On this page (5 sections)
Content reviewed: 2026-10-13. Examples are hypothetical.
Resolution risk is uncertainty about how a contract's written conditions will be applied. A trader can correctly predict a real-world development yet own a contract that settles differently because it refers to another source, definition or deadline.
Translate the rules into a test
Polymarket's resolution documentation says the rules define the source and edge cases; Kalshi likewise identifies the outcome verification source in its market rules.[1][2] Turn those instructions into a sentence that could be checked by someone who knows nothing about your trade.
| Field | Example of a precise check |
|---|---|
| Measured event | A named index, office, award or official action |
| Threshold | Strictly above 3.0, rather than at least 3.0 |
| Time | A specified date and time zone |
| Source | The exact agency release or designated publication |
| Revision policy | First publication or a later corrected value |
| Exception | What happens if the source is delayed or unavailable |
The examples describe questions to ask, not universal platform rules. If the rule text leaves an important case unresolved, ask the provider before buying rather than supplying your own favorable interpretation.
Work through awkward outcomes
Consider a hypothetical inflation contract. A first release reports 3.0%, later revised to 3.1%. A contract defined as strictly greater than 3.0% on the first release would fail that test even though the revised figure is higher. BLS documents several kinds of data revision, so the relevant vintage matters.[4]
For weather, a reading at your home is not necessarily the designated station or source. Kalshi's weather documentation distinguishes the sources used for different weather products.[3] Check station, period and measurement before treating an observation as conclusive.
Separate event end, trading close and payment
Write down all three if the provider supplies them. A market can stop accepting orders before final determination. A dispute or a source delay can leave capital unavailable after the real-world event has finished. Do not budget a withdrawal for the moment a news headline appears.
Adjust the trade rather than dismissing the uncertainty
Suppose your estimated event probability is 70%, but there is a material chance that the contract's definition is not the one your forecast models. Revisit the forecast for the actual contractual event. Adding an arbitrary discount to 70% without examining the mismatch does not establish a defensible price.
Preserve the source page and rules with the observation date, and monitor official clarifications. When comparing venues, construct a payoff table that includes disagreement states. If a key ambiguity remains, choosing not to hold the contract avoids a risk that a more confident probability estimate cannot remove.
References
- Polymarket Documentation. Resolution. Accessed October 13, 2026.
- Kalshi Help Center. Market Rules. March 17, 2026; accessed October 13, 2026.
- Kalshi Help Center. Weather Markets. Accessed October 13, 2026.
- U.S. Bureau of Labor Statistics. Revisions. Accessed October 13, 2026.