How to read prediction-market prices: probability, odds and payouts

New to this? Read from the top; the math is simpler than it looks. If you already trade, skip to how to spot a mispricing. If you come from sports betting, the conversion table for sportsbook odds will feel familiar.

A price on Polymarket or Kalshi is a number between $0.00 and $1.00, and it tells you three things at once. It is the market's implied probability that the event happens. It sets your profit if you are right: $1.00 minus the price. And it is the most you can lose if you are wrong: the price you paid.

What a price tells you

A contract trading at $0.65 YES means the market puts the chance of the event at 65%. Buy at $0.65 and, if the event happens, you collect $1.00. That is a profit of $0.35, or a 54% return on your $0.65. If it does not happen, you lose the $0.65.

The same market shows a NO price of $0.35, a 35% chance the event does not happen. The two prices add up to $1.00 because exactly one outcome will occur. If they drifted apart, arbitrage traders would close the gap within seconds.

The bid-ask spread is the gap between the best price a buyer will pay and the best price a seller will accept. A one-cent spread (bid $0.64, ask $0.65) marks a liquid market. A ten-cent spread (bid $0.55, ask $0.65) marks a thin one: your position is harder to sell, and the displayed price is a weaker guide to the real probability.

The rest of this guide works through the math with examples. It covers bid and ask, how Kalshi and Polymarket display the same data, how to convert prices to sportsbook odds, and how to judge when a market has it wrong. By the end you should be able to read four numbers off any market screen: probability, payout, return and risk.

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How a price becomes a probability

Prediction-market contracts are binary. Each pays $1 if a specific event happens and $0 if it does not. The trading price is the market's combined estimate of the probability.

The conversion is direct:

Multiply by 100. $0.65 is 65%. $0.27 is 27%. $0.83 is 83%. The price is the probability, written in cents.

Why this works. Traders bid the price up when they think the event is more likely and push it down when they think it is less likely. The price settles where buyers and sellers balance, and that level is the market's best shared guess at the probability. For the longer argument, see our explainer on how prediction markets work.

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Why YES and NO add up to $1.00

Every contract has a YES side and a NO side, and their prices sum to $1.00.

The reason is that the outcomes are mutually exclusive and exhaustive. The Fed will either cut rates in December (YES) or it will not (NO). One of those will happen. Buy one YES at $0.65 and one NO at $0.35 and you spend $1.00 today to receive exactly $1.00 at resolution, because one contract pays $1.00 and the other pays nothing. You neither gain nor lose.

If the two prices summed to less than $1.00, you could buy both sides, hold to resolution and take a risk-free profit. Arbitrage traders do exactly that within seconds of any gap, which pushes the sum back to $1.00.

Prices may read $0.65 / $0.35 one moment and $0.62 / $0.38 the next as news arrives. The sum stays at $1.00, or very close to it. On busy markets the spread can make the momentary sum $0.99 or $1.01.

What to watch for: if YES shows $0.65 and NO shows $0.40, the sum is $1.05. One side is mispriced. Most likely the market is thin with wide spreads, or one price has not updated yet. Either way, take it as a sign of poor liquidity.

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A complete trade, step by step

Here is one trade from start to finish.

Setup. You are on Polymarket. The market asks: "Will the Federal Reserve cut interest rates at the December 2026 FOMC meeting?" YES trades at $0.45 and NO at $0.55, so the market puts the chance of a cut at 45%.

Your view. You disagree. After the latest CPI print and the FOMC commentary, you put the chance of a cut nearer 60%. In your view, YES is too cheap.

Your trade. You deposit $20 and buy 40 YES contracts at $0.45 each.

40 × $0.45 = $18 spent, plus a taker fee of roughly 60 cents at Polymarket's US rates

You now hold 40 YES contracts:

• Maximum payout (if the Fed cuts): 40 × $1.00 = $40
• Maximum profit: $40 − $18 = $22
• Maximum loss (if the Fed holds): your full $18 stake
• Return on cost if you win: $22 ÷ $18 = 122%

Scenario A: the Fed cuts. Your 40 contracts resolve at $1.00 and you receive $40. That is a $22 profit on an $18 stake, a 122% return before fees.

Scenario B: the Fed holds. Your contracts resolve at $0.00. You receive nothing and lose your $18. Your loss never exceeded your stake.

Scenario C: you sell early. Two weeks before the meeting, a weak jobs report pushes YES to $0.62. You take the profit rather than wait, and sell all 40 contracts at $0.62:

40 × $0.62 = $24.80 received

Your profit is $24.80 − $18 = $6.80, a 38% return, in cash and with no resolution risk.

The point: you can sell into a moving price, which makes this a market rather than a bet. As long as there is liquidity, you can exit. That constant trading is also why the price keeps up with the latest news.

