Payout

The payout structure of a prediction market contract is fixed at creation. For a Binary Market, a YES share purchased at $0.65 implies a 65% probability of the event occurring. If the event occurs and the market resolves YES, that share pays exactly $1, generating a $0.35 profit per share. If the event does not occur, the share pays $0, resulting in a $0.65 loss. This fixed payout structure means the Contract Price at any moment represents the markets consensus estimate of the probability, since rational traders will price shares at the Expected Value of the $1 payout. After Market Resolution, the platform or smart contract executes Settlement and credits the payout to each traders account automatically.

Not all markets pay binary $1 or $0 outcomes. A Scalar Market pays a value proportional to where the final result falls within a predefined range. For example, a market on US unemployment might pay between $0 and $1 depending on the exact reported rate. Additionally, when a market is declared Invalid Market, all positions typically receive $0.50 per share regardless of their YES or NO stance, returning capital proportionally to all traders. On Kalshi, the platform may also invoke Rule 6.3 to settle at the last traded price in ambiguous situations. Understanding the payout mechanics before entering a trade is essential for accurate Expected Value calculations and sound Bankroll Management.