Product
Market Resolution
Definition
Market resolution is the process by which a prediction market contract is settled once its event is decided: the venue determines the outcome under the contract's written rules, using a named source, and pays out on winning positions, typically 1 dollar per winning contract and nothing on losing ones. The rules set out the event being measured, the source of truth (such as the governing league for a sports result or an agency for an economic data release), the timing, and what happens if the event is postponed, abandoned or ambiguous.
On Kalshi, a CFTC-regulated exchange, the exchange determines outcomes under each contract's terms once the source agency publishes a result, which can take from about an hour to more than twelve hours after a market closes. Polymarket uses UMA's Optimistic Oracle, in which a proposed outcome becomes final unless challenged within a short window, with disputes escalating to a vote of UMA token holders.
Key takeaways
- Market resolution is how a prediction market decides and settles a contract's outcome under its published rules.
- Every contract names a source of truth, such as the league for a sports result, and rules for postponements and edge cases.
- Regulated exchanges such as Kalshi determine outcomes themselves under contract terms; Polymarket uses a decentralised oracle with a dispute process.
- Unclear resolution rules are the most common source of disputes and reputational damage for prediction markets.
Worked example
Two illustrative resolution scenarios, based on published rules.
Postponed game on a regulated exchange. A football totals contract names the governing league as its source. Under one set of Kalshi contract terms, if the game is postponed but rescheduled within 48 hours of the original date, the market stays open. If it is suspended before 55 minutes of play and not resumed within 48 hours, unresolved markets settle at the last fair price determined by the exchange rather than at 0 or 1 dollar.
Oracle-based market. On Polymarket, a proposer posts a bond (typically 750 dollars) with an outcome. If no one disputes it within a two-hour challenge window, the outcome stands. If disputed, the matter can go to a vote of UMA token holders lasting about 48 hours. In rare cases where no outcome clearly applies, each token can redeem for 0.50 dollars.
Why it matters
Resolution is where a prediction market's promise to pay meets reality, so the quality of its rules is a core product and compliance asset. A sportsbook's equivalent is bet settlement, governed by house rules on results sources, dead heats and void bets. Prediction markets face harder cases because they list contracts on speeches, politics, culture and data releases, where outcomes can be genuinely ambiguous.
On a CFTC-regulated exchange, resolution terms form part of the contract listed with the regulator, so ambiguity is a regulatory issue as well as a customer service one. On oracle-based venues, resolution depends on the incentives of bond posters and token holders, which raises questions about who decides an outcome and whether large holders can sway a vote.
For B2B partners, resolution design affects data contracts and risk. Sports contracts rely on timely, accurate official league data, and postponement rules determine exposure when events move. Partners distributing an exchange's event contracts inherit its resolution disputes with their own customers. The prediction markets course covers contract design in more depth.
Market Resolution vs Bet Settlement
| Market Resolution | Bet Settlement |
|---|---|
| Settles a traded contract under rules written into the contract itself and, on a regulated exchange, listed with the CFTC. Edge cases may settle at a last fair price or 50-50 rather than being voided. | Settles a bet with a bookmaker under the operator's house rules and the gambling regulator's requirements. Edge cases usually lead to a void bet with stakes returned. |
Customers moving between sportsbooks and prediction markets assume the same treatment of postponements and errors. They often get a different result, which drives complaints.
The bottom line
Market resolution is the rule-based process that decides and settles a prediction market contract. Clear sources, timing and edge-case rules are essential, because ambiguity is the main cause of disputes and loss of trust.
Sources
- Market Outcomes - Kalshi Help Center
- FOOTBALLTOTALS contract terms - Kalshi
- Resolution: UMA Optimistic Oracle - Polymarket documentation
Frequently asked questions
How are prediction markets resolved?
Each contract states what event it measures, which source determines the result and when it settles. After the event, the venue applies those rules: a regulated exchange such as Kalshi determines the outcome itself using the named source agency, while Polymarket relies on UMA's Optimistic Oracle, where a proposed outcome becomes final unless disputed. Winning contracts then pay out, typically 1 dollar each.
What happens to a prediction market if a game is postponed?
It depends on the contract's rules. Under one set of Kalshi football contract terms, a market stays open if the game is rescheduled within 48 hours of the original date. If a game is suspended early and not resumed within 48 hours, markets that cannot be decided settle at the last fair price set by the exchange. Always check each contract's specific terms.
Who decides the outcome of a Polymarket market?
Polymarket uses UMA's Optimistic Oracle. Anyone can propose an outcome by posting a bond. If no one challenges it during a two-hour window, it becomes final. If it is disputed, it can escalate to a vote of UMA token holders that takes about 48 hours, with bonds going to whichever side the vote supports. Ambiguous cases can resolve 50-50.
Market resolution vs bet settlement: what is the difference?
Both decide who wins, but under different frameworks. Bet settlement follows a bookmaker's house rules and gambling regulation, and edge cases are often voided with stakes returned. Market resolution follows the contract's own terms, which on a regulated exchange are part of the listed contract, and edge cases may settle at a last fair price or split payout instead of being voided.