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How to read the order book

Below the headline price, each platform shows an order book: the buy orders (bids) and sell orders (asks) waiting on the exchange. Reading it tells you what a trade will cost.

Example order book (Polymarket-style, YES side):

How to read it:

• The best ask is $0.64, the lowest price anyone will sell at, for 200 contracts. Buy now and you pay $0.64 for up to 200 contracts.
• The best bid is $0.63, the highest price anyone will buy at, for 320 contracts. Sell now and you receive $0.63 for up to 320 contracts.
• The spread is $0.64 − $0.63 = $0.01. One cent, with decent size on both sides: a liquid market.
• Depth across several price levels means the market can take larger orders without moving much. A 2,000-contract buy would walk up the book, filling 200 at $0.64, 850 at $0.65 and 950 at $0.66, for an average price of about $0.654.

Compare a thin market:

Here the spread is $0.68 − $0.55 = $0.13. A 150-contract buy would fill 100 at $0.68 and 50 at $0.75, an average of about $0.70, and anything larger runs off the visible book. A 200-contract sell would fill 80 at $0.55 and the other 120 at $0.50. The midpoint of $0.615, (0.68 + 0.55) / 2, is not a reliable read of the probability. It is a by-product of poor liquidity.

Rule of thumb: look at the book before you trade. A spread under 2 cents means strong liquidity. Two to 5 cents is moderate. Over 5 cents is a thin market, so treat the price with suspicion.

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Bid, ask and last trade

Three related numbers that people often mix up:

• Best bid: the highest price someone will currently pay.
• Best ask (sometimes "offer"): the lowest price someone will currently sell at.
• Last trade: the price at which the most recent trade went through.

The "current price" a platform shows is usually the midpoint of bid and ask. With a bid of $0.63 and an ask of $0.64, the midpoint is $0.635. Some interfaces show the last trade instead.

When you trade, the bid and ask matter more than the midpoint. You buy at the ask. You sell at the bid. The midpoint is what the market is saying about probability; the ask is what it costs you to take a position.

So read the midpoint when you want the probability. When you place an order, look at the ask (buying) or the bid (selling), and allow for slippage if your order is bigger than the size shown at the top of the book.

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Thick and thin markets

A market's thickness, or depth, is how much order-book volume sits within a reasonable range of the midpoint. It matters for two reasons:

• Thick markets absorb large trades with little price impact. A $10,000 trade against $100,000 of depth moves the price slightly, and the midpoint is a reliable read of the probability.
• Thin markets jump on small trades. A $1,000 trade against $5,000 of depth can move the price 5 to 10 cents, and the midpoint says much less.

What counts as thick:

• Marquee markets on Polymarket or Kalshi, such as US presidential races, Fed decisions, Sunday NFL games and major crypto events, often show $100,000 or more of depth within 5 cents of the midpoint. Those prices are reliable.
• Niche markets, such as long-shot political races, obscure climate questions and narrow-window contracts, often show $1,000 to $10,000. Treat those prices as a rough guide.
• New markets are usually thin in their first few days. Depth builds over weeks as traders take positions.

A quick check: add up the bids and asks within 5 cents of the midpoint. If the total is more than 10 times your intended trade, you will get a clean fill. If not, expect slippage, or split the order into smaller pieces.

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Payout formulas

If you BUY YES at price P:

• Cost = P × number of contracts
• Payout if YES = $1.00 × number of contracts
• Maximum profit = (1.00 − P) × number of contracts
• Maximum loss = P × number of contracts (your full stake)
• Return if YES = (1.00 − P) / P

If you BUY NO at price (1 − P):

• Cost = (1 − P) × number of contracts
• Payout if NO = $1.00 × number of contracts
• Maximum profit = P × number of contracts
• Maximum loss = (1 − P) × number of contracts (your full stake)
• Return if NO = P / (1 − P)

Worked examples, $20 each:

• YES at $0.20 (20% probability): 100 contracts. Payout $100, profit $80. Return if YES: 400%.
• YES at $0.50 (50%): 40 contracts. Payout $40, profit $20. Return if YES: 100%.
• YES at $0.80 (80%): 25 contracts. Payout $25, profit $5. Return if YES: 25%.
• NO at $0.10 (YES at 90%, NO at 10%): 200 contracts. Payout $200, profit $180. Return if NO: 900%.

The pattern: cheaper contracts pay a higher percentage return because they are less likely to pay at all. Markets are mostly efficient, so a big potential return usually reflects a low probability. Mispricings do exist, and that is where an edge comes from.

A first trade with $20. Deposit $20 on Kalshi or Polymarket. Pick a market on a subject you know well, with YES somewhere between $0.40 and $0.60, the most liquid range. Buy 25 to 50 contracts with $10 to $15 and keep the rest in the account. Hold to resolution, or sell early if the price moves your way, so you see the whole cycle once. Treat the first trade as a lesson and the money as the fee for it.

