What Are Event Contracts? The 2026 Beginner's Guide
The Short Answer
An event contract is a derivative that pays a fixed amount if a stated event happens and nothing if it does not. On Kalshi, ForecastEx and Polymarket US it settles at $1 or $0, so 63 cents reads directly as a 63% implied probability. The CFTC describes these as typically structured as swaps, listed on designated contract markets where the exchange never takes the other side. Robinhood, Webull, Interactive Brokers and CME Group each route to a different set of those exchanges.
Most people asking what are event contracts arrived from a brokerage app, not from crypto. A tile appears next to your equities, priced in cents, looking like a stock quote and a wager at once. The mechanics come from options, the subject matter comes from the news, and the regulator is the one that supervises corn futures. "Event contract" is the regulated term; "prediction market" is what the crypto side calls the venue.
Key Takeaways
- A standard event contract settles at $1 or $0. Each cent of price equals one percentage point of implied probability, and Yes plus No always sums to a dollar.
- The CFTC treats them as swaps on designated contract markets, and says regulated exchanges and brokers do not take a side of the trade.
- The dollar cap is not universal. Kalshi's perpetual futures are margined and can be liquidated, so the most you can lose is not always what you paid.
What Are Event Contracts in Trading Terms?
Strip away the subject matter and you have a binary instrument. Buy a Yes contract at 40 cents and you receive $1 if the event resolves your way and nothing if it does not. A hundred of them puts $40 at risk with a $100 ceiling. ForecastEx, an Interactive Brokers affiliate and one of three exchanges IBKR routes to, quotes the same way, $0.01 to $0.99. It also passes the interest it earns back to members as an Incentive Coupon, so a ForecastEx price is not a like-for-like read against Kalshi's. Kalshi quotes 0 to 100 cents, each cent 1% of implied probability, with Yes and No moving inversely. Whole cents are the standard display increment, but Kalshi's FIX documentation supports sub-penny precision on order entry, so the cent is a convention rather than a hard floor.
You need not hold to expiry: a position bought at 40 cents can be sold at 55, like closing an option early. Markets close when the outcome occurs or at a set time, and Kalshi says settlement typically lands within about three hours. Two asterisks on the tidy dollar rule. Combination markets settle separately from their legs and can resolve at odd values such as $0.70. And Kalshi's perpetual futures line is margined and liquidatable, so "worst case, I lose what I paid" does not cover everything these exchanges list.
Why the CFTC Calls These Derivatives, Not Bets
The regulator's own explainer is blunt: event contracts are typically structured as swaps, derivatives whose value comes from an event rather than a traditional commodity. Section 5c(c)(5)(C) of the Commodity Exchange Act gives the CFTC power to prohibit certain types of event contracts, which presumes jurisdiction to begin with. Venues are approved as designated contract markets. None of this is new: HedgeStreet, later acquired by IG Group and renamed Nadex in June 2009, became the first CFTC-designated contract market offering binary options back in 2004, and Dodd-Frank expanded the framework in 2010.
The line worth memorising is the CFTC's point that regulated exchanges and brokers do not take a side of the trade. Kalshi says the same from the other direction: you trade against another member, not the exchange. No house, no margin baked into a line. That is the real difference from a sportsbook, and we cover the rest in prediction markets versus sports betting.
On 4 February 2026 the CFTC withdrew its June 2024 proposed rule on event contracts and its September 2025 sports contracts staff advisory, saying it does not intend to issue final rules. Any guide describing a pending federal ban is describing a document that no longer exists.
Where Event Contracts Actually Trade
The distinction that trips people up is exchange versus broker: Robinhood, Webull and Interactive Brokers hand you an interface and route the order elsewhere. Robinhood routes to KalshiEX, ForecastEx and Rothera; it co-owns Rothera with Susquehanna and has been migrating flagship markets there since June. Webull is simpler, connected to Kalshi since a February 2025 partnership, its orders landing on Kalshi's book. Our Kalshi versus Robinhood comparison covers the trade-offs.
| Route | Exchange behind it | Worth knowing |
|---|---|---|
| Robinhood | KalshiEX, ForecastEx, Rothera | Co-owns Rothera; no public API |
| Webull | KalshiEX only | Kalshi partnership since February 2025 |
| Interactive Brokers | Kalshi, CME Group, ForecastEx | One screen, routes to best net price |
| CME Group | Its own exchange | Futures-based, plus sports since December 2025 |
| Kalshi, Polymarket US | Their own exchanges | Direct account, full KYC |
The under-reported entry is Interactive Brokers. On 14 May 2026 it launched a single interface for trading Kalshi, CME Group and ForecastEx side by side, showing fees across venues and routing to the best net price. No other broker we know of aggregates three exchanges. ForecastEx is an IBKR affiliate rather than a third party, and access is limited to eligible clients. Our Kalshi fee breakdown explains the pricing formula these exchanges share.
