Prediction market proponents hail them as powerful forecasting tools that can synthesize information from diverse sources in real time. Skeptics, however, argue they are just gambling platforms in disguise—prone to manipulation, riddled with ethical concerns, and monetizing questions that perhaps should not have price tags at all.
Prediction market proponents hail them as powerful forecasting tools that can synthesize information from diverse sources in real time. Skeptics, however, argue they are just gambling platforms in disguise—prone to manipulation, riddled with ethical concerns, and monetizing questions that perhaps should not have price tags at all.
Regardless of where you stand, the rise of platforms like Polymarket and Kalshi has taken onlookers by surprise. And if their popularity during the 2024 election was any indication, prediction markets aren’t going away anytime soon.
Prediction Markets, Explained
At their core, prediction markets let participants trade real money on whether a specific event will happen (yes) or not (no) via event contracts, and the market price of these contracts reflects the crowd’s collective belief about the likelihood of the event.
Each contract is a binary contract, and has a payout rule attached and specified in advance – for instance, “Pays $1 if candidate X wins the election, $0 otherwise.”
The best markets are those with clear and concise rules, terms, and resolution criteria, free from ambiguity amongst traders.
Contracts are typically priced between 1¢ and 99¢, using one-cent increments. These prices easily convert to implied probabilities: a contract trading at 75¢ implies a 75% chance of the event happening.
Some platforms go even more granular, offering fractional pricing (e.g., 1.7¢, 3.5¢ and so on). This format provides more precise pricing and forecasts but is not as user-friendly to casual traders.
Traders can place buy or sell orders on these contracts, as prediction markets use the law of supply and demand via its order book to dynamically set prices in real time: the more people want to buy a contract, the more its price will rise.
For example, if a well-known expert publicly says “I think there’s a 90% chance candidate X wins,” but the market is sitting at 80%, opportunistic traders will rush to buy at the bargain price of $0.80. The increased demand can push the price up. If buyers keep buying, the price will keep climbing.
Prediction Markets Education
How to Trade on Prediction Markets?
To trade on prediction markets, you first must choose a platform, such as Kalshi, PredictIT, Polymarket, Metaculus, or Manifold Markets.
Those are the top prediction market sites, with Kalshi and Polymarket being the undisputed leaders.
What’s the difference between Kalshi and Polymarket? Mainly that Kalshi is federally regulated by the CFTC, accessible to Americans in all 50 states and other U.S. jurisdictions, while Polymarket is banned in the U.S.
Here’s a quick breakdown of who should use each prediction market platform:
- Kalshi: U.S.-based users looking to risk real money on a regulated platform.
- Polymarket: Traders who are outside of the U.S., but looking for a wide variety of markets, liquidity within those markets, and safe and trustworthy transactions.
- Manifold: Casual traders who prefer risking play money.
- PredictIt: Political traders in the U.S. who are looking for another option in addition to Kalshi.
- ForecastEx: Institutional traders with large bankrolls.
Once you select a prediction market platform(s), you need to fund your account using one of the available deposit options (unless it’s a fake-money prediction market like Manifold). From there, select a market and make your first prediction by buying contracts. After that you have the choice to sell contracts before the market resolves, too.
For instance, if you bought a contract at 40¢ and the price rises to 70¢, you can sell for a profit before the event concludes. That’s where a lot of strategy comes into play—buying low, selling high, or even shorting contracts you believe are overpriced.
The more you understand market dynamics, news flow, and actionable metrics within a category, the more edge you can develop which will help you profit long term. Don’t rely on luck, but instead focus on timing, insight, and managing risk.
Latest Prediction Market News
Key Moments from Lively Prediction Markets Panel Debate at SBC
At the SBC Summit Americas in Ft. Lauderdale, prediction markets took center stage. Conference attendees gathered for the panel titled...
Read more
Prediction Market Topics
Politics, and more specifically the 2024 election, is what put top prediction markets Kalshi and Polymarket on the map. Political prediction markets have been growing since the mid 2010s, when PredictIt, the original political prediction marketplace, launched.
