How Prediction Markets
Resolve
Every prediction market contract specifies in advance exactly how and when it will resolve. Understanding resolution mechanics (who decides, what data they use, and what happens in edge cases) is essential before you trade. This guide covers resolution across Kalshi, Polymarket, and PredictIt, with real case studies including the Khamenei market.
Objective data vs judgment-based resolution
Resolves based on a specific official data source. No human judgment required: when the data releases, the contract settles automatically or semi-automatically.
Resolves based on a committee's interpretation of publicly available information and stated contract criteria. More flexible but introduces resolution risk on edge cases.
How each platform resolves markets
Kalshi
- Resolution is handled by Kalshi's internal resolution team using the criteria specified in each contract.
- Objective markets (Fed rate, CPI) resolve automatically or semi-automatically from official data feeds as soon as data releases.
- Judgment markets (elections, geopolitical) are reviewed by the team within hours of the determining event.
- Kalshi publishes resolution criteria in the contract details before the market opens. Read these before trading on ambiguous events.
- Disputes: Kalshi has a stated dispute window post-resolution. Escalation to CFTC is available for CFTC-regulated contract disputes.
Polymarket (QCEX / on-chain)
- Original Polymarket uses UMA protocol oracles for resolution. Market creators post resolution criteria; UMA token holders vote if the result is disputed.
- QCEX (US-licensed) has its own resolution process: details follow CFTC-compliant procedures for designated contract markets.
- Oracle-based resolution is more transparent (on-chain audit trail) but slower than centralized resolution.
- Disputes on Polymarket go through UMA's dispute escalation mechanism, which can take 2–5 days to fully resolve.
- Major markets (US elections, mainstream political outcomes) have had clean resolution historically.
PredictIt
- PredictIt resolves markets manually via its admin team.
- Resolution criteria are posted in each market's description page. Criteria are sometimes vague on edge cases.
- Resolution typically occurs within 1–2 days of the determining event.
- PredictIt has had some resolution controversies, particularly on ambiguous political language ("will X be president by Y date" when X took office slightly before Y date).
- Disputes can be submitted to PredictIt admin. There is no direct CFTC resolution escalation for PredictIt's no-action-letter-covered markets.
The Khamenei market: how an edge case played out
Kalshi operated a market: "Will Ali Khamenei remain the Supreme Leader of Iran until [date]?" with over $54M wagered on YES (he would remain). On February 28, 2026, US-Israeli strikes killed Khamenei. Kalshi declined to pay out the YES side, citing internal rules against markets that resolve due to the death of the market subject. All stakes were refunded to both YES and NO holders at cost. YES holders who believed death constituted "ceasing to be Supreme Leader" filed litigation: arguing they should have been paid out as winners.
What this case teaches us about resolution
Read the resolution criteria before trading
Kalshi's internal rules excluded death-related resolutions. This was not prominently disclosed to all traders. Before placing large positions on geopolitical or personal status markets, read the full resolution criteria in the contract details page.
Edge cases happen on unusual outcomes
The Khamenei market was designed around political removal (coup, resignation, incapacitation). Death by external military action was an unanticipated resolution path. Any market on a person's status faces this edge case.
Stakes were returned — this wasn't fraud
Kalshi refunded all stakes when it declined to resolve. The controversy is about whether they should have paid YES rather than voided. No funds were lost or misappropriated: the platform handled an ambiguous situation by returning capital.
Regulatory frameworks matter
Because Kalshi is CFTC-regulated, the litigation has a clear legal venue. YES holders can pursue their claim in court with CFTC contract rules as the framework. On an unregulated platform, this recourse would not exist.
What to do if you think a market resolved incorrectly
- 1 Document everything immediately
Screenshot the contract details page, the resolution criteria, and the official data or news source you believe supports your position. Do this before the page updates: resolution pages sometimes display differently post-resolution.
- 2 Submit a dispute via the platform's process
Kalshi: contact support with your dispute within the stated window (check current terms, typically 24–72 hours post-resolution). Polymarket: if using UMA, the dispute mechanism is on-chain. PredictIt: email support with your evidence.
- 3 Cite the specific criteria
Don't just say "I think you got this wrong." Quote the exact resolution criteria language and explain specifically how the official data or outcome meets or doesn't meet those criteria. Resolution teams respond to precise contractual arguments, not general complaints.
- 4 Escalate to the CFTC if unresolved (Kalshi/QCEX)
For CFTC-regulated platforms (Kalshi, Polymarket QCEX), if the platform's internal process doesn't resolve your dispute satisfactorily, you can file a complaint with the CFTC at cftc.gov. The CFTC has enforcement authority over designated contract markets.
- 5 Consider litigation for large amounts
For disputes involving significant sums (the Khamenei case involved millions), litigation in federal court is an option for CFTC-regulated exchange contracts. Seek a lawyer with derivatives or commodities experience.
Common questions about resolution
How do prediction markets resolve? +
Based on criteria stated in the contract before the market opens. Objective markets (Fed rate, weather) use official data sources automatically. Judgment markets (elections, events) use a resolution committee reviewing public information against the stated criteria. Resolution typically occurs within hours to days of the determining event.
What happens if a prediction market resolves incorrectly? +
Submit a dispute via the platform's process with specific evidence citing the contract criteria. For CFTC-regulated platforms (Kalshi, Polymarket QCEX), you can ultimately escalate to the CFTC. For large amounts, federal litigation is available.
What happened with Kalshi's Khamenei market? +
Kalshi declined to pay out YES after Khamenei's death in US-Israeli strikes, citing rules against death-related resolutions. All stakes were refunded. YES holders filed litigation arguing death constitutes removal from power. The case is ongoing as of May 2026.
Is Polymarket's oracle resolution reliable? +
Historically yes: major markets (elections, referenda, mainstream political outcomes) have resolved cleanly. Edge cases on ambiguous contracts have occasionally produced disputes. UMA's dispute mechanism provides a transparent on-chain process but can take several days for contested resolutions.
More educational guides
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From implied probability to orderbooks: the complete beginner's guide.
RiskInsider trading on prediction markets
The Fort Bragg prosecution and how to stay on the right side of the law.
StrategyStrategy & bet sizing
Kelly Criterion, finding edge, and how to think about probability.