A political prediction market contract pays $1 if the outcome it names happens and nothing if it doesn’t. You buy at a price between 1 cent and 99 cents, so if you buy a candidate at 40 cents and they win, each contract pays $1 when the market settles, a 60-cent gain before fees. You can also sell before the result is known, at whatever the market will pay at that moment.
When and how you actually get paid depends on the platform’s rules: what counts as the official result, which fees apply and how money moves in and out. This is an explainer, not financial or tax advice.
How does the $1 payout work? #
Every contract is a yes-or-no question. The Yes and No sides trade against each other, and their prices add up to about $1.
| Scenario | What you paid | If the event happens | If it doesn’t |
|---|---|---|---|
| Buy 100 Yes at 40¢ | $40 | $100 payout ($60 gain) | $0 ($40 loss) |
| Buy 100 No at 60¢ | $60 | $0 ($60 loss) | $100 payout ($40 gain) |
The price is read as the market’s probability: 40 cents means traders collectively put the chance around 40%. Our guide to reading prediction market odds explains that conversion.
Selling before the result #
You don’t have to wait for Election Day. If your 40-cent contract rises to 65 cents after a strong debate, you can sell for a 25-cent gain per contract. If it falls, you can sell to limit the loss. Prices change constantly, and in thin markets you may not be able to sell as much as you want at the price you see.
How do payouts differ by platform? #
Platforms differ in currency, fees, limits and how disputes are resolved. Fee schedules change, so check each platform’s current terms before trading.
| Kalshi | PredictIt | Polymarket | |
|---|---|---|---|
| Regulation | CFTC-regulated exchange | CFTC-regulated since 2025 | International site offshore; US platform CFTC-licensed |
| Currency | US dollars | US dollars | USDC stablecoin on the international site; dollars on the US platform |
| Main fees | Per-trade fee from a published schedule | 10% of profits on each contract, 5% on withdrawals | Varies by site and market type |
| Position limit | Set by exchange rules | $3,500 per contract | Set by platform rules |
| Who decides the outcome | The exchange, under its contract rules | PredictIt, under its market rules | UMA’s oracle on the international site; exchange rules on the US platform |
Kalshi #
Kalshi charges a fee on trades based on a published schedule that depends on the contract price and number of contracts. When a market settles, winning contracts are credited at $1 in your account, and you withdraw to a linked bank account. Check its fee schedule for current rates, including any on deposits and withdrawals.
PredictIt #
PredictIt takes 10% of your profit on a contract, and nothing if you don’t profit. It also charges 5% on withdrawals. So on the example above, the $60 gain becomes $54 after the profit fee, and withdrawing the full $100 costs another $5. After its 2025 settlement with the CFTC, PredictIt raised its per-contract limit from $850 to $3,500.
Polymarket #
On Polymarket’s international site, trades and payouts happen in USDC, a stablecoin pegged to the dollar, and winnings land in your crypto wallet. Turning them into cash means moving them to an exchange and withdrawing, which can involve fees. Polymarket’s US platform, launched after it acquired a CFTC-licensed exchange in 2025, settles in dollars under its own rulebook. Which platform US residents can use is covered in are political prediction markets legal in the US?.
Who decides the official result? #
Every contract has written rules that name its resolution source and deadline. This matters more than most traders realize.
- Resolution source. A contract might settle on the Associated Press’s race call, on certified state results, or on a specific official action, such as the Electoral College vote count in Congress.
- Timing. A market settled on a race call can pay out within hours or days. One settled on certification might take weeks.
- Contingencies. Good rules say what happens if there’s a recount, a court challenge or no official result by a deadline. Depending on the rules, the market might wait, settle based on the leader at a set time, or be canceled with money returned.
On Polymarket’s international site, outcomes are settled through UMA’s Optimistic Oracle. Someone proposes the outcome and posts a bond; if no one disputes it within a challenge period, it stands. If it’s disputed, UMA token holders vote on the correct answer. That system has produced controversial results, which is one reason to read resolution rules closely. Our piece on arbitrage between platforms shows how differing rules can make two similar-looking markets pay out differently.
Are prediction market winnings taxable? #
Profits are generally taxable, but the IRS hasn’t issued guidance written specifically for prediction market contracts. How gains are treated can depend on how the platform structures its contracts and what forms it issues, and crypto-based platforms add their own reporting questions. Keep a record of every trade, deposit and withdrawal, and talk to a tax professional before you file.
What’s the difference between trading and following? #
Prices on these markets are one of several signals about a race. They react to news quickly, but they reflect the views of the people trading, who aren’t a random sample of voters. For a comparison of how markets and polls have performed, see prediction markets vs. polls.
If you just want to see what the markets think, you don’t need an account or any money on a platform. Election Tracker shows current Polymarket prices for the races and control markets it follows, with 24-hour moves, next to its own polling averages. The Market Sentiment tab is read-only: it takes no wagers, holds no money and labels prices as trader sentiment, not forecasts. It’s free on iPhone.
Frequently asked questions #
Can I sell my contracts before the election? #
Yes. You can sell at any time while the market is open, at the current price. That’s how traders lock in gains or cut losses without waiting for the result.
What happens to my money if an election is contested? #
It depends on the contract’s rules. Many markets wait for the named resolution source, such as certification. Some settle based on who leads at a deadline, and some are canceled with money returned if no result arrives in time.
When do prediction markets pay out after an election? #
When the contract’s resolution conditions are met. A market tied to a news organization’s race call can settle within a day or two; one tied to certification or congressional counting can take weeks.
Do I pay fees when I withdraw? #
On some platforms. PredictIt charges 5% on withdrawals. Other platforms may charge for certain transfer methods, and moving crypto off the international Polymarket site can involve network and exchange fees. Check each platform’s current fee page.
Are prediction market winnings taxed? #
Generally, yes. Profits count as taxable income, but specific IRS guidance for these contracts is limited. Keep records and consult a tax professional.