In this guide
What Is a Prediction Market?
Prediction markets represent a category of financial venue wherein traders exchange instruments whose value derives from the realisation or non-realisation of forthcoming occurrences. The quoted price of any such instrument embodies the aggregated view of market participants regarding the likelihood of that event transpiring. PolyGram operates as a UK-facing prediction market platform, facilitating exposure to events across international jurisdictions.
How Do Prediction Markets Work?
At their core, prediction market instruments pose a binary question: shall Event X materialise prior to Date Y? Consider the proposition: "Will Labour secure victory in the forthcoming UK general election?" Two complementary instruments are offered:
- YES: Settles at $1.00 should Labour prevail
- NO: Settles at $1.00 should Labour fail to prevail
Should the YES instrument trade at $0.65, participants interpret this as a 65% implied probability of Labour's success. A trader holding a bullish view may acquire YES; one holding a bearish view may acquire NO. Correct positions generate profit; incorrect positions result in capital loss.
Prediction Markets vs Traditional Betting
- Absence of overround: Conventional bookmakers embed a spread into odds — prediction markets do not. The sum of YES and NO prices approximates $1.00
- Early exit capability: Traders may liquidate holdings at any time prior to event resolution
- Price discovery: Market data, including all quotes and order flow, remains openly accessible
- Distributed intelligence: Prices synthesise signals from a broad participant base — frequently surpassing the predictive power of conventional surveys
Types of Prediction Markets
Political Markets
Electoral contests, public sentiment measures, legislative outcomes, shifts in leadership. Platforms such as Polymarket have established these as the deepest and most actively traded category.
Sports Markets
Game results, championship holders, individual performance metrics, final standings.
Crypto Markets
Digital asset valuations, blockchain development milestones, investment product authorisations, supervisory announcements.
World Event Markets
Macroeconomic data releases, geophysical events, technological breakthroughs, cultural ceremonies.
Are Prediction Markets Legal in the UK?
The regulatory status of prediction markets within the United Kingdom remains ambiguous. Neither explicit authorisation from the Gambling Commission nor formal prohibition has been established. Platforms including PolyGram employ distributed ledger settlement mechanisms, distinguishing their operational model from conventional gaming venues.
How Accurate Are Prediction Markets?
Empirical studies demonstrate that prediction market prices consistently outperform both specialist analysts and aggregate survey data. Polymarket's pricing proved prescient regarding the 2024 US presidential election, numerous contests across the European Union, and significant developments in digital asset regulation, with forecasts materialising months ahead of conventional consensus.