{{Short description|Platforms for betting on events}} {{Use dmy dates|date=January 2020}} '''Prediction markets''', also known as '''betting markets''', '''information markets''', '''decision markets''', '''idea futures''', or '''event derivatives''', are open markets that enable the prediction of specific outcomes using financial incentives. They are exchange-traded markets established for trading bets in the outcome of various events.<ref>{{Cite web |title=Prediction Market |url=https://www.investopedia.com/terms/p/prediction-market.asp |publisher=Investopedia}}</ref>
The most common form of a prediction market is a binary option market, which will expire at the price of 0 or 100%.
Prediction markets can be thought of as belonging to the more general concept of crowdsourcing which is specially designed to aggregate beliefs on particular topics of interest, where the market price can indicate what the crowd thinks the probability of the event is. Traders with different beliefs trade on contracts whose payoffs are related to the unknown future outcome and the market prices of the contracts are considered as the aggregated belief.
Prediction markets are considered gambling by many governments, and are banned in some locations. Some users and researchers have reported that prediction markets are similar to gambling and can cause gambling addiction.
==History== Before the era of scientific polling, early forms of prediction markets often existed in the form of political betting. One such political bet dates back to 1503, in which people bet on who would be the papal successor. Even then, it was already considered "an old practice".<ref>{{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2008 |title=Historical Election Betting Markets: An International Perspective |url=http://users.wfu.edu/strumpks/papers/Int_Election_Betting_Formatted_FINAL_NoComments.pdf |journal=Perspectives on Politics}}</ref> According to Paul Rhode and Koleman Strumpf, who have researched the history of prediction markets, there are records of election betting in Wall Street dating back to 1884.<ref>{{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2004 |title=Historical Presidential Betting Markets. |url=http://users.wfu.edu/strumpks/papers/JEP_2004.pdf |journal=Journal of Economic Perspectives |volume=18 |issue=2 |pages=127–142 |citeseerx=10.1.1.360.4347 |doi=10.1257/0895330041371277}}</ref> Rhode and Strumpf estimate that average betting turnover per US presidential election is equivalent to over 50 percent of the campaign spend.{{Citation needed|date=March 2026}}
Economic theory for the ideas behind prediction markets can be credited to Friedrich Hayek in his 1945 article "The Use of Knowledge in Society" and Ludwig von Mises in his "Economic Calculation in the Socialist Commonwealth". Modern economists agree that Mises' argument, combined with Hayek's elaboration of it, is correct.<ref>"Biography of Ludwig Edler von Mises (1881–1973)", The Concise Encyclopedia of Economics</ref> Prediction markets are championed in James Surowiecki's 2004 book ''The Wisdom of Crowds'', Cass Sunstein's 2006 ''Infotopia'', and Douglas Hubbard's ''How to Measure Anything: Finding the Value of Intangibles in Business''.<ref name="how-to-measure-anything">Douglas Hubbard "How to Measure Anything: Finding the Value of Intangibles in Business" John Wiley & Sons, 2007</ref>
===Milestones=== * One of the first modern electronic prediction markets is the University of Iowa's Iowa Electronic Markets, introduced during the 1988 US presidential election.<ref name="Angrist-1995">{{Cite web |last=Stanley W. Angrist |date=28 August 1995 |title=Iowa Market Takes Stock of Presidential Candidates (Reprinted with Permission of THE WALL STREET JOURNAL) |url=http://tippie.uiowa.edu/iem/media/wsj.html |url-status=dead |archive-url=https://web.archive.org/web/20121130193428/http://tippie.uiowa.edu/iem/media/wsj.html |archive-date=30 November 2012 |access-date=7 November 2012 |publisher=The University of Iowa, Henry B. Tippie College of Business}}</ref> * HedgeStreet was the first prediction market to seek approval by the Commodity Futures Trading Commission as a designated contract market after the Commodity Futures Modernization Act of 2000, and it was granted in 2004.<ref>{{Cite journal |last=Beylin |first=Ilya |date=2025 |title=Event Contracts Are a Step Too Far for Derivatives Regulation |url=https://businesslawreview.uchicago.edu/print-archive/event-contracts-are-step-too-far-derivatives-regulation |journal=The University of Chicago Business Law Review |volume=4 |issue=1}}</ref> The exchange was acquired by the United Kingdom–based IG Group and rebranded to Nadex in 2007; Nadex was then acquired by Crypto.com in 2021.<ref>{{Cite web |title=Industry Filings: Designated Contract Markets (DCM) Filing |url=https://www.cftc.gov/IndustryOversight/IndustryFilings/TradingOrganizations/34536 |access-date=March 19, 2026 |website=United States Commodity Futures Trading Commission |language=en}}</ref> * In July 2003, the U.S. Department of Defense publicized a Policy Analysis Market on their website, and speculated that additional topics for markets might include terrorist attacks. A critical backlash quickly denounced the program as a "terrorism futures market" and the Pentagon hastily canceled the program.<ref>{{Cite journal |last=Hanson |first=Robin D. |author-link=Robin Hanson |date=2006 |title=Designing Real Terrorism Futures |url=https://www.jstor.org/stable/30026644 |journal=Public Choice |volume=128 |issue=1/2 |pages=257–274 |issn=0048-5829}}</ref> * In 2005, an article in ''Nature'' stated how major pharmaceutical company Eli Lilly and Company used prediction markets to help predict which development drugs might have the best chance of advancing through clinical trials by using internal markets to forecast outcomes of drug research and development efforts.