Contract Specifications
Definition
Contract specifications are the written terms of an event contract: the precise event or measure, the source that determines it, the observation window, the close and determination times, the payout, and how delays, revisions and other edge cases are handled. Polymarket puts it directly: 'The market title describes the market, but the rules define how it should be resolved.'
Why it matters
Most surprises in prediction markets come from the gap between what a market's headline seems to ask and what its rules actually settle on. Traders who are right about the world can still lose the contract. The CFTC says customers are entitled to contract terms including 'how settlement determinations will be made, who decides, and how,' and the rules page is where those answers are.
Common misconceptions
- •The title is not the contract.
- •A market still trading after an event does not mean the outcome is in doubt.
- •An official source can be later, revised or worded differently from news reports.
- •Player, delay and cancellation provisions differ by market and sport.
Technical details
Checklist
Exact wording of the event and any thresholds (greater than, at least, by).
Named source and which version or release counts.
Observation window and time zone.
Close time and determination time.
Payout, including fair-value, 50-50 or partial settlement rules.
What happens on delay, postponement, revision or non-participation.
Example: player markets on Kalshi
In a standard NFL player market, once a player 'participates in at least one play,' the market settles on actual statistics even if the player is later injured or ejected.
Protected player markets can instead settle 'at its fair price prior to the opening kickoff' under stated conditions.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- Which rules should I read before trading an event contract?
- The resolution source, the deadline and the edge cases. Polymarket says its rules 'specify the resolution source, the market end date, and they outline how the market should resolve in various edge-cases.' Kalshi tells traders to 'always check the market's Rules and Important Information sections,' including 'the market's official source and determination criteria.'
- Why might a market stay open after the event seems to be over?
- Because the rules wait for an official source. Kalshi says 'A market remaining open is not an indication that payout criteria have not been met'; it 'often must wait for an official source agency to publish finalized data before closing or determining a market,' and 'Markets are not re-settled because an event appears to have concluded while trading was still available.'
- What is the difference between close time and determination time?
- Close is when trading stops; determination is when the outcome is fixed. Kalshi: 'The market's displayed close time may not equal determination time. Trading can end before or after an event for operational reasons, while settlement occurs once the official result is confirmed by the source agency.' Some rules 'specify a determination time or date' later than when the event appears to end.
- Can the rules change after I trade?
- They can be clarified. On Polymarket, when a market is clarified 'the order book is cleared and all resting orders cancelled at the time of clarification.' Clarification and dispute processes are covered in later pages of this library.