Prediction contract outcomes: yes/no, categorical and scalar
How three contract types map to real events, with a single worked example you can follow from price to payout.
By Top Prediction Markets EditorialReviewed October 26, 20265 min read
Answer first
Prediction contract outcomes map to real events in three common ways: Yes/No (binary), categorical (multiple exclusive outcomes) and scalar (numeric measurements). Each contract type settles to a value set by the market's resolution rules — typically an authoritative source and a deadline — and that settled value determines the $0–$1 payout a contract holder receives.
The core difference in one paragraph: probability vs. which outcome vs. how much
Yes/no contracts ask a binary question and pay $1 if the event happens, $0 if it does not — their price is an implied probability. Categorical contracts are just a set of mutually exclusive Yes contracts, one per possible winner. Scalar contracts settle to a number (for example a percentage) and pay an amount proportional to that number on a $0–$1 scale. Each format expresses a different question about the same event and therefore exposes you to different settlement mechanics and edge cases.
Quick side‑by‑side comparison
This table puts the three contract types next to each other using real numbers from the example below.
| Property | Yes / No | Categorical | Scalar |
|---|---|---|---|
| Question form | “Incumbent re‑elected by 23:59 UTC on Nov 4?” | “Winner: Candidate A / Candidate B / Candidate C” | “Incumbent vote share (percentage)” |
| Settlement domain | {0, 1} → $0 or $1 | {one winner} → $0 or $1 | Any real number between 0 and 100 → $0.00–$1.00 |
| Example current price | $0.62 (62¢) | A $0.55, B $0.30, C $0.15 | market mid‑price 48.0 (48¢ on a $1 scale); buy price shown below $0.48 |
| How a single contract pays | $1 if event happens, else $0 | $1 if that candidate wins, else $0 | Pays the settled percent divided by 100 (e.g., 52.3 → $0.523) |
| Best when you care about | “Will it happen?” | “Which specific outcome?” | “How big will the outcome be?” |
| Typical edge cases | ambiguous timing, tie rules | which candidate counts as “winner” | rounding, how partial counts (provisional ballots) affect a numeric value |
A concrete, worked example across all three markets
A local mayoral race on November 3 makes this concrete. The site running the markets creates three contracts on the same underlying event:
- A Yes/No contract: “Incumbent re-elected by 23:59 UTC on Nov 4?” Price: $0.62 (62¢).
- A categorical contract: “Winner: Candidate A / Candidate B / Candidate C.” Current prices: A $0.55, B $0.30, C $0.15.
- A scalar contract: “Incumbent vote share (percentage).” This contract settles to a number between 0 and 100. Current market mid-price: 48.0 (i.e., 48¢ on a $1 scale).
If you buy 1 Yes contract at $0.62, it costs $0.62. If the incumbent is officially certified as re‑elected, it pays $1 and your net before fees is $0.38; if not, it expires at $0 and your loss is $0.62. That same behavior applies to a categorical ticket for Candidate A if you buy the “A wins” contract at $0.55 — it pays $1 if A wins, $0 otherwise.
A scalar settles differently. Many platforms pay a dollar amount equal to the settled percentage divided by 100. If the certified result is:
- Candidate A wins with 52.3% of the vote,
then the scalar “Incumbent vote share” settles at 52.3 → pays $0.523.
Here is the exact mapping from those markets to payouts for one contract each:
| Contract | Buy price | Settlement value | Payout to 1 contract | Net gain/loss (before fees) |
|---|---|---|---|---|
| Yes: “Incumbent re-elected” | $0.62 | Yes → $1 | $1.00 | +$0.38 |
| Categorical: “A wins” | $0.55 | A wins → $1 | $1.00 | +$0.45 |
| Scalar: “Incumbent vote share” | $0.48 | 52.3 → $0.523 | $0.523 | +$0.043 |
Common mistake: treating scalar payout like a Yes/No. A scalar can pay any value between $0 and $1, not just $0 or $1; that difference materially changes risk and reward.
Where wording, resolution windows and tie rules actually affect what you get
Markets must define settlement rules before trading. Typical components are the authoritative source (for example, the city elections office certified results), a cutoff or resolution deadline (for example, within 7 days of the election), and how to handle partial data (e.g., provisional ballots) and recounts.
Platforms also publish tiebreaker rules. Common tiebreakers include using the certified result after any mandatory recount within the resolution window; if a true tie is certified, contracts that depend on a single winner may be voided or split per platform policy; and if multiple authoritative sources disagree, the contract will specify a primary source or an ordered list.
If a contract’s phrasing changes the measurement — “by Nov 4” versus “at any point” — that changes settlement drastically. If wording leaves room for dispute, many platforms pause trading and request a moderator ruling. The practical rule: read the resolution clause before you buy, because the exact wording and listed sources determine what counts.
If market prices move before settlement, what actually changes for you
Price movement before settlement doesn’t change how a contract will finally pay; it changes the arithmetic of any trade you make before resolution.
Example: you bought the Yes contract at $0.62. Later the market moves to $0.45.
- If you hold to resolution and the incumbent wins, your payout is still $1 and your profit remains $0.38.
- If instead you had bought at $0.45 and the incumbent wins, your profit would be $0.55.
A lower entry price improves your nominal profit if the same settled outcome occurs. Another way to view price movement is expected value: a Yes priced at $0.45 implies a 45% chance in market consensus. Buying at a lower price improves expected return against the same settled outcome, but always compare your buy price to the current market price and consider how large the market would have to be wrong for you to be profitable.
Disputes, refunds and what happens when settlement is stopped
If the platform’s resolution process finds the question unresolvable under its rules, outcomes include a moderator ruling that picks an authoritative source and a settlement value, void/invalidation of the market and refund of stakes, or split settlements if the wording calls for it.
If you’re tracking an event close to a deadline, expect trading to stop and moderators to announce their plan rather than letting an ambiguous result auto‑resolve. Read the market’s published resolution policy and watch moderator updates during close or contested results — that’s when these provisions get applied.
Related reading
Frequently asked questions
What does a Yes contract pay if the event doesn’t happen?
It pays $0; you lose the purchase price of the contract.
How does a scalar contract determine its payout?
It settles to the numeric value defined by the contract (for example, percent vote share). The payout is that value normalized to the contract’s $0–$1 scale.
If two official sources disagree which one decides settlement?
Resolution follows the contract’s listed authoritative source(s). If the contract doesn’t specify, the platform’s resolution policy applies and moderators will choose per their rules.
What happens if the result is a tie?
Rules vary by platform: some markets are voided and funds refunded, others use a predefined tiebreaker. Check the market’s resolution clause.
Are resolved markets reversible if a recount changes results?
Platforms typically follow the certification policy in the resolution rules. If the contract’s rules require waiting for certification, recounts that change certified results will change settlement; if not, they may not.
Related guides
Beginner Guide
How to Read Prediction Market Prices
Learn what a prediction market price represents, how to read it as an implied probability, and what practical things (like spreads and liquidity) change how you should use that number.
Beginner Guide
How Prediction Market Payouts Work
Learn what a payout is, how prices map to expected payouts, and a simple worked example showing the math when you buy a Yes contract.
Beginner Guide
What Are Prediction Markets?
Prediction markets are markets where people buy contracts that pay out if a future event happens. Prices reflect the crowd’s best estimate of the chance an event will occur.