Event Contract
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In Brief
An event contract is a financial instrument whose payoff depends on whether a specific real-world event occurs by a defined date — the underlying primitive of prediction markets and the regulatory term used by the CFTC for venues like Kalshi.
What Is an Event Contract?
An event contract is a financial instrument whose payoff depends on the outcome of a specific real-world event — for example, "Will the unemployment rate exceed 4% in the next jobs report?" or "Will candidate X win the election?" If the event happens, the contract pays a fixed amount (typically $1); if not, it pays zero.
Event contracts are the underlying primitive of prediction markets. The term is also regulatory — used by the U.S. Commodity Futures Trading Commission (CFTC) to classify the products offered by venues like Kalshi — and is increasingly used onchain by platforms like Polymarket, Predict.fun, and Hyperliquid (HIP-4).
How Does an Event Contract Work?
A contract is defined around a clearly-stated event with a resolution date and a resolution source.
The contract issues two complementary positions: "Yes" and "No," each priced between $0 and $1.
Traders buy and sell these positions, either via an order book or an automated market maker.
As new information emerges, prices move to reflect the updated probability of the event.
At resolution, the designated source determines the outcome.
The winning side pays $1 per contract; the losing side pays $0.
Key Features of Event Contracts
Defined Payoffs
Outcomes are binary (Yes/No) or categorical, with payoffs known in advance.
Probability Pricing
Contract prices, between 0 and 1, are read directly as the market's implied probability of the event.
Resolution Source
Every event contract specifies how it will be settled — a public data source, an oracle, or a designated authority.
Tradable Mid-Cycle
Unlike a sportsbook bet that's locked in at placement, event contracts can be bought and sold continuously until resolution.
Onchain or Off-Chain
Onchain event contracts settle via smart contracts and oracles; off-chain venues like Kalshi use centralized infrastructure under CFTC oversight.
Event Contracts vs Binary Options
| Feature | Event Contract | Binary Option |
|---|---|---|
| Underlying | Real-world event | Asset price at expiry |
| Counterparty | Other traders (peer-to-peer) | Often the broker |
| Regulation | CFTC event contracts / smart contract | Often grey-market or banned |
| Continuous trading | Yes — until resolution | Limited |
| Onchain version | Polymarket, Predict.fun, HIP-4 | Rare |
Use Cases
Hedging real-world risk (a business hedging against a regulatory ruling, a campaign hedging against an electoral outcome)
Information discovery — using event-contract prices as crowd-sourced probability forecasts
Speculation on news, politics, macro data, and sports
Composability — onchain event-contract tokens can be building blocks for other DeFi products
Availability
Event-contract platforms operate under different regulatory frameworks across jurisdictions. Some are CFTC-registered (Kalshi); some are decentralized and access-restricted in the U.S. and other countries (Polymarket, Hyperliquid). Check each platform's terms before trading.
Event Contracts and Trust Wallet
Trust Wallet offers native in-app access to onchain event-contract platforms — Polymarket, Predict.fun, and Hyperliquid (HIP-4) — letting users trade event outcomes from a self-custody wallet without an exchange account. Availability varies by region.