CRYPCryptoExplainer NO. ---
Bitcoin prediction market explained: how $1 event contracts work
Each contract pays $1 if a bitcoin price event happens and $0 if not, so a 30-cent price implies roughly a 30% chance. This guide covers settlement on CF Benchmarks indexes, CFTC rules and how Kalshi, Robinhood and Polymarket differ.
Key takeaways
- A bitcoin prediction market contract is a binary event contract. It settles at $1 or $0, so a 30-cent price implies roughly a 30% chance.
- In the US, Kalshi and other venues list these contracts as designated contract markets (DCMs) regulated by the Commodity Futures Trading Commission (CFTC). Robinhood gives its customers access through Kalshi.
- Kalshi's crypto price contracts settle on CF Benchmarks indexes such as the CF Bitcoin Real-Time Index (BRTI), averaged over the final 60 seconds before expiry.
- Polymarket began as an offshore, on-chain market. The CFTC fined it $1.4 million in 2022, and it later returned to the US through a CFTC-licensed exchange it acquired.
- According to CoinDesk, Robinhood said on October 23, 2026 that bitcoin, gold and crude oil contracts are its fastest-growing prediction products. Sports is still its largest.
What is a bitcoin prediction market?
A bitcoin prediction market lets you trade a yes-or-no contract on a bitcoin price event. Each contract pays $1 if the answer is yes and $0 if not, so a price of 30 cents implies roughly a 30% chance.
A prediction market lists contracts whose payoff depends on whether an event happens. US regulators call them event contracts. The CFTC treats them as binary options, which means they are derivatives, not bets placed with a bookmaker. On a bitcoin market, the event is a price outcome, for example:
- Above/below: Will BTC be above a set strike price at a set time?
- Range: Will BTC finish between two prices?
- Up/down: Will BTC be higher at the end of a short window, such as 15 minutes, than at the start?
- High/low: Will BTC touch a level at any point during a period?
Each market has a YES side and a NO side. One YES and one NO contract together always pay exactly $1, so the two prices add up to about $1 at any moment, apart from the bid-ask spread.
How a yes/no contract is priced: price equals implied probability
Buyers and sellers set the price on an order book. Nobody fixes odds the way a sportsbook does. If YES on "BTC above the strike at 4 p.m." trades at 30 cents, the crowd is putting the chance at about 30%. The NO side would then trade near 70 cents.
Polymarket's documentation describes how the probability shown on screen is calculated. It is the midpoint between the best bid and the best ask. If that spread is wider than 10 cents, Polymarket shows the last traded price instead. Two points matter for readers:
- The shown "probability" is a market price. Thin trading, a wide spread or one large order can move it.
- A price near 99 cents is not a settlement. The contract only pays when the market resolves under its written rules.
Worked example (illustrative numbers)
The figures below are hypothetical and only show the arithmetic. They are not live prices.
| Position | Cost per contract | Payout if YES | Payout if NO | Implied probability |
|---|---|---|---|---|
| Buy 10 YES at $0.30 | $0.30 | $10.00 (gain $7.00 before fees) | $0 (loss $3.00 plus fees) | 30% |
| Buy 10 NO at $0.70 | $0.70 | $0 (loss $7.00 plus fees) | $10.00 (gain $3.00 before fees) | 70% that the event does not happen |
The most a buyer can lose is what they paid plus fees. You do not have to hold to expiry. A position can be sold back into the order book at any time before the market closes, at whatever price other traders will pay.
How settlement works
Settlement is where venues differ most. It is also where most disputes start, so the market rules are worth reading before anything else.
Kalshi: CF Benchmarks index averages
According to Kalshi's help centre, most of its crypto price markets settle on a CF Benchmarks index named in each market's rules, such as the CF Bitcoin Real-Time Index. For above/below and range markets, the expiration value is a simple average of the index over the 60 seconds before the stated time. Fifteen-minute up/down markets compare the average of the minute before the market closes with the average of the minute before it opened. CF Benchmarks says some markets also use trimmed averaging, which drops the highest and lowest 20% of observations. The aim is to make a final-second price spike less able to decide the result.
