specific event views. Use binary markets for clearly defined yes/no outcomes. Consider scalar or categorical structures only when the underlying event has more than two relevant resolution paths. Read our how prediction markets resolve guide for more on resolution mechanics.