<ref>{{Cite journal |last1=Polgreen |first1=P. M. |last2=Nelson |first2=F. D. |last3=Neumann |first3=G. R. |last4=Weinstein |first4=R. A. |date=15 January 2007 |title=Use of Prediction Markets to Forecast Infectious Disease Activity |journal=Clinical Infectious Diseases |language=en |volume=44 |issue=2 |pages=272–279 |doi=10.1086/510427 |issn=1058-4838 |pmid=17173231 |doi-access=free}}</ref><ref name="cia.gov">{{Cite web |title=Using Prediction Markets to Enhance US Intelligence Capabilities |url=https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/using-prediction-markets-to-enhance-us-intelligence-capabilities.html#_ftn2 |archive-url=https://web.archive.org/web/20070613045642/https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/using-prediction-markets-to-enhance-us-intelligence-capabilities.html#_ftn2 |url-status=dead |archive-date=13 June 2007 |access-date=3 February 2017 |date= April 6, 2007 |website= Central Intelligence Agency |language=en|last=Yeh|first=Puong Fei}}</ref> Also in 2005, Google announced that it had been using prediction markets to forecast product launch dates, new office openings, and many other things of strategic importance. Other companies, such as HP and Microsoft, also conduct private markets for statistical forecasts.<ref name="cia.gov" /> * In October 2024, the Kalshi prediction market won a lawsuit against the Commodity Futures Trading Commission, allowing it to relist its election prediction markets. Kalshi's court victory led to a much broader range of prediction markets offered on their platform and by competitors.<ref name=":2">{{Cite web |last=Harty |first=Declan |date=2024-10-02 |title=Political bettors hit the jackpot as court clears election markets for comeback |url=https://www.politico.com/news/2024/10/02/election-betting-markets-00182165 |access-date=2024-12-11 |website=POLITICO |language=en}}</ref><ref name=":3">{{Cite web |last=Blackburn |first=Piper Hudspeth |date=2024-10-02 |title=Federal appeals court allows prediction market Kalshi to offer US election betting |url=https://edition.cnn.com/2024/10/02/business/appeals-court-allows-kalshi-election-betting/index.html |access-date=2024-12-11 |website=CNN |language=en}}</ref><ref name=":4">{{Cite web |last=Matthews |first=Laura |date=October 2, 2024 |title=US appeals court clears Kalshi to restart elections betting |url=https://www.reuters.com/legal/us-federal-court-upholds-ruling-letting-kalshiex-list-election-betting-contracts-2024-10-02/ |website=Reuters}}</ref>
==Accuracy== {{Section rewrite|date=February 2024}}
=== Theory of operation ===
Prediction markets are based on the theory that individuals with financial stakes in an outcome can collectively predict it more accurately than any single expert. Eric Zitzewitz, an economics professor at Dartmouth, explains "Financial markets are generally pretty efficient, and the evidence suggests that the same is true of prediction markets. There’s no virtue-signaling in an anonymous market when you're betting[. ...W]hat you're seeing with the market is some average of all of those different opinions, weighted by their willingness to put their money where their mouth is."<ref>{{Cite web |last=Morrow |first=Allison |date=2024-11-08 |title=How prediction markets saw something the polls and pundits didn't |url=https://edition.cnn.com/2024/11/08/business/polymarket-election-trump-nightcap/index.html |access-date=2024-11-27 |website=CNN |language=en}}</ref>
While prediction markets tend to perform better than polling for the prediction of election outcomes, a study found that belief aggregation of participants who are asked to quantify the strength of their belief can beat prediction markets.<ref name=marketmoreaccurate>{{cite journal |doi-access=free |title=Are markets more accurate than polls? The surprising informational value of "just asking" |quote=Prediction markets appear to be a victory for the economic approach, having yielded more accurate probability estimates than opinion polls or experts for a wide variety of events |date=1 January 2023 |first1=Jason |last1=Dana |first2=Pavel |last2=Atanasov |first3=Philip |last3=Tetlock |first4=Barbara |last4=Mellers |journal=Judgment and Decision Making |volume=14 |issue=2 |pages=135–147 |doi=10.1017/S1930297500003375 }}</ref> When market participants have some intrinsic interest in trying to predict results, even markets with modest incentives or no incentives have been shown to be effective. When the group is more optimistic, they will bet more in aggregate than the pessimists, raising the market price. The movement of the price will reflect more information than a simple average or vote count. Research has suggested that prediction markets' greater accuracy lies largely in superior aggregation methods rather than superior quality or informativeness of responses.<ref name=marketmoreaccurate />
James Surowiecki posits three necessary conditions for collective wisdom: diversity of information, independence of decision, and decentralization of organization.<ref>{{Cite book |last=Surowiecki |first=James |title=The Wisdom of Crowds |publisher=Anchor Books. |year=2005 |location=New York}}</ref> In the case of a predictive market, each participant normally has diversified information from others and makes their decision independently. The market itself has a character of decentralization compared to expert decisions. For these reasons, a predictive market is generally a valuable source to capture collective wisdom and make accurate predictions.{{Citation needed|date=February 2026}}
Prediction markets can aggregate information and beliefs of the involved investors and give a good estimate of the mean belief of those investors. The latter have a financial incentive to price in information. This allows prediction markets to incorporate new information quickly and makes them difficult to manipulate.<ref>{{Cite web |last=Ozimek |first=Adam |date=2014 |title=The Regulation and Value of Prediction Markets |url=https://www.mercatus.org/system/files/Ozimek_PredictionMarkets_v1.pdf |website=mercatus.org/system/files/Ozimek_PredictionMarkets_v1.pdf}}</ref>
=== Empirical studies ===