Polymarket: oracles
Polymarket says most of its markets resolve through the UMA Optimistic Oracle. Anyone can propose an outcome by posting a bond, and anyone can dispute it. A disputed proposal goes to a vote of UMA token holders. Its short-term bitcoin "Up or Down" markets work differently. The market rules name the Chainlink BTC/USD data stream as the resolution source, not prices on any single exchange. Winning outcome tokens can then be redeemed for $1 each.
Robinhood, Kalshi and Polymarket compared
| Venue | Regulatory status | How bitcoin contracts settle | Fees (published) |
|---|---|---|---|
| Kalshi (KalshiEX LLC) | CFTC designated contract market since November 2020 | CF Benchmarks index; 60-second average before expiry (per market rules) | Taker fee = 0.07 × contracts × price × (1 − price), rounded up to the next cent |
| Robinhood (Robinhood Derivatives, LLC) | Broker giving app access to contracts listed on CFTC-regulated exchanges, starting with KalshiEX | Under the rules of the exchange that lists the contract | At launch in March 2025: 2 cents per contract, 1 cent to Robinhood and 1 cent to Kalshi (Fortune) |
| Polymarket | Fined by CFTC in 2022 for operating unregistered; CFTC amended its order of designation in November 2025 to allow intermediated US access | UMA Optimistic Oracle; Chainlink BTC/USD data stream for short-term bitcoin markets | Varies by market; check the market page |
| ForecastEx (Interactive Brokers) | CFTC-registered DCM and clearing house; began operating August 1, 2024 | Under its own contract terms | Set by Interactive Brokers |
Fee schedules change. The Kalshi formula above comes from its published fee schedule. Because of the price × (1 − price) term, the fee peaks for contracts priced near 50 cents. Ten contracts at 40 cents, for example, cost 0.07 × 10 × 0.40 × 0.60 = $0.168, which rounds up to $0.17. Always check the total cost shown before you confirm an order.
How bitcoin prediction markets are regulated in the US
US law treats event contracts as swaps or options under the Commodity Exchange Act. That means only CFTC-registered venues may offer them to US customers. The CFTC's own enforcement history shows how this works:
- November 2020: The CFTC designated KalshiEX LLC as a contract market. In January 2025 it amended that order to allow intermediated trading, the route brokers such as Robinhood use.
- January 2022: The CFTC ordered Polymarket's operator, Blockratize Inc., to pay a $1.4 million civil penalty and wind down non-compliant markets. The agency found that it had offered more than 900 event markets without registering. Its enforcement director said derivatives markets must follow the law "regardless of the technology used."
- March 17, 2025: Robinhood Derivatives launched a prediction markets hub inside the Robinhood app, available through KalshiEX.
- November 2025: The CFTC amended the designation of the exchange Polymarket acquired, allowing intermediated US trading, according to industry reports.
- March 12, 2026: The CFTC issued a staff advisory to DCMs and an advance notice of proposed rulemaking on prediction markets. The advisory reminds exchanges to list only contracts "not readily susceptible to manipulation." The notice asked for comments, due April 30, 2026, on issues including margin for retail traders and blockchain-based markets.
The biggest open legal fight is over sports contracts, not crypto. Several state gaming regulators argue those contracts are gambling under state law. The CFTC says its federal jurisdiction over DCM-listed event contracts overrides state rules, according to law firm Sidley Austin. Bitcoin price contracts are less exposed to that dispute because they look more like conventional financial derivatives. But they sit inside the same rulebook, so any CFTC rule that comes out of the 2026 consultation would apply to them too.
Why bitcoin prediction markets are growing now
CoinDesk reported on October 23, 2026 that JB Mackenzie, Robinhood's vice president and general manager for futures and prediction markets, spoke at the NEXTPredict conference in New York. He called price contracts on bitcoin, crude oil and gold "the fastest growing products that are out there." Robinhood's largest event contract in September was tied to the Federal Reserve's rate decision, not a sports event.
Mackenzie also said settlement windows on crypto contracts have shortened from a week, to a day, to 15 minutes. He compared the 15-minute contracts to zero-day options, which can produce fast losses. He added that some customers who start with event contracts go on to trade stocks, crypto, futures and options. Neither Robinhood nor CoinDesk gave volume figures for the crypto contracts, so this article does not estimate them.