How CME's Event Contracts Are Built
If you came from a futures platform the vocabulary changes, but the payout will look familiar. CME's futures-based event contracts are cash-settled, European-style binary options on futures, listed on E-mini equity index futures and EUR/USD among other underlyings. Per CME Rulebook Chapter 23 they settle at $1.00 in the money and $0.00 out of it, quoted in minimum increments of $0.01, expiring to the underlying future's daily settlement price. Older guides quote a $20 contract with a 0.25 tick, taken from CME listing notices from 2022 and 2023. If those are the figures you found elsewhere, check the live chapter at cmegroup.com/rulebook/CME/I/23.pdf before trading against them.
CME is also no longer futures-only. Sports event contract swaps have been listed since 6 December 2025 under notice SER-9634, covering professional basketball, professional and college football, hockey and men's college basketball. A further clearing notice effective 22 January 2026 added college basketball totals, tennis singles champions and football touchdown markets. On 13 February 2026 CME said its event contracts had passed 100 million traded since the December 2025 launch, a milestone covering the whole line rather than sports alone. The retail front door has been FanDuel Predicts, a CME joint venture live since December 2025. Reporting in early August 2026 says FanDuel is moving its sports contracts to Crypto.com while CME keeps the financial listings. That is days old at the time of writing, so check Flutter Entertainment's investor releases for where it actually landed.
Sports Event Contracts Are the Contested Part
A sports event contract is structurally identical to any other: a binary claim on an outcome, priced as a probability, traded against other participants. Legally it is the most argued-over corner of the market, because state gaming regulators see a bet where federal law sees a swap.
On 6 April 2026 a divided Third Circuit panel affirmed Kalshi's preliminary injunction against New Jersey two to one, holding that sports event contracts on CFTC-regulated exchanges are swaps and that the Commodity Exchange Act preempts state gaming rules: KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir.). Then a district court went the other way. In July 2026 Judge Analisa Torres in the Southern District of New York denied Kalshi a preliminary injunction against the New York State Gaming Commission, finding no preemption, and later declined emergency relief pending appeal. That is not a circuit split, whatever the headlines said. The Third Circuit remains the only appellate court to have ruled, and Torres sits outside it. Appeals are pending in the Second, Fourth, Sixth and Ninth Circuits. Availability varies by state, dockets move faster than guides do, and none of this is legal, tax or financial advice.
Frequently Asked Questions
What are event contracts on Robinhood?
The same instrument, delivered through a brokerage app rather than an exchange account. Robinhood does not run one venue behind them: orders route to KalshiEX, ForecastEx and Rothera, an exchange it co-owns with Susquehanna. Commissions are price-scaled rather than flat at the time of writing, with a Gold discount, plus exchange fees. There is no public API.
What are event contracts on Webull?
Webull's event contracts are powered by Kalshi. Under a partnership announced in February 2025 Webull said it would become a Kalshi clearing member, and customer orders route onto Kalshi's order book, so prices and settlement rules are Kalshi's. We found no evidence it routes to ForecastEx, CME or Rothera, so treat it as single-exchange and check current fees in the app.
What are event contracts in trading?
Binary derivatives on real-world outcomes, which the CFTC describes as typically structured as swaps. Most pay $1 if the event occurs and $0 if it does not, and each cent of price equals one percentage point of implied probability. Maximum loss on a standard contract is what you paid, which is not true of margined products such as perpetual futures.
What are CME event contracts?
Two families now. The futures-based ones are cash-settled, European-style binary options on futures, listed on E-mini equity index futures and EUR/USD among other underlyings. Per CME Rulebook Chapter 23 they settle at $1.00 or $0.00 with a minimum price increment of $0.01, expiring to the underlying future's daily settlement price. Older guides quote a $20 contract with a 0.25 tick from 2022 and 2023 listing notices, so check the live chapter. Since December 2025 CME has also listed sports event contract swaps.
What are sports event contracts?
Binary contracts on sporting outcomes, mechanically identical to any other event contract but legally the most disputed. On 6 April 2026 the Third Circuit held in KalshiEX LLC v. Flaherty that these are swaps, preempting New Jersey's gaming rules. In July 2026 a federal judge in New York reached the opposite conclusion against Kalshi, though one district court disagreeing with a court of appeals is not a circuit split. Appeals are pending elsewhere, and nothing here is legal advice.
Conclusion
The instrument is simple: a dollar of payout, a price that reads as a probability, a counterparty who is another trader. Everything complicated sits one layer up: which exchange your broker routes to, which state you live in, which court ruled most recently. Read your platform's own disclosures for anything that carries money, treat fee and availability claims as perishable, and take none of this as financial, tax or legal advice. If you would rather watch prices across venues than inside one app, our guide to prediction market data sources is where Predictefy starts.