What Are Event Contracts? A Plain-English Guide
Event contracts are CFTC-regulated financial instruments that pay $1 if a real-world event happens and $0 if it doesn't. They're not bets, not stocks, and not options, and they're legal in California. Here's how they actually work.
On this page
- What is an event contract?
- How is an event contract different from a sports bet?
- What can event contracts be written on?
- Who regulates event contracts?
- Where do event contracts trade?
- Are event contracts legal in California?
- How do you make money trading event contracts?
- Are event contract winnings taxable?
- Where to go next
- Keep reading
- Sources & further reading
TL;DR:
An event contract is a binary financial contract that resolves to $1 (YES) or $0 (NO) based on whether a specified real-world event occurs by a specified date. The price between $0 and $1 reflects the market's estimate of the event's probability. Event contracts are regulated by the federal Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act: the same regulator that oversees CME interest-rate futures. California residents (minimum age 18 on most of these apps, 21 on Novig; we recommend 21+) can trade event contracts on Kalshi, Polymarket, ProphetX, OG and Novig even though state-licensed sportsbooks remain illegal in California; courts are still deciding whether state gambling law can apply to sports contracts. Categories listed: politics, macro/economics, sports, climate/weather, culture/entertainment. Profits are taxable at federal and California state level (top CA marginal rate 13.3%); Kalshi provides a profit-and-loss statement for your trades.
An event contract is a financial instrument that pays $1 if a specified real-world event happens and $0 if it doesn't. They trade on CFTC-regulated exchanges like Kalshi and Polymarket, and the price between $0 and $1 reflects the market's estimate of the event's probability.
Event contracts aren't bets, aren't stocks, and aren't options. They're a federally regulated commodities product. Which is why a California resident can legally trade them when state-licensed sportsbooks remain illegal here.
What is an event contract?
An event contract is a binary financial contract: it resolves to either $1 (YES) or $0 (NO) based on whether a specified real-world event occurs by a specified date. The price you pay between zero and one is your maximum loss per contract; the difference between your buy price and the resolution value is your profit or loss.
Concrete example. Kalshi lists a contract: "Will the Federal Reserve cut interest rates at the June 2026 FOMC meeting?" If the YES contract trades at 42¢, the market thinks there's a 42% chance the Fed cuts. You buy 100 YES contracts at 42¢. Total cost $42, max loss $42. If the Fed cuts, each contract pays $1. You collect $100, profit $58. If they don't, each contract pays $0. You lose $42.
How is an event contract different from a sports bet?
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CAPREDICTS
Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.
Last checked October 5, 2026
A sports bet is a wager you place against a sportsbook (the house). An event contract is a position you take against another trader on an exchange. That structural difference is why event contracts are federally regulated as commodities. And why sportsbooks are state-licensed gambling products.
| Event Contract | Sports Bet |
|---|---|
| Counterparty | Sportsbook = the house sets the line and takes the other side. Event contract = another trader takes the other side; the exchange just matches orders. |
| Pricing | Sportsbook books vig into every line (typically 4-6% theoretical hold). Event contract markets charge explicit, smaller fees. And prices move continuously with order flow, not by oddsmaker decree. |
| Exit | Sportsbook bets usually settle at outcome, limited cash-out windows. Event contracts trade like stocks, you can sell back into the order book any time before resolution. |
| Regulator | Sportsbooks = state gambling commissions. Event contracts = the federal Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act. |
| Where you can use them | Sportsbooks are state-by-state. California has none legal. Event contracts are CFTC-regulated, legal in 47 states plus D.C., California included. |
What can event contracts be written on?
Almost any verifiable real-world outcome with a clear settlement source. The CFTC reviews each contract category before listing; the categories that have been authorized are broad.
| Category | Examples |
|---|---|
| Politics and elections | presidential, congressional, gubernatorial, mayoral, ballot measures. |
| Macro and economic data | Fed interest-rate decisions, monthly CPI inflation, jobs reports, GDP, recession probability. |
| Sports | outright winners, match outcomes, season win totals, player props, championship futures. |
| Climate and weather | temperature thresholds, hurricane landfalls, wildfire acreage, snowpack levels. |
| Culture and entertainment | Oscars, Emmys, Grammys, box-office openings, awards-season outcomes. |
What can't be listed: contracts the CFTC determines are contrary to public interest: historically that includes contracts on assassination, terrorism, war declarations, and a handful of similar edge cases.
Event contracts are federally regulated commodities, not bets. That's why a California resident can legally trade them on Kalshi and Polymarket while state sportsbooks remain illegal.
Who regulates event contracts?
Ready to trade?
Kalshi: The regulatory leader.
Sign up at KalshiCertain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.