Risks to understand before using a bitcoin prediction market
- All-or-nothing payoff. A contract that misses its strike by one dollar pays $0. Short windows such as 15 minutes leave little time for a position to recover.
- Fees on small prices. A cent or two per contract is a large share of a contract priced at 3 or 5 cents.
- Settlement source risk. The result depends on a named index or oracle, not the price on the exchange you watch. The two can differ at the moment of expiry.
- Liquidity. Wide spreads can make the shown probability misleading and make it costly to exit early.
- Venue and legal risk. Access differs by country and US state. Offshore or on-chain venues may not offer the customer protections that come with CFTC-regulated exchanges and brokers.
- Scams using the name. Fraudsters copy popular trends. Use only the official app or website, and read our guide to crypto investment scams.
What it means
For readers, the main point is that a bitcoin prediction market price is a probability, not a forecast from an expert. It reflects what traders will pay, minus fees and spread, and it settles on a specific index or oracle under written rules. The products now sit with mainstream brokers and federally regulated exchanges in the US. That gives users a clearer legal framework than the offshore markets of a few years ago. It also puts bitcoin price bets, sports contracts and economic data contracts in the same app. The CFTC's 2026 consultation, and the court fight between states and the agency over sports contracts, will decide how far that model can expand.
For related reading, see how bitcoin ETF flows are measured, how bitcoin downside-protection ETFs use options, how to backtest a crypto trading strategy in Python, and how to secure a crypto wallet seed phrase.
Frequently asked questions
How does a bitcoin prediction market work?
You buy a YES or NO contract on a price event, such as bitcoin finishing above a set level at a set time. The winning side pays $1 per contract and the losing side pays $0. Prices move between 1 and 99 cents as traders buy and sell, and the price works as the market's implied probability.
Are bitcoin prediction markets legal in the US?
Yes, when they are listed on a venue registered with the Commodity Futures Trading Commission, such as Kalshi, which became a designated contract market in 2020. Robinhood offers access through Kalshi. The CFTC fined Polymarket $1.4 million in 2022 for operating without registration; Polymarket later returned to the US through a CFTC-licensed exchange it acquired.
How are Kalshi bitcoin contracts settled?
According to Kalshi, most crypto price markets settle on a CF Benchmarks index such as the CF Bitcoin Real-Time Index, using a simple average over the 60 seconds before the stated time. Fifteen-minute up/down markets compare one-minute averages at the open and close. Each market's rules are final.
What fees do Robinhood and Kalshi charge on prediction markets?
Kalshi's published taker fee is 0.07 times the number of contracts times the price times one minus the price, rounded up to the next cent. When Robinhood launched its prediction markets hub in March 2025, it charged 2 cents per contract, split between Robinhood and Kalshi. Fee schedules change, so check the total shown before confirming.
Sources
- CoinDesk: Robinhood sees surge in bitcoin, gold prediction markets as traders move beyond sports (Oct 23, 2026)
- CFTC: Order against Blockratize Inc. d/b/a Polymarket (Jan 3, 2022)
- CFTC: CFTC designates KalshiEX LLC as a contract market (Nov 4, 2020)
- CFTC: Amended order of designation for KalshiEX LLC (Jan 17, 2025)
- Sidley Austin: US CFTC issues guidance and advance notice of proposed rulemaking on prediction markets (March 2026)
- Kalshi Help Center: Crypto markets
- Kalshi: Fee schedule
- CF Benchmarks: Kalshi leads surging crypto event contract market (Dec 11, 2025)
- Polymarket docs: How are prices calculated?
- Polymarket docs: Resolution
- Robinhood Newsroom: Robinhood prediction markets hub (Mar 17, 2025)
- Fortune: Robinhood launches prediction market (Mar 17, 2025)
- Crowdfund Insider: Polymarket obtains CFTC approval of amended order of designation (Nov 2025)
- Interactive Brokers: ForecastEx begins operations (Aug 1, 2024)
- Crypto Briefing: Polymarket launches 15-minute bitcoin price markets on US app
This article is for information only and is not investment advice.