Numerous researchers have studied the accuracy of prediction markets: * Steven Gjerstad (Purdue), in his paper "Risk Aversion, Beliefs, and Prediction Market Equilibrium",<ref>Steven Gjerstad. [https://web.archive.org/web/20140412042912/http://econ.arizona.edu/downloads/working_papers/Econ-WP-04-17.pdf ""Risk Aversion, Beliefs, and Prediction Market Equilibrium""](PDF). ''Econ.arizona.edu''. Archived from [http://econ.arizona.edu/downloads/working_papers/Econ-WP-04-17.pdf the original] (PDF) on 12 April 2014. Retrieved 20 August 2016.</ref> has shown that prediction market prices are very close to the mean belief of market participants if the agents are risk averse and the distribution of beliefs is spread out (as with a normal distribution, for example). * Justin Wolfers (Wharton) and Eric Zitzewitz (Dartmouth) have obtained similar results to Gjerstad's conclusions in their paper "Interpreting Prediction Market Prices as Probabilities".<ref>Justin Wolfers; Eric Zitzewitz. [https://web.archive.org/web/20121112182734/http://bpp.wharton.upenn.edu/jwolfers/Papers/InterpretingPredictionMarketPrices.pdf ""Interpreting Prediction Market Prices as Probabilities""] (PDF). ''Bpp.wharton.upenn.edu''. Archived from [http://bpp.wharton.upenn.edu/jwolfers/Papers/InterpretingPredictionMarketPrices.pdf the original] (PDF) on 12 November 2012. Retrieved 20 August 2016.</ref> * Lionel Page and Robert Clemen have looked at the quality of predictions for events taking place sometime in the future and provide evidence for a favourite-longshot bias. They found that predictions are better when the event predicted is close in time. For events which take place further in time (e.g., elections in more than a year), prices are biased towards 50%. This bias comes from the traders' "time preferences" (their preferences not to lock their funds for a long time in assets).<ref>{{Cite journal |last1=Page |first1=Lionel |last2=Clemen |first2=Robert T. |year=2013 |title=Do Prediction Markets Produce Well-Calibrated Probability Forecasts? |url=https://eprints.qut.edu.au/69211/1/EJ2012.pdf |journal=The Economic Journal |volume=123 |issue=568 |pages=491–513 |doi=10.1111/j.1468-0297.2012.02561.x |s2cid=152567648}}</ref> Due to the accuracy of the prediction market, it has been applied to different industries to make crucial decisions. Some examples include: * Prediction markets can be utilized to improve forecasting and have a potential application to test lab-based information theories based on their feature of information aggregation. Researchers have applied prediction markets to assess unobservable information in Google's IPO valuation ahead of time.<ref>{{Cite web |last=Berg |first=Joyce |date=2007 |title=Searching for Google's Value: Using Prediction Markets to Forecast Market Capitalization Before an Initial Public Offering |url=https://www.biz.uiowa.edu/faculty/jberg/papers/Google_2007_May.pdf}}</ref> * In healthcare, predictive markets can help forecast the spread of infectious diseases. In a pilot study, a statewide influenza outbreak in Iowa was predicted by these markets 2–4 weeks in advance with clinical data volunteered from participating health care workers.<ref>{{Cite journal |last1=Polgreen |first1=Philip M. |last2=Nelson |first2=Forrest D. |last3=Neumann |first3=George R. |date=15 January 2007 |title=Use of prediction markets to forecast infectious disease activity |journal=Clinical Infectious Diseases |volume=44 |issue=2 |pages=272–279 |doi=10.1086/510427 |issn=1537-6591 |pmid=17173231 |doi-access=free}}</ref> * Some corporations have harnessed internal predictive markets for decisions and forecasts. In these cases, employees can use virtual currency to bet on what they think will happen for this company in the future. The most accurate guesser will win a monetary prize as a payoff. For example, Best Buy once experimented with using the predictive market to predict whether a Shanghai store could open on time.<ref>{{Cite news |last=Lohr |first=Steve |date=9 April 2008 |title=Betting to Improve the Odds |work=The New York Times |url=https://www.nytimes.com/2008/04/09/technology/techspecial/09predict.html |access-date=3 February 2017 |issn=0362-4331}}</ref> The virtual dollar drop in the market successfully forecasted the lateness of the business and prevented the company from extra money loss.{{Citation needed|date=February 2026}}
Although prediction markets are often fairly accurate and successful, there are many times the market fails in making the right prediction or making one at all. Based mostly on an idea in 1945 by Austrian economist Friedrich Hayek, prediction markets are "mechanisms for collecting vast amounts of information held by individuals and synthesizing it into a useful data point".<ref name=":0">Mann, Adam. "Market Forecasts." Nature 538 (2017): 308–10. Web. 3 February 2017.</ref>
One way the prediction market gathers information is through James Surowiecki's phrase, "The Wisdom of Crowds", in which a group of people with a sufficiently broad range of opinions can collectively be cleverer than any individual. However, this information-gathering technique can also lead to the failure of the prediction market. Oftentimes, the people in these crowds are skewed in their independent judgments due to peer pressure, panic, bias, and other breakdowns developed out of a lack of diversity of opinion.{{Citation needed|date=February 2026}}
One of the main constraints and limits of the wisdom of crowds is that some prediction questions require specialized knowledge that the majority of people do not have. Due to this lack of knowledge, the crowd's answers can sometimes be very wrong.<ref>{{Cite news |last=O'Grady |first=Cathleen |date=28 January 2017 |title=Crowds are wise enough to know when other people will get it wrong |work=Ars Technica |publisher=Condé Nast |url=https://arstechnica.com/science/2017/01/to-improve-the-wisdom-of-the-crowd-ask-people-to-predict-vote-outcome/ |access-date=19 April 2021}}</ref>
The second market mechanism is the idea of the marginal-trader hypothesis.<ref name=":0" /> According to this theory, "there will always be individuals seeking out places where the crowd is wrong".<ref name=":0" /> These individuals, in a way, put the prediction market back on track when the crowd fails, and values could be skewed.