The Commodity Futures Trading Commission (CFTC): the same federal regulator that oversees CME interest-rate futures, wheat futures, and crude oil derivatives. Event contracts are listed on CFTC-designated contract markets (DCMs), the same legal status as the Chicago Mercantile Exchange.
The CFTC's authority comes from the Commodity Exchange Act (7 U.S.C. § 1 et seq.). Platforms argue that this federal statute overrides state gambling law for products listed on a designated contract market; for sports contracts, federal appeals courts are split. Which is why state sports-betting laws don't apply to Kalshi or Polymarket. For the regulatory backdrop, see our CFTC advisory breakdown and the federal-vs-state lawsuit explainer.
How to trade this
Trade Event Contracts in 3 Steps
- Open an account on a CFTC-regulated exchange like Polymarket. Check out their current sign-up offer to get started with some extra funds.
- Fund your account with a small amount, like $10-$25, for your first trades. This allows you to learn the platform responsibly without significant financial risk.
- Select an event contract market based on your interest, such as interest rate cuts or tech outcomes. Always read the market's resolution rules carefully before placing a limit order.
Where do event contracts trade?
The two largest US-accessible exchanges are Kalshi and Polymarket. Several smaller specialized platforms also list event contracts.
| Platform | Key Features |
|---|---|
| Kalshi | A CFTC-designated contract market since November 2020. Broadest contract coverage. USD funded via ACH/debit. Strongest in politics, macro, weather, and large sporting events. |
| Polymarket | CFTC-regulated since acquiring QCX in 2025. Trades in US dollars. Deepest liquidity on culture/political contracts, strong international flow. |
| Sleeper | Fantasy and pick'em app, not a CFTC-regulated exchange. Check the app for what it offers in California. |
| Chalkboard | Pick'em-style player-prop app (NFL, NBA, MLB, NHL), not a CFTC-regulated exchange. |
| Novig | Peer-to-peer event contract exchange. |
| Rebet | Group-chat sports app. Not available to California residents. |
Side-by-side comparison: Kalshi vs Polymarket.
Are event contracts legal in California?
Available — dispute pending (as of October 13, 2026). Courts are still deciding whether state gambling law can apply to sports event contracts; the 9th Circuit, whose rulings cover California, sided with Nevada against Kalshi at the preliminary stage in August 2026. California residents 21 and older can legally open accounts and trade on every platform listed above.
California has no legal online sportsbook (Propositions 26 and 27 both failed in November 2022). Traditional sports betting from inside California remains illegal. Event contracts are structurally and legally different. See Is Kalshi legal in California? for the full preemption framework, and our California prediction markets guide for the broader picture.
How do you make money trading event contracts?
Two ways: hold to resolution and collect $1 if your side wins, or sell into the order book before resolution at a higher price than you paid.
Resolution profit is mechanical. You bought YES at 42¢, the event happened, you collect $1, profit 58¢ per contract minus exchange fees. Trading profit is mark-to-market. You bought YES at 42¢, news improved your side's odds, the contract now trades at 65¢, you sell at 65¢, profit 23¢ per contract. Most active traders work both modes, exiting positions when the price moves substantially in their favor before resolution.
Costs to subtract: exchange fees (typically a few cents per contract round-trip), the bid-ask spread (1-2¢ on liquid markets, 5-10¢+ on thin ones), and capital opportunity cost (your money is locked in the position until you exit or the contract resolves).
Are event contract winnings taxable?
Yes. Event contract gains are taxable at both the federal level and under California state income tax; the IRS hasn't said how event contracts are classified federally.
Kalshi provides a profit-and-loss statement for your trades. California's top marginal income tax rate is 13.3%. Full California-specific guidance: Prediction market taxes in California.
This isn't tax advice. Consult a California-licensed CPA if your annual prediction-market activity is meaningful.
Where to go next
If you want to trade event contracts, the practical entry points are our How to use Kalshi walkthrough and the first-account opening guide. For platform-by-platform breakdowns: Kalshi review and Polymarket review. For the California-specific legal and tax framework, start with the California prediction markets guide.
Trade responsibly. If it stops being fun, take a break. Call 1-800-GAMBLER or visit ncpgambling.org.
About the author
Catie Di Stefano
Catie Di Stefano has spent 15 years in the regulated gambling industry, starting at Betsson Group in Malta and spending nearly five years at Gaming Innovation Group (GiG) before building an independent consultancy across European and US iGaming brands, including a licensed engagement with Hard Rock Hotel & Casino Atlantic City under a New Jersey DGE vendor license. She's been interviewed by the California Business Journal on the rise of online gambling in the US, and spoke on a 2022 Next.io panel specifically about California's gaming market. She went on to build the OnlineGamblers.com brand and hold marketing director roles at Smartico.ai and Vegas Kings, and has been named to multiple iGamingExpress industry rankings. She now covers regulated prediction markets full-time.
