What are prediction markets?
Prediction markets are exchange-traded contracts that pay out based on the outcome of real-world events. They have consistently proven more accurate than polls, expert panels, and statistical models at forecasting everything from elections to economic indicators.
A prediction market is a financial exchange where participants trade contracts whose value is tied to the outcome of a future event. Each contract trades between $0 and $1. If you buy a contract at $0.65, you are effectively saying you believe the event has at least a 65% chance of occurring. If the event happens, the contract pays $1 and you profit $0.35. If it does not happen, you lose your $0.65 stake. This mechanism — real money at risk — is what makes prediction markets so powerful. Traders who are wrong lose money, so only genuinely informed views survive in the price. The concept dates back centuries. The earliest recorded prediction markets operated on political elections in 16th-century Italy. Modern electronic prediction markets began with the Iowa Electronic Markets in 1988, which famously outperformed Gallup polls in predicting US presidential elections. Today, platforms like PolyGram, Polymarket, and Kalshi offer thousands of markets across politics, sports, crypto, technology, entertainment, and world events. There are several types of prediction markets. Binary markets have two outcomes — YES or NO. Multi-outcome markets let you trade on which of several candidates or results will win. Scalar markets resolve on a numerical range, such as the exact GDP growth rate or a closing stock price. Prediction markets are useful for more than speculation. Businesses use internal prediction markets to forecast product launch dates and quarterly revenue. Governments have explored them for intelligence analysis. Researchers use them to aggregate expert opinion on scientific questions. The key advantage is information aggregation: a single prediction market price synthesizes the knowledge, beliefs, and risk assessments of every participant into one number, updated continuously. Getting started on PolyGram is straightforward. Create a free account, deposit USDC on Polygon, browse open markets by category, and place your first trade. Every contract settles on-chain with transparent resolution sources, so you can verify the result independently.
- Contracts trade between $0 and $1 — the price IS the crowd's probability
- Consistently outperform polls, pundit forecasts, and statistical models
- Market types: binary (YES/NO), multi-outcome, and scalar (numerical range)
- Real money at risk creates a powerful incentive for honest, informed trading
- Used by businesses, governments, and researchers for better forecasting