What Are Prediction Markets?

A prediction market is a place where you buy and sell contracts on whether something will happen. Each contract pays out $1 (or £1, or 1 USDC) if the event happens, and nothing if it does not. Because the payout is fixed, the only thing left to argue about is the price — and the price is the market's estimate of the probability.

If a contract on "Team A wins the league" trades at $0.62, the market is saying there is roughly a 62% chance. Buy it and you risk $0.62 to win $0.38. Sell it — or buy the opposing contract at $0.38 — and you take the other side. Nobody sets that number. It is wherever buyers and sellers last agreed to trade.

Why the price is the probability

A contract that pays $1 on an event with a true 70% chance is worth 70 cents on average. Pay more and you lose money over many repetitions; pay less and somebody else will happily take the trade. Competition between traders pushes the price towards the collective best guess, which is why economists treat prediction market prices as forecasts with real money behind them.

What makes it different from betting

• A bookmaker quotes a price and takes the other side of your bet. Its margin is built into the odds and it profits when you lose.
• A prediction market matches you against another trader. The venue takes a fee or a spread and does not care who wins.
• You can usually exit before the event ends by selling your contracts back into the market, rather than being stuck until settlement.

What people trade

Elections and policy decisions, sports results, crypto and equity price levels, central bank rates and inflation prints, awards and entertainment outcomes, company announcements, weather and science milestones. Anything with a clear, verifiable resolution can be a market; anything vague cannot, which is why wording matters enormously.

The four things to check before you trade

• Resolution rules. Read the exact wording. "Before 1 January" and "in 2026" are not the same market.
• Liquidity. A tempting price on a market with no depth usually cannot be traded in size, or exited at all.
• Fees. Trading commission, settlement fees, withdrawal costs and network gas all eat into a thin edge.
• Availability. Some venues are licensed derivatives exchanges, some are gambling operators and some are unlicensed offshore or on-chain platforms. Which you may legally use depends on where you live.

Who uses them

Traders looking for an edge, hedgers protecting against an outcome that would cost them money, journalists and analysts using prices as a live sentiment reading, and researchers studying forecast accuracy. You do not need to have an opinion on every market — most active traders specialise in a handful of categories.

A realistic view of accuracy

Prediction markets are usually better calibrated than pundits and often better than polls, particularly close to the event. They are not oracles. Thin markets, limited participation, one-sided crowds and rules ambiguity all distort prices. Treat a price as the best available summary of what informed money currently thinks, not as a fact about the future.

Everything you see on this site is a market-implied price from the platform named on the card. It is never our own forecast.