Editorial standards: How we research and rank
Keep reading
- Are Prediction Markets Legal in California? (2026 Guide)
- Sports Betting Apps Legal in California (2026)
- Is Sports Betting Legal in California? (2026 Guide)
Keep the loop going
- This week's biggest price moves across the markets we track.
- Dated log of offer, ranking and state-availability changes so you know how current a page is.
Weekly digest
The weekly California markets email is launching soon. Until then, see this week's biggest moves and site updates.
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 platforms cite as overriding state gambling law for event contracts; courts are still deciding how far it reaches.
- National Council on Problem Gambling
Free, confidential help and self-assessment tools (1-800-522-4700).
Keep reading
Next steps
Top platforms Californians are using:
Kalshi
The regulatory leader.
Sign up at KalshiCertain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.
Polymarket
The world's largest prediction market, now live in the US.
Sign up at Polymarket US18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading is risky. 100% loss can occur. See polymarket.com/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated exchange and clearing organization.
Frequently asked questions
What is an event contract?
An event contract is a binary financial contract that resolves to $1 if a specified real-world event happens by a specified date, and $0 if it doesn't. The price you pay (between $0 and $1) is your maximum loss per contract. The market's price reflects its collective estimate of the event's probability.
How is an event contract different from a sports bet?
Counterparty: a sportsbook is the house and sets the line; an event contract is matched against another trader on an exchange. Pricing: sportsbooks book vig into every line; event-contract markets charge explicit fees and prices move with order flow. Exit: sportsbook bets typically settle at outcome; event contracts trade like stocks and can be sold any time. Regulator: sportsbooks are state-licensed gambling; event contracts are federally regulated commodities.
Who regulates event contracts?
The Commodity Futures Trading Commission (CFTC): the same federal regulator that oversees CME interest-rate futures, wheat futures, and crude-oil derivatives. Event contracts trade on CFTC-designated contract markets (DCMs). Whether states can also apply their gambling laws to sports event contracts is being decided in the courts.
Are event contracts legal in California?
Yes, for now. California residents (minimum age 18 on most of these apps, 21 on Novig; we recommend 21+) can open accounts and trade event contracts on Kalshi, Polymarket, ProphetX, OG and Novig, even though traditional online sportsbooks (DraftKings, FanDuel, BetMGM, Caesars) remain illegal in California. Rebet is not available in California. Courts are still deciding whether state gambling law can apply to sports contracts: the 9th Circuit, whose rulings cover California, sided with Nevada at the preliminary stage in August 2026.
What can event contracts be written on?
Politics and elections (presidential, congressional, gubernatorial, mayoral, ballot measures); macro/economic data (Fed rate decisions, CPI, jobs reports, GDP); sports (outright winners, match outcomes, season win totals, player props); climate and weather (temperature thresholds, hurricanes, wildfires); culture and entertainment (Oscars, Emmys, Grammys, box office).
Where do event contracts trade?
Kalshi (a CFTC-designated contract market since November 2020, broadest contract coverage), Polymarket (CFTC-regulated since acquiring QCX in 2025, trades in US dollars), ProphetX (sports-first), OG by Crypto.com, and Novig (peer-to-peer exchange) are available to California residents. Sleeper and Chalkboard are fantasy and pick'em apps, not CFTC-regulated exchanges. Rebet is not available in California.
How do you make money trading event contracts?
Two ways. Hold to resolution and collect $1 per contract if your side wins. Or sell into the order book before resolution at a higher price than you paid (mark-to-market profit). Most active traders use both modes, exiting positions when the price moves substantially in their favor.
Are event contract winnings taxable in California?
Yes. Gains are taxable at both federal and California state level. Kalshi provides a profit-and-loss statement for your trades. California's top marginal rate is 13.3%. Consult a California-licensed CPA for your specific situation.
Why do event contracts avoid the California sports betting ban?
Event contracts are legally classified as financial derivatives rather than gambling. They are regulated by the Commodity Futures Trading Commission under the Commodity Exchange Act. Since Propositions 26 and 27 only addressed tribal and commercial sports wagering, they did not affect the federal legality of trading CFTC-regulated contracts on inflation, weather, or political outcomes.
Which platform is best for trading political event contracts in California?
Polymarket is currently ranked as the top platform for volume and liquidity in political event contracts. For users who want a downloadable profit-and-loss statement, Kalshi is the primary regulated domestic option. Prediction markets allow Californians to hedge against real-world outcomes by buying contracts that pay out if a specific event occurs.
18+ · T&Cs apply · Terms
Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.