The effects of manipulation and biases are also internal challenges that prediction markets need to deal with, i.e., liquidity or other factors not intended to be measured are taken into account as risk factors by the market participants, distorting the market probabilities. Prediction markets may also be subject to speculative bubbles. For example, in the year 2000, IEM presidential futures markets, seeming "inaccuracy" comes from buying that occurred on or after Election Day, 11/7/00, but, by then, the trend was clear.{{Citation needed|date=February 2026}}
There can also be direct attempts to manipulate such markets. In the Tradesports 2004 presidential markets, there was an apparent manipulation effort. An anonymous trader sold short so many Bush 2004 presidential futures contracts that the price was driven to zero, implying a zero percent chance that Bush would win. The only rational purpose of such a trade would be an attempt to manipulate the market in a strategy called a "bear raid". If this were a deliberate manipulation effort, it failed, however, as the price of the contract rebounded rapidly to its previous level. As more press attention is paid to prediction markets, it is likely that more groups will be motivated to manipulate them. However, in practice, such attempts at manipulation have always proven to be very short-lived. In their paper entitled "Information Aggregation and Manipulation in an Experimental Market" (2005),<ref>{{Cite web |title=manipulation2.dvi |url=http://hanson.gmu.edu/biastest.pdf |access-date=20 August 2016 |website=Hanson.gmu.edu}}</ref> Hanson, Oprea, and Porter (George Mason U), show how attempts at market manipulation can in fact end up increasing the accuracy of the market because they provide that much more profit incentive to bet against the manipulator.{{Citation needed|date=February 2026}}
Using real-money prediction market contracts as a form of insurance can also affect the price of the contract. For example, if the election of a leader is perceived as negatively impacting the economy, traders may buy shares of that leader being elected, as a hedge.<ref>{{Cite web |title=Idea Futures Exchanges |url=http://www.davidsj.com/post.php?id%3D103_0_1_0_C5 |url-status=dead |archive-url=https://web.archive.org/web/20080420130531/http://www.davidsj.com/post.php?id=103_0_1_0_C5 |archive-date=20 April 2008 |access-date=5 October 2008}}</ref>
=== Elections and referendums ===
These prediction market inaccuracies were especially prevalent during the 2016 Brexit vote in the United Kingdom. Prediction markets leaned heavily in favor of the UK staying in the EU and failed to predict the outcomes of the vote. According to Michael Traugott, a former president of the American Association for Public Opinion Research, the reason for the failure of the prediction markets is due to the influence of manipulation and bias, shadowed by mass opinion and public opinion.<ref name="Levingston">{{Cite web |last=Levingston |first=Ivan |date=28 July 2016 |title=Why political polls and betting odds disagree with each other so much |url=https://www.cnbc.com/2016/07/28/political-polls-vs-betting-markets-heres-why-they-conflict.html |access-date=3 February 2017 |website=CNBC}}</ref> Clouded by the similar mindset of users in prediction markets, they created a paradoxical environment where they began self-reinforcing their initial beliefs (in this case, that the UK would vote to remain in the EU).<ref name="Levingston" /><ref>{{Cite news |date=24 June 2016 |title=Who said Brexit was a surprise? |newspaper=The Economist |url=https://www.economist.com/blogs/graphicdetail/2016/06/polls-versus-prediction-markets |access-date=3 February 2017 |issn=0013-0613}}</ref> Similarly, during the 2016 US presidential elections, prediction markets failed to predict Donald Trump winning. Like the Brexit case, information traders were caught in an infinite loop of self-reinforcement once initial odds were measured, leading traders to "use the current prediction odds as an anchor" and seemingly discounting incoming prediction odds completely.<ref>{{Cite news |last1=Gelman |first1=Andrew |last2=Rothschild |first2=David |date=12 July 2016 |title=Something's Odd About the Political Betting Markets |language=en-US |work=Slate |url=http://www.slate.com/articles/news_and_politics/moneybox/2016/07/why_political_betting_markets_are_failing.html |access-date=3 February 2017 |issn=1091-2339}}</ref> Traders essentially treated the market odds as correct probabilities and did not update enough using outside information, causing the prediction markets to be too stable to represent current circumstances accurately.<ref>{{Cite web |last=Rothschild |first=Andrew Gelman, David |date=12 July 2016 |title=Something's Odd About the Political Betting Markets |url=https://slate.com/news-and-politics/2016/07/why-political-betting-markets-are-failing.html |access-date=12 February 2019 |website=Slate Magazine |language=en}}</ref> Koleman Strumpf, a University of Kansas professor of business economics, also suggests that a bias effect took place during the US elections; the crowd was unwilling to believe in an outcome with Trump winning, and caused the prediction markets to turn into "an echo chamber", where the same information circulated and ultimately lead to a stagnant market.<ref>{{Cite web |date=9 November 2016 |title=Like polls, prediction markets failed to see Trump's victory coming, economist says |url=https://news.ku.edu/2016/11/09/polls-prediction-markets-failed-see-trumps-victory-coming-economist-says |access-date=3 February 2017 |website=The University of Kansas}}</ref>
