How election prediction markets work
How election prediction markets work: the binary contract, what the price means, how races resolve, and the legal and regulatory risks.
Updated November 10, 2026 · Lumina Markets
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An election prediction market turns a race into a binary contract: a question with a yes and a no, a price between 2¢ and 99¢ on Lumina, and a named source that settles it. You buy one side at its quoted price. The contract pays $1 if that side occurs and $0 if it doesn't.
On a $1 contract, a quote of 62¢ is conventionally read as an implied probability of roughly 62%. The quote itself is a transaction price, set by what participants are willing to buy and sell at, so it updates whenever they transact at a different level.
What the price is, and what it isn't
It is the level at which buyers and sellers are currently willing to transact. One participant treats 62¢ as cheap, another as expensive, and the quote sits where they last met.
It isn't a forecast Lumina publishes, a poll, or a prediction. It's a market quote, and how much it tells you depends on the market it came from. How to read a prediction market price covers the spread, volume and settlement details that bear on that.
The market types you'll see
Elections generate several contract shapes, because "who wins" is only one of the things people want to price.
The simplest form. Will a named candidate win a named office? Resolves on the results its rules name. Those rules can let it settle before certification, for example once major news organizations have consistently called the race and no recount or legal challenge is under way.
Which party controls a chamber after the election: not a single race but a threshold across many. See balance of power for how the threshold is defined.
A market on aggregate national preference rather than any individual contest. Which measure the contract names determines how it resolves. See generic ballot.
Will a race be decided by more than a stated number of points? Will turnout clear a stated figure? Same binary structure, with a numeric question in place of a name.
Will a result be certified, called, or contested by a stated date? These reference the process rather than the outcome, so the settlement wording does more of the work.
What resolves an election market
A contract settles on the terms it names, which is not always the same thing as who won the race.
An election produces several things that can each look like "the answer", and they don't arrive together:
- EarliestNetwork and wire-service calls
Typically the earliest signal, and not an official result.
- EarlyUnofficial returns from election authorities
Usually early and incomplete, and generally subject to revision.
- Often weeks laterCertified results
The official result, which in many races arrives weeks later.
- If contestedCourt outcomes
Where a result is contested.
A contract naming certified results and one naming a specific source's call can therefore settle differently, and at different times, on the same race. Where a race is contested, that gap can widen.
For that reason the resolution source and the settlement deadline are the terms to read first on any election contract, before the price and regardless of how clear the race itself looks.
Contracts vs polls: different instruments
Both produce a number about an election. They are not versions of the same thing.
| Poll | Event contract | |
|---|---|---|
| What it measures | Stated intention of a sample, during a field period | The price participants will trade at, right now |
| Updates | When the next poll is published | Continuously |
| Cost of being wrong | None to respondents | Real, to whoever holds the position |
| Known failure modes | Sampling and response bias; a stale field period | Thin volume; correlated views; ambiguous settlement terms, among others |
| What it settles | Nothing; it's an estimate | A contract, on a named source |
The two go wrong in different ways: a poll can misrepresent the electorate it sampled, while a quote can carry little information for reasons that have nothing to do with the race, low volume being one of several.
Where the price comes from and when it moves
The quote comes out of participants' orders rather than from a published figure, and it can move on new public information (a debate, a filing deadline, a candidate withdrawal, a court ruling, a data release) or without any of those, as positions change for reasons that aren't visible from outside.
Two things worth knowing about that movement:
On a thinly-traded contract a single order can shift the quote by several cents, so volume is part of reading any jump.
A move that precedes a news story reflects what someone acted on, which may be analysis, an expectation, or a reallocation, and not necessarily information the reader lacks.
The legal and regulatory risks
- Regulatory and legal risk is ongoing. Event contracts sit in an active area of law. These contracts may be classified as "gaming" under certain state or federal laws, and the regulatory treatment of election-related contracts specifically has been contested.
- Contracts can be terminated. Legal or regulatory action can close a market or terminate a contract before its scheduled resolution, including on non-standard terms, which can mean losing value on a position regardless of whether the view behind it was correct.
- Settlement can be non-standard. Where a result is delayed or contested, or the named source doesn't publish, resolution may not follow the ordinary path or timetable.
- These contracts are not available in all jurisdictions.
- The full amount paid can be lost. A binary contract that resolves against you pays zero.
Lumina facilitates only event contracts that are swaps listed and traded on a CFTC-designated contract market. It does not facilitate trading in any product it determines is unlawful under federal or state law.
Lumina Markets Inc. is a CFTC-registered Introducing Broker and Member NFA (NFA ID: 0576536). Trading event contracts involves substantial risk of loss and is not appropriate for all.
See it live
Prices, history, and the contract terms for each market:
Comparing venues rather than learning the mechanism? Lumina vs Polymarket vs Kalshi.
FAQ
How do election prediction markets work?
Each market is typically a binary contract on a question about an election. It trades between 2¢ and 99¢ on Lumina and, if held to settlement, pays $1 if the stated outcome occurs and $0 if it doesn't. The price is set by supply and demand for the contract; it can be read as an approximate implied probability, but it is a transaction price rather than a measured probability. The contract settles on the resolution source it names.
What does the price mean?
On a $1 contract the price in cents can be read as an approximate implied probability: 62¢ as roughly 62%. That reading is a convention rather than a measurement: the number is the level at which participants are willing to transact, so it reflects supply and demand for the contract, and it typically carries less information on thinly-traded or recently-listed markets. It is not a forecast Lumina publishes.
How is an election market resolved?
On the source the contract names (certified results, a specified authority's returns, or a named call) by a stated deadline. Contracts on the same race can resolve differently and at different times, so the settlement terms are the place to start.
Are election prediction markets the same as polls?
No. A poll measures stated intentions of a sample during a field period; a contract is a price participants transact at continuously, with money at risk. They measure different things.