Settlement Source
Definition
The settlement source is the specific data provider, publication or authority named in an event contract's rules as the basis for determining the outcome, such as an official statistics agency, a league's statistics, or a price feed. The CFTC says customers are entitled to know 'how settlement determinations will be made, who decides, and how.' The named source governs even when other reports disagree.
Why it matters
Traders often bet on what they think happened, but contracts pay on what the named source says, at the time and in the form the rules specify. Investors should identify the source before trading, check how it publishes and whether it revises, and treat any mismatch with common reporting as a real risk.
Common misconceptions
- •News reports and social media do not settle contracts.
- •A price feed's average over a window can differ from the last trade anywhere.
- •A source that later corrects itself may not change a settled market.
- •The label is only a starting point. Investor outcomes usually depend on the governing documents, cash-flow priority, valuation policy, disclosure quality, and manager discretion surrounding the term, not just the shorthand definition used in marketing materials.
Technical details
Checklist
Name of the source and the exact series, table or feed.
Which release counts: first, revised or final.
Observation window and time zone.
Fallback if the source does not publish.
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 source determines who wins an event contract?
- The one named in its rules. Polymarket's rules specify a 'resolution source,' for example 'official announcements, specific websites.' Kalshi relies on 'a source agency (for example, official league statistics, government releases, or other event authorities) to publish finalized results.'
- What about price markets?
- They use a defined feed and window. Polymarket's up-down markets resolve on a Chainlink time-weighted average price: 'The TWAP at the start sets the price to beat. When the duration ends, the TWAP at that time sets the final price.' A price on another exchange or at a different instant does not count.
- What if the source is late or wrong?
- The rules decide. Kalshi says that if source data 'is delayed or revised, we may wait before settling, depending on the market rules.' On Polymarket, a proposed outcome can be disputed during the challenge period.