Prediction markets can yield better estimates of the mean opinion across a population than opinion polls. A study found that for the five US presidential elections between 1988 and 2004, prediction markets gave a more accurate estimate of the voting result than 74% of the studied opinion polls.<ref name="Berg-2008">{{Cite journal |last1=Berg |first1=Joyce E. |last2=Nelson |first2=Forrest D. |last3=Rietz |first3=Thomas A. |date=2008-04-01 |title=Prediction market accuracy in the long run |url=https://www.sciencedirect.com/science/article/pii/S0169207008000320 |journal=International Journal of Forecasting |series=US Presidential Election Forecasting |volume=24 |issue=2 |pages=285–300 |doi=10.1016/j.ijforecast.2008.03.007 |issn=0169-2070|url-access=subscription }}</ref> On the other hand, a randomized experiment from 2016 obtained that prediction markets were 12% less accurate than prediction polls, an alternative method for eliciting and statistically aggregating probability judgments from a crowd.<ref>{{Cite journal |last1=Atanasov |first1=Pavel |last2=Rescober |first2=Phillip |last3=Stone |first3=Eric |last4=Swift |first4=Samuel A. |last5=Servan-Schreiber |first5=Emile |last6=Tetlock |first6=Philip |last7=Ungar |first7=Lyle |last8=Mellers |first8=Barbara |date=2016-04-22 |title=Distilling the Wisdom of Crowds: Prediction Markets vs. Prediction Polls |url=https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2015.2374 |journal=Management Science |volume=63 |issue=3 |pages=691–706 |doi=10.1287/mnsc.2015.2374 |issn=0025-1909|url-access=subscription }}</ref>
== Legality and regulation == Whether prediction markets are regulated as financial products or betting platforms varies by jurisdiction. Some prediction market platforms have been banned from various countries, though often over registration issues rather than broad bans on prediction markets.
=== Asia === Singapore's Gambling Regulatory Authority blocked Polymarket as an illegal online gambling platform in December 2024. In January 2025, Thailand's Cyber Crime Investigation Bureau announced plans to block Polymarket as an illegal gambling website due to its use of cryptocurrency.<ref>{{Cite news |last=Toh |first=Bernadette |last2=Nicolle |first2=Emily |date=January 15, 2025 |title=Singapore, Thailand Move to Block Crypto Betting Site Polymarket |url=https://www.bloomberg.com/news/articles/2025-01-15/singapore-thailand-move-to-block-crypto-betting-site-polymarket |archive-url=http://web.archive.org/web/20250827073059/https://www.bloomberg.com/news/articles/2025-01-15/singapore-thailand-move-to-block-crypto-betting-site-polymarket |archive-date=August 27, 2025 |access-date=March 19, 2026 |work=Bloomberg.com |language=en}}</ref>
=== Europe === Prediction markets are classified as betting platforms in the United Kingdom, and require operating licenses from the Gambling Commission.<ref>{{Cite news |last=Davies |first=Rob |date=March 6, 2026 |title=Betting on nuclear war: what are prediction markets and could they come to the UK? |url=https://www.theguardian.com/society/2026/mar/06/bylections-regime-change-how-gambing-on-any-event-fuelled-the-surge-in-prediction-markets |access-date=March 19, 2026 |work=The Guardian |language=en-GB |issn=0261-3077}}</ref>
The European Union has no unified regulatory structure for prediction markets, though some countries have taken action against various platforms. Belgium, France, Italy, Poland, and Romania have banned Polymarket as an unlicensed gambling platform. The EU's Markets in Crypto-Assets (MiCA) regulation, which comes into effect in July 2026, will apply to prediction markets using cryptocurrency assets.<ref>{{Cite news |last=Mealha |first=Quirino |date=December 30, 2025 |title=The business of predicting the future is booming despite EU pushback |url=https://www.euronews.com/business/2025/12/30/the-business-of-predicting-the-future-is-booming-but-eu-regulators-remain-uneasy |archive-url=http://web.archive.org/web/20260219052443/https://www.euronews.com/business/2025/12/30/the-business-of-predicting-the-future-is-booming-but-eu-regulators-remain-uneasy |archive-date=February 19, 2026 |access-date=March 19, 2026 |work=Euronews |language=en-GB}}</ref>
On May 26, 2026, Spain's Ministry of Consumer Affairs banned Kalshi and Polymarket for a period of three to four months for operating without a gambling license.<ref>{{Cite news |last=Latona |first=David |date=2026-05-26 |editor-last=Derpinghaus |editor-first=Thomas |title=Spain blocks prediction markets Polymarket, Kalshi over lack of gambling licences |url=https://www.reuters.com/business/spain-blocks-prediction-markets-polymarket-kalshi-over-lack-gambling-licences-2026-05-26/ |access-date=2026-05-26 |work=Reuters}}</ref>