Other popular subcategories include cabinet markets, House and Senate elections, approval ratings, bills, and court markets, to name a few.
Examples:
Who will win the 2028 U.S. presidential election?
Will the government shut down this year?
Popular political markets:
Presidential and midterm elections (U.S. and global), Cabinet markets, presidential approval ratings, party control of legislative bodies, Supreme Court rulings.
Pop culture prediction markets bring stock market-like speculation to the arts: music, film, and celebrity gossip (ok ok – not quite art). Traders can wager on outcomes for the Grammys, Academy Awards, Rotten Tomatoes scores, and so much more.
Examples:
Will Taylor Swift release another album in 2025?
Who will win Best Picture at the Oscars?
Popular entertainment markets:
Oscars, Grammys, Spotify charts, Rotten Tomatoes scores.
Economic and business prediction markets focus on real-world financial indicators. These include interest rate decisions, unemployment numbers, GDP growth, inflation reports, and major tech earnings. Rather than relying on opinion or sentiment, these markets often react to hard data and economic calendars.
Examples:
Will the Fed raise interest rates at its next meeting?
Will the U.S. unemployment rate fall below 4% this quarter?
Popular economic and business markets:
Federal Reserve rate hikes, CPI inflation data, GDP growth, business deliverables, mention markets
Until 2025, sports event contracts were only available on Polymarket, which is inaccessible in the U.S. without nefarious workarounds like using a VPN. Make make real-money sports predictions, sports bettors had to bet with a legal sportsbooks, if there was one, in their state, or turn to sketchy offshore sites and illegal bookmakers if they wanted to bet on the Super Bowl, March Madness, The Masters, etc.
That quickly changed, as Crypto.com was the first to test the limits and introduce sports event contracts for the NFL and college football playoffs. Kalshi, a CFTC-regulated prediction market, followed their lead and has yet to look back. Most recently, Kalshi facilitated over $100 million in trades on the 2025 Masters, much of which came during the tournament.
Kalshi’s leap into sports has turned the sports betting industry upside down, and sportsbook leaders like DraftKings and FanDuel are definitely paying attention.
We’ll have to wait and see what becomes of sports event contracts, and the upcoming CFTC roundtable on prediction markets will certainly shed some light. Already, new sports-focused prediction market companies, like SI Predict, have announced that they will join the space.
Examples:
- Will will win the Masters?
- Who will be the next head coach of the Chicago Bears?
Popular sports markets:
Football, golf, baseball, basketball, etc.
Are Prediction Markets Accurate?
Michigan University economist Justin Wolfers may have put it best when he said , “The promise of prediction markets isn’t that they’re perfect, it’s that everything else is worse.”
Prediction markets have attracted attention for their accuracy because, when conditions are right, they often outperform traditional forecasting methods. Their greatest strength is harnessing the “wisdom of crowds,” the idea that aggregating many independent guesses can produce remarkably accurate predictions. These markets tap into dispersed knowledge: each trader may know a little bit (a local rumor, an analytical model, a gut feeling, etc.), and the market price combines all those bits together into one number.
As long as traders have diverse information sources and incentives to be honest (i.e. to make money), the market’s collective forecast tends to be very hard to beat. In many case studies, prediction market prices have been shown to equal or beat the accuracy of polls, expert opinions, and statistical models.
For example, election markets have a strong track record: the Iowa Electronic Markets famously out-predicted many polls in U.S. presidential races, and prediction market prices can even be used to improve polling forecasts by accounting for late-breaking information
In one analysis, combining market odds with poll results lowered prediction errors compared to using polls alone. Most recently, in the 2024 U.S. presidential election, prediction markets Polymarket and Kalshi both correctly made Donald Trump the betting favorite ahead of election day in face of polling and pundits that argued otherwise.
Not only have these markets correctly forecasted elections, but they’ve been applied in fields from business to public health. Additionally, prediction markets can be used as hedging tools to mitigate risk.
Bet on Prediction Market Events
Kalshi
Polymarket
PredictIt
Drift Bet
Manifold
ForecastEx
