Prediction contract outcomes: yes/no, categorical and scalar

A concrete scenario you can follow

A local mayoral race on November 3 provides a handy example. The site running the markets creates three contracts on the same underlying event:

1. A Yes/No contract: “Incumbent re-elected by 23:59 UTC on Nov 4?” Price: $0.62 (62¢).
2. A categorical contract: “Winner: Candidate A / Candidate B / Candidate C.” Current prices: A $0.55, B $0.30, C $0.15.
3. 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).

In simple terms, each contract type expresses a different question about the same event. Keep these numbers in mind — we’ll run them through actual payouts and edge cases below.

Calculating payouts when you buy a Yes contract

Here's the basic idea for a Yes/No contract: a Yes contract pays $1 if the stated event happens and $0 if it does not. Prices are quoted in dollars (or cents) and act like implied probabilities.

If a Yes contract costs 62¢ and pays $1 if the event happens, buying one contract costs $0.62. If the event happens, the contract pays $1, so the gain before fees is $0.38. If the event does not happen, the contract expires at $0, so the loss is $0.62.

A simple example using our scenario:

• You buy 1 Yes contract for $0.62 that pays $1 if the incumbent is re-elected.
• If the incumbent wins (officially certified), you receive $1 and your net profit is $0.38.
• If the incumbent loses, you receive $0 and your loss is $0.62.

The key thing to know is this: the Yes price reflects the market consensus of the probability the event will occur. Buying at 62¢ buys you that implied probability as exposure to the outcome.

What happens with categorical and scalar contracts (worked numbers)

Categorical contracts are simply a set of mutually exclusive Yes contracts — one per possible outcome. If you buy the “Candidate A wins” categorical contract for $0.55, it behaves like the Yes contract above: it pays $1 if A wins, $0 otherwise.

Scalar contracts settle to a number. Many platforms pay a dollar amount equal to the settled value normalized to a $0–$1 scale (for percent-based scalars, divide by 100). So if a scalar contract is “Incumbent vote share” and it settles at 52.3, the contract pays $0.523.

Using our earlier prices, imagine the official certified results are:

• Candidate A wins with 52.3% of the vote.

Here is a small table that maps the three markets to the payouts you’d see.

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.

Resolution windows, ties and ambiguous wording

Markets define how they will be settled before you trade. Typical components of a resolution rule 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).
• How to handle partial data (e.g., provisional ballots) and recounts.

Platforms also publish tiebreaker rules. Common tiebreakers include:

• Use the certified result after any mandatory recount completed within the resolution window.
• If a true tie is certified, contracts that depend on a single winner may be voided or split according to platform policy.
• If multiple authoritative sources disagree, the contract will specify a primary source or an ordered list of sources.

What if the question is conditional or ambiguously worded? If the contract says “by Nov 4” versus “at any point,” that changes settlement drastically. The platform typically looks only at the exact phrasing and the predefined sources. If wording leaves room for dispute, many platforms pause trading and request a moderator ruling. The key thing to know: read the resolution clause before you buy.

How the maths shifts if the price moves before resolution

Before settlement, price changes reflect updated consensus probability or numeric expectation. A Yes contract moving from $0.62 to $0.45 changes the immediate arithmetic of the buy-and-hold case.

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 is $0.38.
• If you had waited and bought at $0.45, your profit (if the incumbent wins) would be $0.55 instead of $0.38. The market move doesn’t change the eventual settlement; it changes the price you pay and therefore your profit or loss.

Another way to view price movement is expected value. If the market now prices the Yes at $0.45, it implies the market estimates a 45% chance. Buying at a lower price improves expected return against the same settled outcome. Always compare your buy price to the current market price and think about how much the market would have to be wrong for you to be profitable.

Disputes, refunds and stopped settlement

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.
• Split settlements if the wording calls for it.

If you’re tracking an event close to the deadline, expect trading to stop and moderators to announce their plan rather than letting an ambiguous result auto-resolve.

Where to go next

• What Are Prediction Markets?
• What Are Yes/No Contracts?
• How to Read Prediction Market Prices
• How Prediction Market Payouts Work