=== North America === Early prediction markets were regulated by the Commodity Futures Trading Commission as futures contracts in the United States. Though Iowa Electronic Markets did not pursue registration with the CFTC, the University of Iowa granted a no-action letter in 1993 and allowed to continue operating the platform with restrictions on the number of traders and trading amounts. When Congress passed the Commodity Futures Modernization Act of 2000, prediction markets were required to "self-certify" their contracts. In 2010, the law was amended by the Dodd–Frank Wall Street Reform and Consumer Protection Act, which created a special rule in which the CFTC, could perform a public-interest review on contracts involving terrorism, assassination, war, gaming, activity that violates state or federal law, or activity deemed similar to any of the reviewable activities. In 2011, the CFTC deemed the North American Derivatives Exchange's political event contracts to be contrary to the public interest. In 2023, the CFTC made the same finding for Kalshi's event contracts on which political party would control chambers of Congress. Kalshi sued the CFTC, and in 2024, the District Court for the District of Columbia ruled in favor of Kalshi with an opinion that narrowly interpreted the CEA's mention of "gaming".<ref>{{Cite journal |last=Kurtz |first=Alexander |date=2026 |title=Political Prediction Markets: Bad Law, but Good Policy? |url=https://bclawreview.bc.edu/articles/10.70167/QYCV4877 |journal=Boston College Law Review |volume=67 |issue=2}}</ref> The CFTC appealed the decision, but dropped the appeal under the Trump administration.<ref>{{Cite web |last=Tokar|first=Dylan|date=February 21, 2026|title=Meet the Trump Official Fighting for Prediction Markets|url=https://www.wsj.com/finance/regulation/meet-the-trump-official-fighting-for-prediction-markets-b1e64a09|url-access=subscription|access-date=March 19, 2026|website=The Wall Street Journal|language=en-US}}</ref> After Kalshi's court victory, it and other prediction markets platforms dramatically expanded their offerings.<ref>{{Cite web |last=Beam |first=Christopher |date=February 23, 2026 |title=Kalshi and Polymarket Prediction Markets Turn Truth Into Bets |url=https://www.bloomberg.com/features/2026-prediction-markets-polymarket-kalshi/ |url-access=subscription |archive-url=http://web.archive.org/web/20260310154516/https://www.bloomberg.com/features/2026-prediction-markets-polymarket-kalshi/ |archive-date=March 10, 2026 |access-date=March 19, 2026 |website=Bloomberg News |language=en}}</ref> CFTC Chairman Michael S. Selig has asserted that the agency has exclusive jurisdiction over prediction markets. However, state attorneys general and gaming regulators have taken enforcement action against prediction markets platforms that have offered sports-related event contracts, including Kalshi and Crypto.com.<ref>{{Cite web |last=Parker |first=Hannah |last2=Canal |first2=Allie |date=February 17, 2026 |title=CFTC chief sides with prediction markets over state regulators in a high-stakes court case |url=https://www.nbcnews.com/business/business-news/cftc-selig-prediction-markets-nevada-rcna259352 |access-date=March 19, 2026 |website=NBC News |language=en}}</ref> In February 2026, the CFTC submitted an amicus brief asserting its sole authority in a lawsuit by Crypto.com against the state of Nevada.<ref>{{Cite web |last=Harty|first=Declan|date=February 18, 2026|title='He's jumping in all the way': A Trump financial regulator backs prediction markets in their clash against states|url=https://www.politico.com/news/2026/02/18/wall-street-markets-las-vegas-selig-00785442|access-date=March 19, 2026|website=Politico|language=en}}</ref><ref>{{Cite web |last=Tokar|first=Dylan|date=February 21, 2026|title=Meet the Trump Official Fighting for Prediction Markets|url=https://www.wsj.com/finance/regulation/meet-the-trump-official-fighting-for-prediction-markets-b1e64a09|url-access=subscription|access-date=March 19, 2026|website=The Wall Street Journal|language=en-US}}</ref>
The Canadian Securities Administrators prohibited trading binary options in 2017. However, Polymarket has operated in all of Canada besides Ontario, from which it was banned in 2025. The CBC has described prediction market regulation as a "grey area", and a spokesperson for the CSA has said prediction markets not covered by the binary options ban could be considered "securities, derivatives or both".<ref>{{Cite news |last=Hughes |first=Abby |date=January 10, 2026 |title=Someone made big money betting on Maduro. What are prediction markets, and is it time they had tighter rules? |url=https://www.cbc.ca/news/business/prediction-markets-maduro-bets-9.7038860 |access-date=March 19, 2026 |work=CBC.ca}}</ref>
=== Oceania === In August 2025, the Australian Communications and Media Authority determined that Polymarket was a "prohibited and unlicensed regulated interactive gambling service" and blocked access to the website.<ref>{{Cite web |last=Woods |first=Cat |date=January 29, 2026 |title=Predictions market shifted from niche to norm but regulators don’t like the odds |url=https://lsj.com.au/articles/predictions-market-shifted-from-niche-to-norm-but-regulators-dont-like-the-odds/ |access-date=March 19, 2026 |website=Law Society Journal |language=en-AU}}</ref>
In February 2026, the New Zealand Department of Internal Affairs ruled that prediction markets like Polymarket and Kalshi are prohibited under the Gambling Act 2003 and the Racing Industry Act 2020.<ref>{{Cite web |last=Dirga |first=Nik |date=February 26, 2026 |title=Why betting on top online prediction markets is now illegal in New Zealand |url=https://www.rnz.co.nz/news/what-you-need-to-know/587993/why-betting-on-top-online-prediction-markets-is-now-illegal-in-new-zealand |access-date=March 19, 2026 |website=Radio New Zealand |language=en-nz}}</ref>
=== South America === Polymarket was deemed an unlicensed betting platform and banned nationwide in Argentina by a Buenos Aires judge in March 2026.<ref>{{Cite web |last=Pavlof |first=Silvia |date=March 18, 2026 |title=Argentina Enforces Nationwide Ban on Prediction Market Platform Polymarket |url=https://www.gamblingnews.com/news/argentina-enforces-nationwide-ban-on-prediction-market-platform-polymarket/ |access-date=March 19, 2026 |website=GamblingNews |language=en}}</ref>
