Categorical market
Last reviewed 2026-08-07
Categorical market — definition
A market with more than two mutually-exclusive outcomes — e.g. which candidate wins, or which school takes the top ranking.
Categorical markets split a question into multiple binary sub-markets, one per outcome. Their prices should sum to roughly $1.
When prices sum noticeably above $1, there's an arbitrage. When they sum below, it's usually a thin book.
Learn more: Event contracts explained: what they are and how they work
See also
Frequently asked questions
What does categorical market mean in prediction markets?
A market with more than two mutually-exclusive outcomes — e.g. which candidate wins, or which school takes the top ranking.
How does categorical market work in practice?
Categorical markets split a question into multiple binary sub-markets, one per outcome. Their prices should sum to roughly $1.
Sources & further reading
- CFTC — Event contracts explainedU.S. Commodity Futures Trading Commission
- Kalshi — how prices and settlement workKalshi
- UMA Optimistic Oracle documentationUMA Protocol
Last reviewed 2026-08-07 · CollegePredictionMarkets.com