From MoneyWeek · · 1m 30s
Prediction Markets Harness Crowd Wisdom
Prediction markets use crowd intelligence to forecast events with real-time accuracy.
In brief
Prediction markets use crowd intelligence to forecast events with real-time accuracy. Prediction markets like Kalshi and Polymarket trade contracts on future events, with Kalshi processing $750 million in trades before the 2024 US election. Originally reported by MoneyWeek.
Quick answers
- What are prediction markets?
- Prediction markets are sites where users buy 'yes' or 'no' contracts on future real-world events.
- What is the key takeaway from Prediction Markets Harness Crowd Wisdom?
- Prediction markets like Kalshi and Polymarket trade contracts on future events, with Kalshi processing $750 million in trades before the 2024 US election.
What are prediction markets?
Prediction markets are sites where users buy 'yes' or 'no' contracts on future real-world events.
Biggest platforms
Kalshi and Polymarket are the biggest platforms, both launched around the time of the pandemic but went mainstream during the 2024 US presidential race.
Kalshi's trading volume
In the week before the 2024 US election, Kalshi processed around $750 million in trades.
How prediction markets work
Unlike bookmakers, prediction markets allow users to trade against one another with no 'house edge'.
What prediction markets cover
Users can bet on everything from wildfire destruction to Donald Trump saying 'Kamala' in speeches.
Kalshi's growth
Kalshi's valuation has quadrupled in under a year to £22 billion with over 10,000 live markets.
Prediction markets history
The basic idea dates back to George Washington but was banned during Prohibition and later replaced by polling.
Who uses prediction markets
52% of Gen Z investors diverted money to sports betting last year, with women's share rising from 13% to 26%.
Why prediction markets work
Polymarket calls itself a 'global truth machine' and outperforms economist consensus forecasts on CPI inflation.
Financial outcomes
Two-thirds of Polymarket users lost money, with only 1% capturing more than three-quarters of profits.
What to remember
Prediction markets like Kalshi and Polymarket trade contracts on future events, with Kalshi processing $750 million in trades before the 2024 US election.