In Brazil, regulators have not established whether prediction markets fall under the purview of the country's Securities Commission or the Ministry of Finance's Secretariat of Prizes and Betting.<ref>{{Cite web |last=Goldsmith |first=Kyle |date=March 12, 2026 |title=SPA flags prediction markets concerns after Kalshi enters Brazil |url=https://igamingbusiness.com/prediction-markets/spa-flags-concerns-prediction-markets-kalshi-brazil/ |access-date=March 19, 2026 |website=iGB |language=en-GB}}</ref>
== Controversial incentives == Some kinds of prediction markets may create controversial incentives. For example, a market predicting the death of a world leader might be quite useful for those whose activities are strongly related to this leader's policies, but it also might turn into an assassination market.<ref>a scenario described by Jim Bell in 1997. {{Cite web |last=Bell |first=Jim |date=3 April 1997 |title=Assassination Politics |url=http://jrbooksonline.com/PDF_Books/AP.pdf |url-status=live |archive-url=https://web.archive.org/web/20110127224301/https://jrbooksonline.com/PDF_Books/AP.pdf |archive-date=27 January 2011 |access-date=28 February 2011 |website=Infowar}}</ref>
In 2026, United States Representative Chris Murphy announced plans to propose a bill regulating prediction markets, citing concerns that government officials might be profiting from inside knowledge, or that officials money riding on military-related events contracts could be influenced to make decisions that would be profitable to them.<ref>{{Cite news |last=Livni |first=Ephrat |date=March 18, 2026 |title=Betting on Ayatollah’s Ouster Ignites Ire Over Prediction Markets |url=https://www.nytimes.com/2026/03/18/world/middleeast/ayatollah-ouster-bets-death.html |access-date=March 19, 2026 |work=The New York Times |language=en-US |issn=0362-4331}}</ref>
== Gambling comparisons == Some users of prediction markets have reported gambling addictions,<ref>{{Cite web |date=2026-04-30 |title=Prediction markets say they’re different from sportsbooks. Gambling addicts say it’s all the same |url=https://www.bostonherald.com/2026/04/30/prediction-markets-gambling-addiction/ |access-date=2026-05-13 |website=The Mercury News |language=en-US}}</ref><ref>{{Cite web |last=Newsham |first=Jack |title='Bam, everything's gone': Two young men describe losing thousands on Kalshi and Polymarket |url=https://www.businessinsider.com/quitting-polymarket-kalshi-prediction-markets-problem-gambling-addiction-2026-2 |access-date=2026-05-13 |website=Business Insider |language=en-US}}</ref> with some gambling addiction clinicians saying that they generate the same "cycle of that anticipation, action and reaction" that traditional gambling does.<ref>{{Cite web |date=2026-05-06 |title=Gambling addiction isn't just about casinos and sports betting. Prediction markets are now concerning clinicians. |url=https://www.9news.com/article/news/nation-world/gambling-addiction-prediction-markets-concern-clinicians/507-01db4fd3-83ed-47b1-a932-e40b313e4d3a |access-date=2026-05-13 |website=KUSA.com |language=en-US}}</ref>
Researchers have said that while "academic and institutional PMs continue to serve research-oriented forecasting purposes''',''' the broader PM landscape has expanded to include gamified, large-scale digital trading platforms enabling continuous, real-time global participation across jurisdictions, some operating on crypto-based infrastructure and optimized for engagement over epistemic rigor"<ref>{{Cite journal |last=Packin |first=Nizan Geslevich |last2=Rabinovitz |first2=Sharon |date=2026-04-16 |title=Prediction markets as a public health threat |url=https://www.science.org/doi/10.1126/science.aee3932 |journal=Science |volume=392 |issue=6795 |pages=257-260 |doi=10.1126/science.aee3932|url-access=subscription }}</ref> and that prediction markets resemble gambling, with users staking money on outcomes out of their control.<ref>{{Cite journal |last=Johnson |first=Benjamin |last2=Chan |first2=Gary |date=2025-11-23 |title=Prediction markets: An emerging form of gambling? |url=https://onlinelibrary.wiley.com/doi/10.1111/add.70272 |journal=Addiction |volume=121 |issue=2 |pages=458-459 |doi=10.1111/add.70272}}</ref>
The National Council on Problem Gambling in the United States has described prediction markets as having similar risks to sports betting.<ref>{{Cite web |date=2026-02-09 |title=Resolution of the NCPG Board of Directors Calling on Prediction Market Operators to Promote the National Problem Gambling Helpline™ |url=https://www.ncpgambling.org/news/calling-prediction-market-operators-to-promote-helpline/ |access-date=2026-05-13 |publisher=National Council on Problem Gambling |language=en-US |quote=Whereas the buying and selling of futures contracts via prediction markets carries substantially similar levels of risk to the consumer as traditional sports betting, including risks associated with chasing losses, impulsive behavior, financial harm, and the development or escalation of gambling-related harm.}}</ref>
