Event contracts are an asset class that give investors the ability to trade directly on their opinions about a specific yes-or-no question.

Event contracts offer direct exposure to or a hedge to a wide range of risks including inflation, fed rates, debt ceiling, recessions, student loans, politics, climate and weather, and more.

Event contract trading occurs on Kalshi's exchange between other members of Kalshi. Investing in an event contract on Kalshi means investing in your opinion about a particular topic, global event, or trend. As an investor, you buy contracts based on whether you believe the answer to the market question will be YES or NO.

Contract structure and trading mechanisms

An event contract is $1 denominated: it pays $1 if an event happens, and $0 if it does not. Traders can buy event contracts at any price between $0 and $1. Event contract markets are phrased as simple yes/no questions. For example, “Will the Fed raise interest rates next month?”. Users place orders on either the Yes or the No side and choose a price to purchase the contract between 1c and 99c. When there is a Yes order and a No order on both sides where the prices sum to $1, a trade is formed. When the event happens or doesn’t happen, based on criteria clearly defined in our contracts up front, the $1 is given to whoever was right.

The price that a given event contract trades at is actually the market’s assessment of the probability that the event will happen. If something happens that should increase the probability, people will start paying more for Yes contracts, raising the price.

A burgeoning ecosystem

Kalshi’s 2020 regulatory approval followed by the launch of the exchange in January 2022 opened up the market, as the first regulated exchange to offer event contracts. With the regulatory clarity provided, the space is now rapidly growing, with retail investors, trading firms, investment advisors, market makers, and financial brokers beginning to trade event contracts.