How a prediction market resolves
A contract settles on the terms it names: the source, the measure, the timing and the fallback. What each one decides, and what happens when one is misread.
Updated November 10, 2026 · Lumina Markets
On this page
Every contract settles on the terms it names. Most of the time those terms and the news agree, and nobody has cause to notice there was a distinction.
The exceptions are what this is about. A payroll figure clears a threshold on first print and no longer clears it two months later. An award goes to one name on stage and another in the official record. A company reaches the public markets by a route the wording didn't anticipate. In each case the contract paid on what it said, and what it said was readable beforehand.
The four terms every settlement rests on
A fully specified contract generally names four things, whatever its subject. Each one is written into the contract rather than given by the world, and each has its own way of being misread.
Who publishes the number or declares the outcome. A statistical agency, an exchange, an awarding body, an election authority, a named index. Where two plausible sources exist (an announcement and an official record, one venue and a composite index), naming one is what makes the contract determinate. See resolution source.
Which figure from that source. A release can contain several: headline and core, adjusted and GAAP, seasonally adjusted and not. Two contracts naming the same source and different measures are different contracts.
Which publication, at which moment, and at which vintage. A first print and a later revision are different numbers with the same name. A price at an instant and a price averaged over a window behave differently. Where a deadline falls between two candidate moments (pricing and first trade, announcement and certification), this is the term that answers which one counts, though it does so together with the source and the measure rather than on its own.
What happens if the named source doesn't publish on schedule. Releases get delayed and suspended; ceremonies and decisions get rescheduled. A contract without a fallback provision has a gap; one with a fallback has an answer that may not be the one a reader assumed.
Who decides, and what you're entitled to know
Settlement isn't discretionary in a well-specified contract: the terms determine it. But someone applies those terms, and the regulator treats knowing who and how as a customer right rather than a courtesy.
The CFTC's customer-education material on prediction markets and event contracts (opens in new tab) lists, among the rights of participants, entitlement to timely and transparent information about trading rules and contract terms, including payout, prices, and how settlement determinations will be made, who decides, and how. The same material notes that designated contract markets act as self-regulatory organizations, establishing and enforcing rules against fraud, manipulation and unfair trading practices.
In practice: the settlement terms should be readable before you take a position, and a contract whose terms aren't clear is worth a second look.
When the answer arrives in more than one form
The general pattern behind most settlement surprises: a real-world outcome produces several candidate answers that don't arrive together, and they can differ.
Both authoritative, occasionally divergent, as in the 2017 Best Picture misannouncement, where the two disagreed for about two and a half minutes. → awards
Payroll estimates are revised twice in the following two months; seasonally adjusted CPI is revised on a rolling five-year window. → economic data
Three answers to one election, arriving days or weeks apart. → elections
With many venues quoting the asset, a crypto contract names one source and either samples it at an instant or averages it over a window, and the two diverge on a volatile day. → crypto prices
A traditional offering, a direct listing and a SPAC merger all end with a public company. → IPOs
In each case the world produced more than one defensible answer, and the contract had already chosen which one counted.
Non-standard settlement, and termination
Two things the four terms don't cover.
Settlement can be non-standard. Where an outcome is delayed, disputed, or the named source doesn't publish, resolution may not follow the ordinary path or the ordinary timetable.
A contract can be terminated before it resolves. Legal or regulatory action can close a market or terminate a contract, including on non-standard terms, which can mean losing value on a position regardless of whether the view behind it was correct. This one isn't visible in the settlement terms, because it doesn't come from them.
What reading the terms does and doesn't do
Reading the source, measure, timing and fallback before the price removes one class of surprise: being right about the world and wrong about the contract.
It doesn't remove the rest. A revision, a delayed release, a rescheduled decision or a regulatory action is outside any participant's control, and no amount of diligence converts an uncertain outcome into a certain one. A binary contract that resolves against you pays zero.
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.
Category specifics
The four terms apply everywhere; what they contain differs by subject. How different market categories work compares them side by side.
FAQ
How do prediction markets resolve?
On the terms the contract names: a source, a measure, a timing rule and a fallback. The outcome as generally understood and the outcome as the contract defines it usually coincide; where they don't, the terms govern.
Who decides the outcome?
The contract's terms do, applied against the named source. The CFTC treats knowing how that determination is made and who makes it as a customer entitlement, so it should be available before you take a position.
What happens if the data is revised after settlement?
It depends on the vintage the contract names. A contract settling on a first print isn't affected by a later revision; one naming a revised figure is. That's the timing term.
What if the source never publishes?
The contract's fallback provision governs. Releases can be delayed or suspended and decisions rescheduled, which is what a fallback exists for, though the answer it gives may not be the one a reader would have assumed.