# Prediction Markets Harness Crowd Wisdom

> Prediction markets use crowd intelligence to forecast events with real-time accuracy.
- Title: Prediction Markets Harness Crowd Wisdom · MoneyWeek | Shortify
- Summary: Prediction markets use crowd intelligence to forecast events with real-time accuracy.
- Keywords: kalshi, polymarket, prediction markets, prediction contracts, cpi inflation, us presidential election, financial markets, prediction accuracy, cftc regulation, fca regulation, MoneyWeek
- Source: MoneyWeek — https://moneyweek.com/investments/how-prediction-markets-harness-the-wisdom-of-crowds
- Published: 2026-10-31T08:00:00+00:00
- Read time: 1 min
- Topics: kalshi, polymarket, prediction markets, prediction contracts, cpi inflation, us presidential election, financial markets, prediction accuracy, cftc regulation, fca regulation
## 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.
## Key takeaway

Prediction markets like Kalshi and Polymarket trade contracts on future events, with Kalshi processing $750 million in trades before the 2024 US election.