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Why prices move

Prices move all the time, sometimes fast. Five forces cause most of it.

1. New information. A jobs report, a poll, a court ruling or an injury changes the probability, and traders buy or sell. The faster traders learn of it, the faster the price reacts.

2. Order-flow imbalance. When more traders want to buy YES than sell it, buyers use up the asks and the price rises. The reverse pushes it down. Some flow carries information; some is large traders rebalancing.

3. The resolution date. As the deadline nears, uncertainty falls away and prices head toward 0 or 1. A market at $0.55 three months out can trade at $0.85 the day before resolution if the event looks likely, or at $0.10 if it does not.

4. Related markets. When one market moves, traders reprice the markets linked to it. A move in a March Fed market shifts the May market, because the same economic view applies to both. Polymarket and Kalshi usually show similar prices on the same question.

5. Large traders. One big trader entering or leaving can swing a thin market. On illiquid contracts the "market price" can be one person's opinion that looks like a consensus. Volume matters as much as price.

What this means for you: the price on screen is a snapshot, and in five minutes it will be different. Do not fix on a particular entry price. Compare the implied probability with your own estimate, decide whether you have an edge, and trade only if the numbers support it.

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How to spot a mispricing

A mispricing is a price that differs clearly from your own estimate of the true probability. That difference is your edge.

A disciplined method:

1. Pick a market on a subject you know. Knowledge is the minimum requirement. If your view matches the consensus, you have no edge.
2. Write down your estimate before you look at the price. This keeps your thinking independent: "I think this is 55% likely."
3. Then look at the price. If the market is at $0.45 (45%) and you believe 55%, you have a 10-point edge, and buying YES makes sense. If the market is at $0.55 and you also think 55%, you have no edge. Do not trade.
4. Check liquidity. A 10-point edge in a thin market is worth less than a 5-point edge in a deep one, because the thin market's price is noisy and your own order can move it.
5. Size the position to your confidence. A 10-point edge you are sure of might justify 5% of your bankroll. The same edge on a guess might justify 1%, or nothing.

Common beginner mistakes:

• Looking at the price first. The displayed price anchors your estimate. Form your view first.
• Chasing a move. "It was $0.40 yesterday and $0.65 today, so it must be going higher" is momentum thinking, not probability thinking.
• Skipping the resolution rules. A market on "Will the Fed cut rates?" may settle on a specific FOMC statement at a specific time. Read the rules before you trade.
• Forgetting fees. Both platforms charge taker fees, and on a small edge they can take most of it. At 50¢, Kalshi's fee of about 1.75¢ per contract uses up almost all of a two-point edge.

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How Kalshi and Polymarket display prices

Both use the $0.00 to $1.00 scale, with small differences in display:

Kalshi shows prices in cents ("65¢ YES"). The order book shows the same midpoint, and the app is laid out like a brokerage: bid and ask, last trade, depth chart. Some sports markets show a percentage ("65%") instead of cents. Both mean the same thing.

Polymarket shows decimals ("$0.65" or "0.65"). It puts the implied probability up front, as a large 65% label, with the dollar price often in smaller type. The order book sits in the trade view, less prominent than on Kalshi.

A Kalshi contract at "65¢" and a Polymarket contract at "$0.65" or "65%" mean the same thing: the market gives the event a 65% chance. The math is identical.

For fees, liquidity and display side by side, see Kalshi vs Polymarket.

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Prediction-market prices and sportsbook odds

If you have bet on sports, the conversion is simple.

Decimal odds (European format):

• Decimal 2.00 = 50% implied probability = $0.50
• Decimal 1.50 = 67% = about $0.67
• Decimal 3.00 = 33% = about $0.33
• Formula: decimal odds = $1.00 / price

American odds (US sportsbooks):

• +100 = 50% = $0.50
• −150 (favorite) = about 60% = about $0.60
• +200 (underdog) = about 33% = about $0.33
• −300 (heavy favorite) = about 75% = about $0.75
• Formula for underdogs (positive odds): probability = 100 / (odds + 100)
• Formula for favorites (negative odds): probability = |odds| / (|odds| + 100)

Conversion table:

The main difference: sportsbook odds include the book's margin, the "vig", typically 4 to 8%. On a prediction market you trade against other traders, not the house, so the price carries no vig. The exchange charges a trading fee instead, so compare the total cost rather than the headline price alone.

An example: an NBA favorite at −150 at a sportsbook (60% implied) might trade on Kalshi at $0.585 YES (58.5%). The 1.5-point gap is roughly the book's vig. Kalshi's taker fee at that price is about 1.7 cents per contract, so a buyer who takes the ask gives most of that saving back.

