How Kalshi Works: Prediction Markets Explained in Plain English

Kalshi is a regulated U.S. exchange where people buy and sell yes-or-no contracts on real events. Will it snow more than four inches in Central Park this Saturday? Will the Fed cut rates at the next meeting? Will a given movie open at number one? Each of those is a contract, and each contract pays out either one dollar (if the answer ends up YES) or zero (if the answer ends up NO). That's the whole game.

So if a contract pays a dollar when YES happens, what should it cost right now? That's where the price comes from. The price is whatever buyers and sellers agree on, and it moves between zero and one hundred cents. A contract trading at sixty cents is the crowd saying "we think this is roughly a sixty-percent shot." Twenty cents is "probably not, but not crazy." Ninety cents is "almost certainly yes." The price doesn't tell you what's going to happen — it tells you what the crowd, betting real money, currently thinks the odds are.

Who runs it, and is it legal?

Kalshi is a designated contract market regulated by the U.S. Commodity Futures Trading Commission (CFTC). That's the same agency that regulates corn and oil futures. The contracts Kalshi lists are event contracts — futures whose payoff depends on whether a real-world event happens. You can fund an account, buy and sell contracts during normal hours, and when the event resolves, Kalshi settles every contract at one dollar or zero based on the official outcome. There's no brokerage middleman. The exchange is the venue.

How a market settles

Every market has a written resolution rule that tells you, in plain language, exactly what counts as YES. For weather markets that's usually a number from NOAA or the National Weather Service. For elections it's the certified result. For sports it's the official scoreline. The resolution rule matters more than people think — if you don't know what makes a contract settle YES, you don't actually know what you're holding. Bubba's reads always start by reading the rule, because plenty of "obvious" trades fall apart when you discover the rule only counts a very specific source or window.

Why the price is the crowd's best guess at the odds

Imagine a contract that pays a dollar if it rains tomorrow. If you and I both think the odds are exactly fifty-fifty, neither of us wants to pay more than fifty cents — and neither of us wants to sell for less. So the price will settle near fifty. Now imagine new information comes in: the National Weather Service raises the rain chance to seventy percent. Buyers will start paying more, sellers will demand more, and the price drifts toward seventy. The price is the running consensus of everyone with skin in the game. That's why prediction-market prices can be surprisingly sharp — they're not opinions, they're bets.

But "the crowd is usually right" isn't "the crowd is always right." Crowds can be slow to update. They can be wrong about base rates. They can over-react to one viral headline. That's the gap Bubba looks for — places where the crowd's price and a careful read of the actual evidence aren't pointing at the same number. See what an edge actually means for more on that.

What you can actually do on Kalshi

Pick any market, place a limit or market order, and you've got a position. If you change your mind, you can sell out before the event resolves. If you hold to settlement, the contract pays one dollar per YES contract if YES happens, zero otherwise. Kalshi charges a small fee per contract — see our fee breakdown for the simple version. That's it. No leverage, no margin calls, no options chains. One contract, one question, one binary outcome.

Where Bubba's Edge fits

Bubba's Edge doesn't trade. Bubba reads any Kalshi market in seconds, names every source, prices the question with his own model, and shows the gap vs. the crowd. You decide what to do with it. Every Bubba call is graded against the real Kalshi settlement on the public ledger, so you can see the record before you trust the read. Start in the markets browser, or jump straight to the Biggest Gaps page.