Prediction Markets Explained: Polymarket vs Kalshi

By Dana Kovac · Published 2026-10-07 · Independent review — not affiliated with any exchange

A prediction market is a venue where traders buy and sell contracts tied to the outcome of a real-world event, and the contract’s price doubles as the market’s running estimate of how likely that outcome is. Two names dominate the category in 2026: Kalshi, a CFTC-regulated US exchange, and Polymarket, a crypto-based international platform. Understanding what are prediction markets Polymarket Kalshi how they work explained starts with the mechanics of the contract itself, not with the hype around either brand.

Both platforms use the same basic structure — binary Yes/No event contracts that settle to $1.00 or $0.00 — but they differ sharply on regulation, identity checks and which countries can access them. This piece walks through how the contracts work, how Kalshi and Polymarket differ, and where the real risks sit, without getting into which one you “should” use.

How do prediction markets work in practice?

Every contract on Kalshi or Polymarket is binary: it resolves to Yes or No based on a defined real-world event, will a specific economic data point come in above a threshold, will a named event happen by a stated date, and so on. The contract trades somewhere between 1 cent and 99 cents while the outcome is uncertain, and that price is read directly as the market’s implied probability. A contract trading at 70 cents implies traders collectively see roughly a 70% chance of the Yes outcome, for example.

When the underlying event resolves, every Yes contract pays out $1.00 and every No contract pays out $0.00, or vice versa. There’s no partial settlement and no scaling, you’re either fully right or you lose the full amount you put into that contract. This is the core mechanic that separates prediction markets from leveraged crypto derivatives, where positions can be partially closed, stopped out, or liquidated well before expiry. If you’re used to margin trading, it’s worth brushing up on basics like funding rate and liquidation mechanics at the /glossary/#liquidation entry, because prediction-market contracts don’t behave the same way at all.

What makes Kalshi different from a typical crypto exchange?

Kalshi operates as a CFTC-registered Designated Contract Market, which puts it inside the same regulatory category as traditional US derivatives exchanges, not a gray-market betting site and not a crypto-native platform. Per Kalshi’s help center, because it’s a US exchange regulated by the CFTC, it must confirm the identity of every person who trades. That means document verification: a photo of a government-issued ID, such as a valid and unexpired driver’s license or passport, that’s legible and shows a clear photo. During signup, you also confirm your country of residence. In short, Kalshi is not a no-KYC platform, full stop.

Geographically, per Kalshi’s country page, the exchange is available in 143 countries and restricted in 52. Restricted jurisdictions include Australia, Belarus, Belgium, Canada, France, Italy, Poland, Singapore, Switzerland, Taiwan, Thailand, the UAE, the UK, mainland China, Russia, Iran, Cuba and North Korea, among others, and some third-party lists also add Ireland. That list changes, so don’t treat any cached version (including this one) as current; check Kalshi’s own country page before assuming access. US state availability is also unsettled: one third-party guide lists Arizona, Illinois, Massachusetts, Maryland, Michigan, Montana, New Jersey and Ohio as unavailable at the time it was written, which signals this is a moving regulatory target at the state level too.

On funding, third-party guides describe several deposit paths: ACH bank transfer (1-3 business days, no Kalshi fee), wire transfer (same day, no Kalshi fee, though your bank may charge one), and debit card (instant, with a 2% payment fee). Some guides also mention crypto deposit options, which you’d want to confirm directly in the app rather than assume.

How does Polymarket’s model differ, and what’s close-only mean?

Polymarket runs on crypto rails: per third-party guides, standard use on the international platform doesn’t require identity verification at all. You sign up with a wallet or an email, fund the account with USDC, and start trading. Compliance is enforced mainly through geoblocking rather than onboarding checks, a structurally different approach from Kalshi’s document-based KYC.

The United States sits in a specific category here. Per Polymarket’s own geographic-restrictions documentation, the US is listed as close-only on the international exchange, meaning existing positions can be closed but no new trades can be opened, a status that’s been in place since Polymarket’s 2022 CFTC settlement, according to third-party guides. Separately, Polymarket opened a distinct US exchange (iOS, Android and web, waitlist removed in May 2026 per a third-party guide) where every US account must complete full verification before trading, and USD can be deposited by bank transfer/ACH or stablecoins.

Beyond the US, Polymarket’s documentation lists a long set of close-only jurisdictions on both the frontend and API, including Australia, Belgium, Brazil, Canada (specific provinces), France, Germany, Italy, New Zealand, Poland, Russia, Singapore, Taiwan, Thailand and the UK, among others. A shorter list, Ireland, Japan, Malta (sports only), the Netherlands and South Korea, is close-only on the frontend only. Third-party summaries also note that OFAC-sanctioned territories like Iran, Cuba, Syria and the Crimea/Donetsk/Luhansk regions are blocked outright. Again: confirm current status on Polymarket’s own restrictions page, since these lists are updated on the platform’s schedule, not on a publishing calendar.

It’s worth saying plainly: these restrictions exist for legal and regulatory reasons specific to each jurisdiction, and attempting to route around them (via a VPN or otherwise) violates both platforms’ terms of service. If you’re in a restricted region, the accurate answer is that the platform isn’t available to you there, not that there’s a workaround worth pursuing.

For a closer look at where KYC and geography diverge between the two platforms, see Polymarket KYC and no-KYC regions explained, and for the country-by-country restriction picture across both exchanges, the restricted-countries breakdown.

Kalshi vs Polymarket: side-by-side comparison

Is this the same thing as sports betting or crypto trading?

Not exactly either. Prediction markets resemble sports betting in that both pay out on a binary outcome, but a sportsbook sets its own odds and takes the other side of your bet, while Kalshi and Polymarket let a broad pool of traders set the price by buying and selling against each other, closer to an order book than a bookmaker’s line. Depending on your country or US state, regulators may still classify certain event contracts as a form of gambling rather than a financial instrument, which is part of why the legal map is so uneven right now.

Compared to spot or derivatives crypto trading, the mechanics are simpler but less flexible: no leverage, no partial fills on resolution, and no funding-rate carry cost like you’d see on perpetual futures (you can check how that works at the /tools/funding-rate-calculator/). Some crypto traders watch prediction-market pricing as a sentiment signal, but that’s a research input, not a hedge, and it shouldn’t be treated as one.

One live industry thread worth flagging without overstating it: at TOKEN2049 on October 7, 2026, Polymarket CEO Shayne Coplan discussed the possibility of an on-chain asset tied to the platform’s economy, per CryptoTimes’ coverage. No token, ticker, launch date, contract address or distribution has been announced as of this writing, so treat any claim otherwise as unverified.

Closing notes on using either platform

Both Kalshi and Polymarket involve real financial risk, a losing contract settles to zero, there’s no principal protection, and liquidity on less-popular markets can be thin enough that getting in or out at a fair price is harder than it looks on a liquid contract. Resolution disputes also happen when an event’s outcome is ambiguous, and how each platform handles that is worth reading before you trade a market you care about.

If you’re coming from crypto trading and want the practical walkthroughs rather than just the regulatory comparison, the series continues with a beginner’s guide to using Kalshi and a beginner’s guide to using Polymarket, plus a dedicated Polymarket vs Kalshi comparison for anyone deciding between the two. For official specifics, always check kalshi.com and polymarket.com directly, since rules and regional access shift faster than any guide can track. For broader market context on how crypto exchanges are approaching event-driven products, see Binance’s official site or BYDFi’s official site.

Dana Kovac — Covers trading tools, bots and market structure. Spent four years on a prop trading desk before going independent.