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Practice questions

Try these five, then check the answers.

1. A Polymarket market on "Will candidate X win the November election?" trades at $0.42 YES. What is the implied probability that X wins?

42%. Multiply by 100.

2. You buy 100 YES contracts at $0.30. What is your payout if YES happens, and your loss if it does not?

Payout: 100 × $1.00 = $100. Loss: 100 × $0.30 = $30. Profit if YES: $100 − $30 = $70.

3. A market shows YES bid $0.45, ask $0.48. You buy 50 YES at market. What do you pay?

$0.48 × 50 = $24. You pay the ask, not the bid. The $0.465 midpoint is not your fill price.

4. A week ago you bought 100 NO contracts at $0.45, which is the same position as selling YES at $0.55. YES now trades at $0.71. What have you lost?

NO is now worth $0.29. You paid $45 and the position is worth $29, a loss of $16. Neither platform allows you to short a contract you do not own; buying the other side gives the same result.

5. An NFL game shows YES at $0.42 on Kalshi. What are the equivalent American odds?

American underdog odds = (100 / probability) − 100 = (100 / 0.42) − 100 = 238 − 100 = +138. A sportsbook would list roughly +140 before its margin.

If the math came easily, you are ready to trade. If not, work through a few more examples on Kalshi or Polymarket before you deposit real money.

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FAQ

What does $0.65 mean on Polymarket or Kalshi?

The market puts the chance of the event at 65%. Buy YES at $0.65 and you pay $0.65 today. If the event happens, you collect $1.00, a $0.35 profit. If it does not, you collect nothing and lose $0.65.

Why do YES and NO prices add up to $1.00?

Because exactly one of the two outcomes will happen. Buying both YES and NO guarantees a $1.00 payout, so together they must cost $1.00. Any gap is an arbitrage that traders close within seconds.

What is the difference between the bid and the ask?

The bid is the highest price someone will currently pay. The ask, or offer, is the lowest price someone will sell at. You buy at the ask and sell at the bid. The gap between them, the spread, measures liquidity: the tighter the spread, the more liquid the market.

How do I calculate my potential return?

For YES at price P, return = (1.00 − P) / P. At $0.50 you double your money. At $0.20 you make four times your stake. At $0.80 you make 25%. Higher prices mean a better chance of payout and a smaller percentage return.

What is market thickness?

The order-book volume within a reasonable range of the midpoint. Thick markets absorb large trades with little price impact; thin markets jump on small ones. Rule of thumb: a spread under 2¢ is thick, over 5¢ is thin.

Why do prices move all the time?

New information, imbalances in order flow, the approach of the resolution date, moves in related markets and large traders entering or leaving. Constant trading keeps the price a running estimate of probability.

How do Polymarket and Kalshi differ in how they show prices?

Both use the $0.00 to $1.00 scale. Kalshi shows cents ("65¢ YES") with brokerage-style bid and ask. Polymarket shows decimals ($0.65) and gives the percentage (65%) more space than the dollar price. The meaning is the same.

How do prediction-market prices compare with sportsbook odds?

Decimal odds = 1 / price, and American odds follow the formulas above. Sportsbook odds include the book's vig. Prediction-market prices do not, but the exchanges charge trading fees, so compare the total cost.

What is a mispricing, and how do I spot one?

A mispricing is a gap between the market's implied probability and your own independent estimate. Form your estimate first, without looking at the price, then compare. A gap of 5 points or more suggests a possible edge, especially in a liquid market where the price is reliable.

Can the price be wrong?

Yes. Thin markets can be pushed around by small trades. Some markets draw traders who share the same bias; the 2016 Brexit referendum is the famous example. And a market may not yet reflect news that has just broken. Liquid, clearly worded markets are usually accurate. Thin or ambiguous ones less so.

Do fees change the math?

Yes, most of all on small edges. As of October 2026, Kalshi's taker fee is about $1.75 per 100 contracts at 50¢, and Polymarket's US app charges a taker fee that peaks at $1.74 per 100 contracts at 50¢. Its rate was 0.06 from July 1, 2026 and was raised to 0.0695 in October (Polymarket US fee schedule). Both fees are largest near 50¢ and smaller near the ends of the range. Always subtract the fee from your edge before you trade.

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Further reading

• How the mechanism works: what prediction markets are
• Choosing a platform: Kalshi vs Polymarket on fees, liquidity and state availability
• Funding an account: the Polymarket funding guide, from Apple Pay to USDC
• The law in your state: are prediction markets legal
• Safety: is Polymarket safe?
• Opening several accounts: the sign-up stack
• For developers: the Polymarket API reference

Following the 2026 midterms? Our live midterm tracker shows current Senate and House prices, updated automatically, with the closest races at the top.