# Event contract

Also written event contracts, binary event contract.

*https://predictionmarkets.tools/glossary/event-contract · next to Prediction Market Venues*

**Definition:** A contract whose payout depends on whether something happens, usually a fixed amount such as one dollar if it does and nothing if it does not, traded at a price between the two. The CFTC uses the phrase descriptively; it is not a defined term in the Commodity Exchange Act. Here it is the neutral noun for any such position, on a regulated exchange or on-chain, and says nothing about who regulates it.

The designated exchanges in this catalogue list "event contracts", and so, in this catalogue's own words,
does an on-chain order book on Base or Polygon whose terms bar US traders. That is
deliberate. The phrase is the plainest accurate noun for the thing being traded, and the site uses
it precisely because it does not carry a verdict. The mistake is reading a verdict into it anyway.

## How it works

**The mechanics are the same everywhere.** A question with a fixed end — a date, a published
number, a final score — is written down with rules for what counts as Yes. A contract pays a fixed
amount if Yes and nothing if No. The CFTC's own explainer describes them as "often based on yes-no
scenarios", with "a fixed payout (usually $1) and an expiration (either a specific time or the
natural conclusion of the event)". Because the payout is fixed, the price of a contract between
zero and the payout reads directly as the market's probability: 37 cents on a one-dollar contract
is 37 percent.

**The payout is funded by the other side, not by the venue.** On the Polymarket card, one Yes plus
one No always redeems for a dollar, and a winning share redeems for a dollar after resolution. On
a regulated exchange the same arithmetic runs through the clearing house. Either way, a position
bought at 37 cents risks 37 cents to make 63, and the other 63 cents of that dollar came from whoever holds No.

**Names differ by venue, not by mechanism.** Kalshi and the brokers in front of it say contracts.
Polymarket and Limitless say shares, and on-chain they are tokens. A multi-outcome question —
who wins an election with eight candidates — is usually a set of separate Yes/No contracts, one per
candidate, rather than one contract with eight outcomes. That matters when a question is matched
across venues: two markets titled the same can be one contract on one venue and eight on another.

### The phrase is not a legal category

The Commodity Exchange Act does not define it. The CFTC said so in a footnote to its June 2026
proposed rule: "the term 'event contract' is not a defined term in the CEA or the Commission
regulations thereunder", though the Commission has used it since at least 2008 to describe
commodity derivatives, often with a binary payoff, based on the outcome of an occurrence or event.

In the section of the statute that deals with them, the words appear only in headings. 7 U.S.C.
7a-2(c)(5)(C) is titled "Special rule for review and approval of event contracts and swaps
contracts", and its first clause is headed "Event contracts". The operative text under it speaks
of agreements, contracts, transactions or swaps in excluded commodities "based upon the
occurrence, extent of an occurrence, or contingency", listed by a designated contract market or
swap execution facility, and lets the Commission find them contrary to the
public interest if they involve unlawful activity, terrorism, assassination, war, gaming, or other
similar activity it names by rule. A contract so found may not be listed. The legal question is
never "is this an event contract" but which statutory category it falls into, and whether that
category lets a state regulate it — the dispute set out in
[event contract or swap](https://predictionmarkets.tools/guides/event-contract-vs-swap).

## Why it matters here

**It is the word this site uses instead of the contested ones.** Whether a regulated event
exchange is doing something a state may forbid is the question actually being litigated, and the
words a state notice uses for it take a side. The catalogue's house rule is to describe the
instrument — an event contract, a position, a trade — and name the documents that argue about what
it is. When a card says "event contract" about an on-chain venue, it is describing a payoff, not
claiming that venue sits inside the CFTC framework.

**It tells you nothing about who holds your money.** The same one-dollar Yes contract can sit on a
designated exchange you reach directly, on the same exchange through a futures commission
merchant, or in a wallet as a token on a chain. Those three differ on identity checks, on fees, on
who sends a tax form and on who decides the outcome. The card's `markets.settlement` field — cash,
crypto or play money — and its availability block carry that difference; the noun does not. The
exchange side of it is under [designated contract market](https://predictionmarkets.tools/glossary/designated-contract-market).

**It tells you nothing about your state either.** A venue calling its product an event contract
and a state regulator calling it something else can both be acting in good faith, because what the
product is under the Commodity Exchange Act is exactly what is unresolved. Whether it reaches you
is its own question, answered in
[why a venue is unavailable where you are](https://predictionmarkets.tools/guides/why-a-venue-is-unavailable-where-you-are).

**It tells you nothing about the question underneath.** Two contracts with identical titles on two
venues are two contracts: different rules text, different settlement source, different authority
deciding the outcome. The fixed payout makes their prices look comparable, and they are comparable
only after the rules have been read side by side — which is the work described in
[who decides the outcome](https://predictionmarkets.tools/guides/who-decides-the-outcome).

**The price reads as a probability only before costs.** Thirty-seven cents is 37 percent before
the fee, the spread and the months your collateral is locked. A one-dollar contract bought at 97
cents and resolving in eleven months returns three cents, before fees, on capital held for that
long. The fee side is in [what a trade actually costs](https://predictionmarkets.tools/guides/what-a-trade-actually-costs), the
time side in [what your money does while you wait](https://predictionmarkets.tools/guides/what-your-money-does-while-you-wait).

## Where you will meet this

- [Adjacent](https://predictionmarkets.tools/tools/adjacent.md)
- [Crypto.com Prediction](https://predictionmarkets.tools/tools/crypto-com-prediction-markets.md)
- [ForecastEx](https://predictionmarkets.tools/tools/forecastex.md)
- [Kalshi](https://predictionmarkets.tools/tools/kalshi.md)
- [Limitless](https://predictionmarkets.tools/tools/limitless.md)
- [polymarket-client](https://predictionmarkets.tools/tools/polymarket-client.md)
- [Polymarket](https://predictionmarkets.tools/tools/polymarket.md)
- [PredictIt](https://predictionmarkets.tools/tools/predictit.md)
- [Robinhood Prediction Markets](https://predictionmarkets.tools/tools/robinhood-prediction-markets.md)

## Sources

1. [Prediction Markets; Public Interest Determinations, 91 FR 35806 (proposed rule)](https://www.govinfo.gov/content/pkg/FR-2026-06-12/html/2026-11854.htm) — Commodity Futures Trading Commission, 2026-06-12
2. [Understanding Prediction Markets and Event Contracts](https://www.cftc.gov/LearnandProtect/PredictionMarkets) — Commodity Futures Trading Commission, read 2026-09-27
3. [7 U.S.C. 7a-2, Common provisions applicable to registered entities](https://www.govinfo.gov/content/pkg/USCODE-2024-title7/html/USCODE-2024-title7-chap1-sec7a-2.htm) — Office of the Law Revision Counsel, U.S. House of Representatives, read 2026-09-27

*Last updated 2026-09-27. A reference page, corrected in place — not a dated post.*