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How to Read Prediction Market Odds
Last Updated: February 17, 2026
A prediction market contract priced at $0.63 means the market estimates a 63% probability that the event will happen. The price IS the probability. This direct relationship between price and probability makes prediction markets one of the most transparent forecasting tools available.
How Do Prediction Market Prices Work?
Every prediction market contract settles at either $1.00 (event happened) or $0.00 (event did not happen). The current trading price between these two extremes represents the market’s real-time probability estimate. No conversion formula is needed — the cent price is the probability expressed as a decimal.
If a contract for “Fed cuts rates at the March meeting” trades at $0.41, the market implies a 41% chance of a rate cut. Buying that contract at $0.41 gives you a potential payout of $1.00 if correct, or a total loss of $0.41 if wrong. Your expected value depends on whether you believe the true probability is higher or lower than 41%.
This pricing model is consistent across platforms. Whether you are reading prices on Kalshi, Polymarket, or the Odds Reference dashboard, a price of 63 cents means the same thing.
How Do Yes and No Shares Relate to Each Other?
Every binary prediction market has two sides: Yes and No. These are complementary contracts. If Yes is priced at $0.63, the corresponding No contract should be close to $0.37. Together they sum to approximately $1.00.
In practice, the sum often slightly exceeds $1.00. A market might show Yes at $0.63 and No at $0.39, summing to $1.02. That $0.02 gap is the bid-ask spread — it represents the cost of liquidity and is effectively a built-in trading fee. Wider spreads indicate thinner liquidity and higher effective costs.
On the Odds Reference dashboard, we display both the mid-price (average of Yes and No) and the spread width. Tight spreads (under $0.02) indicate liquid, well-priced markets. Spreads above $0.05 suggest you should treat the price with more caution.
How Do Multi-Outcome Markets Work?
Some prediction markets offer more than two outcomes. A market on “Which party wins the 2028 presidential election?” might list Democratic, Republican, and Independent contracts separately.
In multi-outcome markets, individual contract prices represent the implied probability of each outcome. The sum of all contract prices should approximate $1.00 (or slightly above, due to the overround). To get the normalized probability of any single outcome, divide its price by the sum of all prices:
| Outcome | Price | Normalized Probability |
|---|---|---|
| Democratic | $0.44 | 43.1% |
| Republican | $0.53 | 52.0% |
| Independent | $0.05 | 4.9% |
| Sum | $1.02 | 100% |
The $0.02 overround represents the market’s built-in margin. Multi-outcome markets on Polymarket frequently carry larger overrounds than binary markets due to the complexity of maintaining liquidity across multiple contracts.
How Do You Compare Odds Across Platforms?
The same event often trades on multiple platforms at slightly different prices. One of the most useful applications of cross-platform comparison is identifying where markets agree (convergence) and where they disagree (divergence).
Our analysis across platforms shows that price divergences greater than 5 percentage points on the same event are relatively uncommon on liquid markets but occur regularly on thinner ones. These divergences can reflect different participant pools, information asymmetries, or simply the cost of moving capital between platforms.
The Odds Reference dashboard displays cross-platform prices side by side for shared events, making divergences immediately visible. When platforms agree closely, the consensus price is more reliable. When they diverge significantly, it signals genuine uncertainty or a structural difference in how each platform’s participants view the event.
What Are Common Mistakes in Reading Prediction Market Odds?
Treating prices as votes. A contract at $0.70 does not mean 70% of participants think the event will happen. It means the marginal dollar of capital values the contract at $0.70. A single well-informed trader with significant capital can move the price more than a thousand small participants.
Ignoring liquidity. A $0.90 price on a market with $500 in total volume carries far less information than $0.90 on a market with $5 million in volume. Always check volume and open interest before treating a price as meaningful.
False precision. A price move from $0.51 to $0.53 on a thin market is noise. On a liquid market, the same move represents a genuine shift in the market’s assessment. The number of decimal places in the price does not determine how seriously you should take it.
Key Takeaways
- Prediction market prices directly express probability: $0.63 = 63% implied chance
- Yes and No contracts are complementary and sum to approximately $1.00 (the gap is the spread)
- Multi-outcome markets require normalization to get accurate probabilities
- Cross-platform comparison reveals market confidence — convergence means consensus, divergence means uncertainty
- Volume and liquidity determine how seriously to take any given price