Basics·5 min read
Reading probability prices: a 5-minute primer
Why 62¢ is the same as +61 in American odds, and why you'll never want to go back.
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Sources & further reading
Every figure and legal claim on this page traces back to a primary source. These are the ones we checked, open them and verify us.
- CFTC: Commodity Futures Trading Commission
The federal regulator that authorizes and supervises every event-contract exchange we cover.
- CFTC designated contract markets registry
Official list of registered exchanges, where we verify a platform's DCM status.
- Commodity Exchange Act (7 U.S.C. § 1 et seq.)
The federal statute that preempts state gambling law for event contracts.
- National Council on Problem Gambling
Free, confidential help and self-assessment tools (1-800-522-4700).
Frequently asked questions
What does a 62¢ contract mean?
- It means the market thinks there's a 62% probability the event happens. If you buy and the event occurs, you collect $1. If not, you lose your 62¢.
How do I read a probability price?
- Read the price straight off the contract: cents equal percent. A contract at 60¢ is a 60% implied chance, a contract at 29¢ is a 29% chance, and YES plus NO always add up to 100¢ on a CFTC-regulated exchange. No conversion math required.
Why are probability prices clearer than American odds?
- Probability prices show the market's exact view with no hidden margin. YES and NO add up to exactly 100¢ on a CFTC-regulated exchange. American odds bake in a 4-5% vig that obscures true probability.
Do YES and NO always add to 100¢?
- Yes, by construction. If YES is 62¢, NO is 38¢. The platform charges a small disclosed fee per fill instead of hiding it inside the price.
What is the bid-ask spread on prediction markets?
- The difference between the highest buy order and lowest sell order. Deep markets like Super Bowl winner often run a 1¢ spread; thin or far-future markets can run 5-10¢ wide.
Can I sell my position before the event resolves?
- Yes. Anytime liquidity exists, you can sell back into the order book and lock in gains or cut losses, something traditional sportsbooks rarely allow cleanly.
How do I calculate the potential profit on a 40 cent contract?
- A 40 cent contract represents a 40 percent implied probability. If the event occurs, the contract pays out 100 cents. To find your profit, subtract the purchase price from the payout. In this case, a 40 cent investment yields 60 cents in profit, representing a 150 percent return on the capital risked.
What is the difference between a limit order and a market order in prediction markets?
- A market order buys contracts immediately at the current best available price. A limit order allows you to specify the exact price you are willing to pay, such as 55 cents. In California, using limit orders is recommended to avoid paying more than your target probability price during periods of low volume.
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