# Prediction market odds explained: from price to probability

> A 30¢ prediction market price means about a 30% chance. How to read prices, bid and ask, fees, and convert American, decimal and fractional odds.

Sep 29, 2026 · Markets · Sikt Intelligence · https://www.siktintelligence.com/blog/prediction-market-odds-explained

**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

| Price of a Yes contract | Implied probability | If it happens, $1 pays | Profit per contract |
|---|---|---|---|
| 5¢ | 5% | $1 | 95¢ |
| 30¢ | 30% | $1 | 70¢ |
| 50¢ | 50% | $1 | 50¢ |
| 90¢ | 90% | $1 | 10¢ |

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](/blog/event-contracts-explained).)

For how these contracts are traded and settled, see [how prediction markets work](/blog/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](/odds), 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](https://www.covers.com/betting/prediction-sites/polymarket-vs-kalshi)). 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:

| Format | Example | Formula | Implied probability |
|---|---|---|---|
| American (underdog) | +300 | 100 ÷ (300 + 100) | 25% |
| American (favorite) | −200 | 200 ÷ (200 + 100) | 66.7% |
| Decimal | 4.00 | 1 ÷ 4.00 | 25% |
| Fractional | 3/1 | 1 ÷ (3 + 1) | 25% |

**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](https://www.karlwhelan.com/Papers/Kalshi.pdf)). See [the favorite-longshot bias](/blog/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](/blog/base-rates-forecasting).

Every one of these checks is built into our live odds pages, for example the [2028 Democratic nominee odds](/odds/2028-democratic-nominee-odds) or [Fed rate odds](/odds/fed-rate-cut-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](https://www.karlwhelan.com/Papers/Kalshi.pdf)
- Covers: [Polymarket vs. Kalshi: Comparing Promos, Pricing, Fees & More](https://www.covers.com/betting/prediction-sites/polymarket-vs-kalshi)
- Wikipedia: [Odds](https://en.wikipedia.org/wiki/Odds)