Prediction market odds explained: from price to probability

The rule of thumb: a prediction market price in cents is roughly the market's probability in percent. A Yes contract that pays $1 and trades at 30¢ means about a 30% chance. That is the whole idea, but there are a few details that decide how precise that number really is.

Price = probability, roughly

A No contract is the mirror image: if Yes is 30¢, No is about 70¢. Together they always pay exactly $1. (Each of these is an event contract.)

For how these contracts are traded and settled, see how prediction markets work.

Bid, ask and the "real" price

Most prediction markets use an order book with two prices at any moment:

• The bid: the highest price someone will pay for Yes right now.
• The ask: the lowest price someone will sell Yes for.

If the bid is 28¢ and the ask is 32¢, the market's probability is best read as the midpoint, about 30%. A wide gap between bid and ask is a sign of a thin market, where the price is less reliable. On our odds pages, Kalshi prices are the midpoint when the spread is tight, and the last trade otherwise.

Fees

Fees change the math slightly. On Kalshi, trading fees follow a formula that is highest around 50¢, at about 1.75¢ per contract, and smaller toward the extremes. Polymarket's fees work differently, so check each platform's schedule (Covers). Fees mean that a contract has to be a bit better than its price to be worth buying, which pushes prices slightly away from the true odds.

Converting sportsbook odds to probabilities

Sportsbooks quote odds in other formats. All of them convert to an implied probability:

One catch: the overround. A sportsbook builds its margin into the odds, so the implied probabilities of all outcomes add up to more than 100%, usually by a few percentage points. To get fair probabilities, divide each one by the total. Prediction markets have a much smaller version of this in the bid–ask spread.

Five things that bend the price away from the true odds

1. Long-shot bias. Cheap contracts are systematically overpriced: on Kalshi, buyers of contracts under 10¢ lost over 60% on average (Bürgi, Deng and Whelan). See the favorite-longshot bias.
2. Thin markets. Few traders means a few orders can move the price a long way.
3. Time value. Money locked into a contract that resolves years from now could earn interest elsewhere, which can pull long-dated prices toward 50¢.
4. Different rules. Two markets on "the same" question can have different deadlines or definitions. Always read the rules.
5. Fees and spreads, as above.

Reading odds like a forecaster

• Treat a price as a probability, not a prediction: 70% still fails three times in ten.
• Compare two platforms where you can; a big gap usually means different rules or a thin market.
• Look at the trend, not just today's number.
• Hold the price against a base rate: how often do events like this happen? See base rates.

Every one of these checks is built into our live odds pages, for example the 2028 Democratic nominee odds or Fed rate odds. Nothing here is financial advice.

Key takeaways

• A price in cents is roughly the probability in percent: 30¢ ≈ 30%.
• Read the midpoint of bid and ask; a wide spread means a less reliable price.
• Convert sportsbook odds with 100 ÷ (odds + 100) for plus odds, odds ÷ (odds + 100) for minus odds, and 1 ÷ decimal odds.
• Remove the sportsbook margin by dividing each implied probability by the total.
• Long shots, thin markets, long horizons, rules and fees all bend prices away from the true odds.

FAQ

What does 30 cents mean on a prediction market?

That the market puts the event at roughly 30%. The contract pays $1 if the event happens, so paying 30¢ is a fair price only if the chance is about 30%.

How do you convert American odds to probability?

For plus odds, divide 100 by (the odds + 100): +300 is 100 ÷ 400 = 25%. For minus odds, divide the odds by (the odds + 100): −200 is 200 ÷ 300 = 66.7%.

Why don't the odds add up to 100%?

On sportsbooks, the bookmaker's margin (the overround) pushes the total above 100%. On prediction markets, the gap between buy and sell prices has a smaller, similar effect.

Sources

• Bürgi, Deng and Whelan (2026): Makers and Takers: The Economics of the Kalshi Prediction Market
• Covers: Polymarket vs. Kalshi: Comparing Promos, Pricing, Fees & More
• Wikipedia: Odds