Definition ∞ Event contracts are financial instruments whose value depends on the outcome of a specific future occurrence. These derivatives allow participants to speculate on or hedge against the realization of a defined event, such as an election result, a sports outcome, or a specific market movement. Unlike traditional futures, their payoff structure is typically binary, settling at a fixed value if the event occurs and another if it does not. They offer a unique way to trade on verifiable, real-world happenings.
Context ∞ The regulatory treatment of event contracts, especially those related to digital assets or settled with cryptocurrencies, is a current point of discussion. Regulators assess whether these contracts fall under existing gambling laws or financial derivatives oversight. The debate often centers on consumer protection and the potential for market manipulation, with ongoing efforts to establish clear jurisdictional boundaries for their operation.
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