‘Invest’ in Prediction Markets to Bet On Possible Outcomes
Prediction markets describe specialized marketplaces where anyone can trade. “Investors” buy and sell contracts based on the outcome of future events. These events can include elections, sports, entertainment or economic outcomes, among other things.
Prediction markets combine these investments and reflect the probability of certain outcomes, in real time. Some analysts say the markets give more accurate forecasts than traditional polls or surveys. This reflects, they say, the “wisdom of crowds.”
How Do Prediction Markets Work?
Contracts typically consist of yes or no options. Prices usually range between 1 cent and 99 cents, with the price reflecting the probability. For example, if the market prices at outcome at 70 cents, there is a 70-percent probability that outcome will take place.
If the event occurs, “yes” contracts pay out $1. Otherwise, they are worth nothing.
An example from early 2026 was “Will SpaceX land successfully on Mars before 2030?” The outcome prices were:
- Yes: 32 cents
- No: 71 cents
The result of “No” is more likely and the price reflects that option. Betting on a “Yes” result here is more of a risk, but offers a better payout. Like the stock market, the prices are always moving up and down. And like the stock market, owners can sell their shares/contracts.
What’s the Difference Between Sports Betting and Prediction Markets?
Sports betting involves a “house,” whether it’s at a casino or through an app you wager with online. The house sets the odds, usually with a point spread. That means the game winners you get on must “beat the spread” – win by a point difference larger than the spread. The bettor gives their money to the house upfront, and the bet is locked in.
Participants in prediction markets are trading their money with other participants. The price anyone is willing to pay in essence sets the odds. And traders can sell their choices at any time.
This may come as a surprise, but prediction markets are actually regulated. The Commodity Futures Trading Commission (CFTC) is an independent U.S. federal agency that oversees well-known types of trades. These include commodity futures, obviously – in which an investor buys price options, predicting whether the price will be higher or lower in the future. The similarity to investing in other predictions – like who will win an election – is plain. The CFTC’s primary purpose is to protect the public from fraud and market manipulation.
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If you want to try this type of investing, Gambling Insider names its top 5 prediction markets.
Lastly, you can learn more about our services here!
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