Jeremy BraginPrices and probability
What a price tells you, and how to compare it across venues. The odds converter turns any price into sportsbook odds.
Event contract
A contract that pays $1 if a stated event happens and $0 if it does not. The whole category is built on this one instrument.
Implied probability
The chance a price assigns to an outcome. On a prediction market it is the price itself: a 62¢ contract implies 62%. Sportsbook odds have to be converted first.
Yes price / No price
The price of the contract that pays on the event happening, and of the one that pays on it not happening. The two sum to roughly $1; the Yes price reads as the probability.
Consensus
On our cross-venue pages, the mean Yes price across every venue that quotes the question, reported with the venue count, because one venue is not a consensus.
Cross-venue spread
The gap between the highest and lowest Yes price for the same question on different venues, the difference a single venue will never show you.
Calibration
How well prices match outcomes across many markets. If contracts at 70¢ resolve Yes about 70% of the time, the market is well calibrated.
Trading terms
How orders meet, and what decides the price you actually get.
Bid and ask
The best price a buyer is offering (bid) and the best price a seller will accept (ask). You buy at the ask and sell at the bid.
Spread
The gap between the best bid and best ask. You pay it on every round trip, on every venue, and no fee schedule lists it.
Volume
The dollar value of contracts traded over a period, usually the last 24 hours. It measures activity, not how much is still at stake.
Open interest
The value of contracts currently held and not yet settled, a measure of how much money is committed, distinct from how much traded today.
Liquidity
How much you can trade near the current price before moving it. A thin book means a large order pays a worse average price than the one quoted.
Maker and taker
A maker posts an order that rests on the book; a taker fills against one that is already there. Venues often charge takers and not makers.
Limit order
An order to buy or sell at a stated price or better. It fills only if the market reaches that price, and rests on the book until then.
Market order
An order that fills immediately at the best available price. Fast, but on a thin book it can fill well away from the quoted price.
Arbitrage
Buying and selling the same outcome on two venues to lock in a gain from their price gap. After fees and the spread, true arbitrage is rare.
Combo
One contract that pays only if several outcomes all happen, like a sportsbook parlay. It is priced as a single contract, not as separate legs.
Fees and margins
The costs a quoted price does not show. Our fee comparison works them out for every app, and the payout calculator applies them to your own trade.
Quadratic fee
A fee proportional to price × (1 − price): largest at 50¢, near zero close to 0¢ or $1. Both venues that publish a schedule use this shape.
Overround (vig)
The amount by which a sportsbook’s implied probabilities for all outcomes exceed 100%. It is the book’s margin, paid on whichever side you take.
Rules, settlement and regulation
Who decides the result, who regulates the exchange, and what the courts are arguing about. The legal guide has the current state of play.
Resolution source
The named source a venue settles against. Two venues can word the same question differently and settle differently; the wording decides who gets paid.
Settlement
The point at which a contract’s outcome is decided and it pays $1 or $0. You can usually sell before settlement at the current price.
Close-only
A restriction that lets you exit positions you already hold but not open new ones: how some venues treat restricted countries.
Designated contract market (DCM)
An exchange registered with the CFTC. Contracts on a DCM are federal derivatives, which is the basis of the legality argument, and the point states dispute for sports.
CFTC
The Commodity Futures Trading Commission, the US federal regulator for derivatives exchanges, including those that list event contracts.
Oracle
The mechanism a blockchain market uses to report a real-world result. On an optimistic oracle, a proposed result stands unless someone disputes it in time.
Clearinghouse (DCO)
A derivatives clearing organization: the CFTC-registered entity that stands between buyer and seller, holds the collateral and pays winning contracts.
Swap
A kind of derivative defined in the Commodity Exchange Act. Whether a sports event contract counts as one is the question the federal appeals courts split on.
Preemption
The principle that federal law can override state law. Exchanges argue the Commodity Exchange Act preempts state gambling law for their contracts; states disagree.
Geofence
A location check that blocks trading from a place. Apps use them to switch off contracts where a court order or their own policy says so.
Self-certification
How a CFTC-regulated exchange lists a new contract: it certifies the contract meets the rules, and trading can start unless the CFTC steps in.
No-action letter
A letter in which CFTC staff say they will not recommend enforcement against a described activity. The Iowa Electronic Markets and PredictIt both ran on one.