Glossary
Event contract
An event contract is a tradable agreement that pays a fixed amount, often one dollar, if a stated event happens and nothing if it does not. Because the payout is fixed, its price maps directly to a probability: a contract trading at 63 cents implies the market sees about a 63 percent chance.
On a prediction market, you are not placing a bet with a house at fixed odds. You are buying and selling a contract with other traders, and the contract is the unit everything else is built on. Each one is tied to a clearly defined outcome and settles for a set amount if that outcome occurs, or for zero if it does not.
The elegant part is what the price tells you. If the maximum payout is one dollar, then the price is just the probability wearing a dollar sign. A contract changing hands at 41 cents is the crowd saying, with real money behind it, roughly 41 percent. Sell that same contract and you are effectively taking the other side at about 59 percent.
Because the two sides of a binary market are mirror images, their prices tend toward a hundred cents combined, unlike sportsbook odds where the totals run over because of the vig. That does not mean the market is right, only that its current consensus is legible.
Price is an estimate, not a promise
A contract priced at 63 cents is a live estimate that can move as new information arrives. It reflects what traders currently believe, not what will actually happen. Any figure here is hypothetical.
Reading a price as a probability, using implied probability, is the first habit of trading these markets well.