Prediction market platforms allow people to predict outcomes of various situations and events in everyday life. You make predictions by buying contracts you can later trade, like in a stock exchange. You wonder how? Check the details below.
What Are Prediction Markets?
Prediction market apps are platforms where people can bet on the outcome of many events in their everyday lives and trade their predictions. The predictions can be about anything, starting with politics, entertainment, sports teams, public health, and anything that comes to mind.
When you look at the online prediction markets, they can tell you a lot about the public opinion and people’s forecasts about some major upcoming events. They generally show a good picture of people’s expectations.
For example, you can predict the presidential candidates for the next elections, whether there will be snow for Christmas in various cities in the world, or guess the Rotten Tomatoes score for an upcoming movie.
How Do Prediction Markets Actually Work?
The main principle of prediction markets revolves around trading contracts on the binary outcome of a prediction: yes or no. Let’s explain it with a simple example: White Christmas in New York 2025: yes or no?
The price of both yes and no contracts will depend on other people’s predictions. So, for example, if the chance is 23%, that means that the ‘Yes” contract costs $0.23 at the moment. If the odds change before Christmas, you can even make a profit if you offer to trade your contracts.
If it snows on Christmas in New York, people holding the ‘Yes’ contracts get $1 per contract, and the ‘No’ ones get nothing, or the other way around. It is similar to stock trading, but with people betting on binary yes-or-no options and getting payouts.
Top prediction markets can be about anything that interests people: sports, politics, weather, public health, and other topics.
Predictions vs Odds: What’s the Difference?
Predictions are based on people’s forecasts of whether something will happen or not. There is no need for a bookmaker. Instead, it’s enough to have a prediction market and people willing to predict the outcome.
Predictions work on a binary set of contacts: yes or no. Odds, on the other hand, are displayed in a numeric value, and they are set by the bookmaker, based on various criteria.
Even though some betting markets offer odds for both yes and no options, like BTTS: yes or BTTS: no, they don’t add up to $1 and can’t be purchased or traded at a regular sportsbook.
Instead, you need to place your bet and wait for the outcome and potentially win the amount from your bet slip, which is your wager multiplied by the odds.
Why Sports Fans Use Prediction Markets
Sports fans can use prediction markets to make what in regular sports betting is called an outright or futures bet. They can then trade their contracts to make a profit even without waiting for the final outcome of the event.
Sports fans in the USA also use online prediction markets to wager (in a way) on sports events in states where sports betting is illegal. They can create a market on a prediction that sportsbooks sometimes don’t pick up as an outright market, and learn other people’s opinions on it.
However, a prediction is a simple yes-or-no proposition, and it doesn’t offer all the possibilities of traditional sports betting.
How to Choose the Right Prediction Market App
The list of prediction markets is usually vast on every prediction market app. If somebody has recommended a platform to you, and you have started using it, we suggest that you pay attention to these things before continuing:
- The Commodity Futures Trading Commission (CFTC) regulates prediction market apps in the US, so you should search for proof on the website or in the app that the company is regulated.
- Some prediction market apps charge fees when you purchase contracts, while others make a profit later in the trading process.
- Check funding options to ensure the app accepts the payment method you wish to use. These are typically limited to bank transfers, bank cards, and potentially cryptocurrencies.
- These apps can pay you interest, so make sure to check all the terms surrounding the trading on their platforms.
- The design and quality of the app also play a part in choosing the right option for you.
- The value and transparency of markets are essential when it comes to the legality and security that users can expect. The best prediction markets should always tick this box.
Sports Prediction Markets vs Traditional Sports Betting
We have already pointed out that sports bettors use prediction markets to make futures bets where sports betting is illegal. However, sports prediction markets are popular everywhere, even in the US states where it is legal to bet on sports.
Here are some differences between sports prediction markets and traditional sports betting:
- Traditional sports betting allows for more options, markets and features for sports betting. Prediction market apps only allow for predicting a specific outcome, but also give you insight into other people’s opinions about the event.
- A prediction market app doesn’t allow you to combine markets into a combo bet, to bet in-play, or get any bonus offers, like you could on a traditional sports betting site. Also, there are often fees when purchasing prediction contracts, but none when placing bets.
- You can get an early payout on a sports bet, whereas you would need to sell your contracts if you wish to get something from a prediction market before the event finishes.
- If your prediction is correct, you get $1 per contract you hold, regardless of the price you paid for it. If your sports bet wins, the amount you win depends on your wager and the odds at which you placed your bet.
- Speaking of risk, traditional sports betting could be deemed riskier because of the multitude of markets and possibilities to get your bet wrong. Prediction markets show other people’s opinions, so you can see what the majority thinks.
- Sportsbooks must carry a valid licence to conduct business in the US. Prediction market apps are regulated by the Commodity Futures Trading Commission (CFTC), but their legality in the context of sports prediction markets is often questioned.
How to Use Prediction Markets for Sports
Using prediction markets for sports works exactly the same as using it for any other market. We will start this brief guide by assuming you have already opened and funded your account with a predictions market app. Here’s what you should do next:
- Find the market you wish to make a prediction on, whether it’s about a player or a team. If it is not easily accessible among popular markets, use the search function.
- Once you locate the market, find the option you wish to choose. For example, you wish to predict that a team will win the NBA playoffs. Find the team name in the market, and select ‘Yes’.
- You will get the price of the ‘Yes” contract in cents. You can also choose how many contracts you wish to purchase.
- Confirm your purchase.
After you purchase your contracts, you can wait for the final outcome of your prediction or sell them if their value increases and there are interested buyers.
Final Verdict: Are Sports Prediction Markets Worth Trying?
For people living in states where sports betting is illegal, prediction markets are the only legal way of making sports predictions. They can also give you the opportunity to trade your contracts and make a profit before the event you made a prediction on ends.
When you look at the sports prediction markets and prices, they tell you how other fans feel about the event you are interested in, and it could change your mind, or give you a dose of confidence that people share your opinion.
The bottom line is that, where you have a choice, picking sports prediction markets over traditional sports betting is a matter of personal choice. If you only bet on futures and enjoy the trading, then the choice is obvious.
If you enjoy betting on other markets or mixing things up a bit, then sports betting is still an option for you.
