What is a prediction market and how does it work?
A quick guide to understanding Polymarket, Kalshi and why prediction markets are the most honest way to measure the probability of future events.
A prediction market is a place where people buy and sell contracts on whether something will happen or not. The price of each contract reflects the collective probability the market assigns to that event.
A concrete example
On Polymarket there is a market: “Will Madrid win the Champions League?”. The YES contract is trading at 0.22 dollars. This means:
- The market believes the probability of Madrid winning is 22%.
- If you buy YES at 0.22 and Madrid wins, you receive 1 dollar — making 0.78.
- If they lose, you lose the 0.22 you paid.
Why prediction markets matter
When real money is at stake, predictions tend to be more accurate than polls, expert forecasts and closed models. It’s information aggregated by thousands of people with skin in the game.
Polymarket and Kalshi
The two leading platforms:
- Polymarket — the largest by volume. Runs on USDC over the Polygon blockchain. Not regulated in the US.
- Kalshi — regulated by the CFTC. Lower liquidity but smooth access from the US.
Forekast aggregates both venues so you can spot the best opportunities without jumping between platforms. Check the ranking of forekasters with verified ROI or the markets active right now. Once you understand how it works, read how to choose which forekaster to follow before copying anyone.
