When regulators banned binary options, the payoff structure did not disappear. It moved onto exchanges. An event contract settles at 100 or at zero depending on whether something happened — the same binary outcome, on a venue that is supervised and where the operator is not your counterparty.
The scale is no longer marginal. Kalshi reported roughly $52 billion in cumulative contract volume by March 2026 and was valued at about $22 billion across funding rounds in 2025 and 2026, with sports accounting for more than 85% of its volume. Polymarket processes over $2 billion annually.
How this differs from a binary option
| Binary option | Event contract | |
|---|---|---|
| Counterparty | The broker | Another market participant |
| Venue | The broker's own platform | A designated exchange |
| Who profits from your loss | The broker, directly | Nobody; the venue earns fees either way |
| Pricing | Set by the broker | Set by the order book |
| Supervision | Usually none | CFTC, for US venues |
| Typical duration | 60 seconds upward | Days to months |
The row that matters is the third one. Almost every structural complaint about binary options — pricing nobody could audit, expiries that landed one tick against the client, retention staff steering positions — traces back to the broker being on the other side of the trade. An exchange removes that.
Where the law currently stands
In the United States, event contracts are legal on a CFTC-designated contract market. Nadex, approved in 2004 as the first such venue, established the route; Kalshi now dominates the volume. The boundary is being litigated: the CFTC declared exclusive jurisdiction in February 2026, several state gaming regulators have argued that sports event contracts are wagering, and the CFTC sued three states in April 2026. A proposed rule issued on 10 June 2026 would rework Rule 40.11.
For residents of countries that banned binary options, an event contract on a US exchange is generally not accessible either — the venues restrict non-US participants. Check your jurisdiction.
Why this section carries no sponsored links
Neither Kalshi nor Polymarket operates a publisher affiliate programme. Both run user referral schemes that require substantial personal trading before they unlock. Publishing a personal referral link on a finance site would be a disclosure problem, so we do not. This section exists because the questions are real, not because it earns.
Frequently asked questions
Are event contracts the same as binary options?
The payoff is the same shape: a contract settles at 100 or at 0. What differs is the market structure. A binary option is written by the broker, who takes the other side of your position. An event contract trades on an exchange between participants, with the venue matching orders rather than taking a position. That single difference removes the conflict of interest that caused most of the harm in binary options.
Why is the price the probability?
Because the contract pays $1 if the event occurs and nothing if it does not, its price is the market’s implied probability, less fees. A contract at 63 cents is the market pricing a roughly 63% chance. This is the same relationship as the delta of a digital option — see our page on the Greeks.
Is this legal in the United States?
Yes, on a CFTC-designated contract market. That is the crucial qualifier: off-exchange binary options offered to US persons remain unlawful. The perimeter is contested — the CFTC asserted exclusive jurisdiction over event contracts in February 2026, sued Arizona, Connecticut and Illinois in April 2026 over state regulation attempts, and proposed amendments to Rule 40.11 on 10 June 2026.
Can I get an affiliate link for Kalshi or Polymarket?
Not as a publisher. Kalshi runs a user referral scheme that unlocks after 100 trades and caps out at $1,000; Polymarket gates its affiliate link behind $10,000 of personal lifetime volume. Neither is a publisher programme, which is why this section carries no sponsored links to either.
What about outside the United States?
Brazil’s B3 is introducing prediction-style derivatives structured as binary options on the US dollar, the Ibovespa and bitcoin, initially restricted to professional investors holding more than R$10 million. Polymarket is reachable across much of the Gulf. Most other jurisdictions have no framework yet.
Risk warning: binary options are high-risk speculative instruments and most retail accounts lose money. Nothing on this page is investment advice or a recommendation to trade.