How does Kalshi work? Event contracts, explained

Will CPI come in above 3%? Will the Fed cut in March? Every market on the exchange is a yes-or-no question of that shape, carrying a written settlement rule and a price that moves as the market's estimate moves. What follows is the whole mechanism — how event contracts are priced, how the order book works, how settlement and fees land — with one worked trade followed from open to payout. If the instrument itself is new to you, start with what prediction markets are and how a price becomes a probability.

Contracts: YES, NO, and prices as probabilities

Each market has a YES side and a NO side — complementary claims on the same $1 settlement. A matched YES price of 38¢ corresponds to a NO price of 62¢, and buying NO at 62¢ creates the same exposure as being short YES at 38¢ (Kalshi implements it as a funded purchase — you pay the 62¢ up front, there's no premium collected). Displayed bids and asks sit around those matched prices, separated by the spread. A price of 38¢ on YES means the market collectively estimates about a 38% chance the event happens. That's the core mental shift from stock trading: you're not valuing a company, you're pricing a probability, and your edge is the gap between your estimate and the market's.

The order book: you trade other people, not the house

Kalshi is an exchange, not a bookmaker. Orders rest in a central limit order book; a trade happens when a buyer and seller meet on price. The practical consequences:

• There's a bid–ask spread — crossing it is a real cost, and in quiet markets it can be several cents.
• Depth matters. The quoted price is good for the size resting at it; larger orders walk the book.
• You can exit early. Selling a contract you own at today's price — rather than waiting for settlement — is how you take profit or cut a loss before the outcome resolves.

Settlement: the rulebook is the contract

Every market names its settlement source and criteria in advance — a specific government data release, a named official result, a stated cutoff time. When the event resolves, the exchange settles the market: winning contracts are credited $1 each, losing contracts expire at $0.

Fees

Kalshi charges a trading fee that scales with price — highest for contracts near 50¢, small near the extremes. It is charged once per order rather than per contract and rounds up to a whole cent, so small orders pay a proportionally higher rate; the rate schedule itself is published on Kalshi's site. Fees are charged on trades, not on settlement — the worked trade above pays 43¢ to enter, and the early exit at 55¢ pays another 46¢ on the way out. For thin edges — consistency trades, near-certain contracts — fee math decides whether a trade is worth placing at all, which is why serious sizing tools compute it before they draft a trade.

How many markets are there?

The count moves constantly — markets open and settle daily — but the shape is stable: hundreds of live events at any time, each carrying one or more markets (a CPI event, for example, lists a ladder of threshold markets), spanning economics and the Fed, politics and elections, weather and climate, crypto prices, company and tech milestones, and culture. Liquidity concentrates in the headline economic and political markets; the long tail is real but thin.

Where the edge comes from

Because prices are probabilities, making money on Kalshi reduces to estimating probabilities better than the crowd on the markets you pick — usually by researching the catalyst harder (what does the data pipeline for this release actually look like?), reading the settlement rule more carefully, or noticing when related markets disagree with each other. That research-then-size loop is exactly what Quantreno's event-market desk automates — catalyst research, probability estimates with stated reasoning, Kelly-based sizing, and a review step where you confirm every order before it places. For the sizing math itself, see our Kelly criterion walkthrough.