What is a Prediction Market?#

How people collectively forecast the future.

A prediction market is a platform where people can bet on the outcome of future events. By buying and selling shares in the outcomes, participants collectively forecast the likelihood of events such as sports results, political elections, or entertainment awards.

How it works#

Market Prices = Probabilities: The price of shares in a prediction market represents the current probability of an event happening. For example, if shares of an event are trading at 20 cents, it indicates a 20% chance of that event occurring.

Making predictions#

If you believe the actual probability of an event is higher than the market price suggests, you can buy shares. For instance, if you think a team has a better than 20% chance of winning, you would buy shares at 20 cents. If the event occurs, each share becomes worth $1, yielding a profit.

Free-market trading#

You can buy or sell shares at any time before the event concludes, based on new information or changing circumstances. This flexibility allows the market prices to continuously reflect the most current and accurate probabilities.

Trust the markets#

Prediction markets provide unbiased and accurate probabilities in real time, cutting through the noise of human and media biases. Traditional sources often have their own incentives and slants, but prediction markets operate on the principle of "put your money where your mouth is." Here, participants are financially motivated to provide truthful insights, as their profits depend on the accuracy of their predictions.

In a prediction market, prices reflect the aggregated sentiment of all participants, weighing news, data, expert opinions, and culture to determine the true odds. Unlike media narratives, which can be swayed by various biases, prediction markets offer a transparent view of where people genuinely believe we're heading.

Why use prediction markets?#

Prediction markets are often more accurate than traditional polls and expert predictions. The collective wisdom of diverse participants, each motivated by the potential for profit, leads to highly reliable forecasts. This makes prediction markets an excellent tool for gauging real-time probabilities of future events.

Polymarket, the world's largest prediction market, offers a user-friendly platform to bet on a wide range of topics, from sports to politics. By participating, you can profit from your knowledge while contributing to the accuracy of market predictions.