==List of prediction markets== *Augur is a now-defunct decentralized prediction market platform built on the Ethereum blockchain.{{Citation needed|date=February 2026}} *Good Judgment Open is a reputation-based prediction website.{{Citation needed|date=February 2026}} *The Iowa Electronic Markets is an academic market examining elections where positions are limited to $500. *iPredict was a prediction market in New Zealand.{{Citation needed|date=February 2026}} *Kalshi, is a U.S. CFTC-regulated betting market<ref>{{Cite news |title=Cryptoverse: U.S. election speculators play the prediction markets |last=Lisa Pauline |first=Mattackal |date=2024-11-04 |url=https://www.reuters.com/markets/currencies/cryptoverse-us-election-punters-play-prediction-markets-2024-11-04/ |url-status=live |archive-url=https://archive.today/20241115092816/https://www.reuters.com/markets/currencies/cryptoverse-us-election-punters-play-prediction-markets-2024-11-04/ |archive-date=15 November 2024 |access-date=2024-11-15 |work=Reuters |others=Editing by Vidya Ranganathan and Pravin Char |location=Bengaluru |format=}}</ref> and available only for U.S. residents.<ref>{{Cite news |title=The surge in election betting has catapulted Kalshi and Polymarket to the top of Apple's App Store |last=Fox |first=Matthew |date=2024-11-05 |url=https://www.businessinsider.com/kalshi-polymarket-top-apple-app-store-downloads-election-betting-surge-2024-11 |url-status=live |archive-url=https://archive.today/20241115092941/https://www.businessinsider.com/kalshi-polymarket-top-apple-app-store-downloads-election-betting-surge-2024-11 |archive-date=15 November 2024 |access-date=2024-11-15 |work=Business Insider |format=}}</ref><ref>{{Cite news |title=Kalshi resumes taking bets on U.S. election after appeals court lifts freeze |last=Mangan |first=Dan |date=2024-10-02 |url=https://www.cnbc.com/2024/10/02/bets-on-congressional-races-allowed-cftc-appeals-court.html |url-status=live |archive-url=https://archive.today/20241115093001/https://www.cnbc.com/2024/10/02/bets-on-congressional-races-allowed-cftc-appeals-court.html |archive-date=15 November 2024 |access-date=2024-11-15 |work=CNBC }}</ref> Robinhood has also partnered with Kalshi to offer prediction markets on its platform.<ref>{{cite web | title=Robinhood (HOOD) Enters Betting Arena with NFL, College Football Prediction Markets | url=https://www.coindesk.com/business/2025/08/19/robinhood-partners-with-kalshi-to-launch-pro-and-college-football-prediction-markets }}</ref><ref>{{cite web | title=Robinhood Launches Pro and College Football Prediction Markets | url=https://newsroom.aboutrobinhood.com/pro-and-college-football-prediction-markets/ }}</ref><ref>{{cite web | title=Robinhood to Offer Kalshi's Football Event Contracts | date=19 August 2025 | url=https://sports.yahoo.com/article/robinhood-offer-kalshi-football-event-212638324.html }}</ref> *Manifold is a reputation-based prediction market.{{Citation needed|date=February 2026}} *Metaculus is a reputation-based prediction website with the ability to make numeric-range or date-range predictions, inspired by SciCast.<ref name=":1" /> *Polymarket is a decentralized prediction market built on the Polygon Chain that uses the USDC stablecoin.{{Citation needed|date=February 2026}} *PredictIt is a prediction market for political and financial events.{{Citation needed|date=February 2026}} *SciCast was a reputation-based combinatorial prediction market focusing on science and technology forecasting.<ref>{{Cite journal |last1=Laskey |first1=K. B. |last2=Hanson |first2=R. |last3=Twardy |first3=C. |date=9 July 2015 |title=Combinatorial prediction markets for fusing information from distributed experts and models |url=https://ieeexplore.ieee.org/document/7266786 |journal=2015 18th International Conference on Information Fusion (Fusion) |pages=1892–1898}}</ref>
==Types==
=== Reputation-based === Some prediction websites, sometimes classified as prediction markets, do not involve betting real money but rather add to or subtract from a predictor's reputation points based on the accuracy of a prediction. This incentive system may be better-suited than traditional prediction markets for niche or long-timeline questions.<ref name=":1">{{Cite journal |last=Mann |first=Adam |date=2016-10-20 |title=The power of prediction markets |journal=Nature News |language=en |volume=538 |issue=7625 |pages=308–310 |doi=10.1038/538308a |pmid=27762382 |doi-access=free|bibcode=2016Natur.538..308M }}</ref><ref>{{Cite web |last=Piper |first=Kelsey |date=2020-04-08 |title=Predictions are hard, especially about the coronavirus |url=https://www.vox.com/future-perfect/2020/4/8/21210193/coronavirus-forecasting-models-predictions |access-date=2020-11-28 |website=Vox |language=en}}</ref> These include Manifold,<ref>{{cite web |url=https://www.ft.com/content/9a3b4b78-b18b-4d1f-b28b-05a73525aa61 |title=How to spend a million dollars, by Sam Bankman-Fried |author=<!--Not stated--> |date=December 19, 2022 |publisher=Financial Times |access-date=December 22, 2022}}</ref> Metaculus, and Good Judgment Open.
A 2006 study found that real-money prediction markets were significantly more accurate than play-money prediction markets for non-sports events.<ref>{{Cite journal |last1=Rosenbloom |first1=E. S. |last2=Notz |first2=William |date=2006-02-01 |title=Statistical Tests of Real-Money versus Play-Money Prediction Markets |url=https://www.tandfonline.com/doi/abs/10.1080/10196780500491303 |journal=Electronic Markets |volume=16 |issue=1 |pages=63–69 |doi=10.1080/10196780500491303 |issn=1019-6781|url-access=subscription }}</ref>
===Combinatorial prediction markets=== A combinatorial prediction market is a type of prediction market where participants can make bets on combinations of outcomes.<ref>{{Cite journal |last=Hanson |first=Robin |date=January 2003 |title=Combinatorial Information Market Design |url=http://mason.gmu.edu/~rhanson/combobet.pdf |journal=Information Systems Frontiers |volume=5 |issue=1 |pages=107–119 |doi=10.1023/A:1022058209073 |s2cid=7429015}}</ref> The advantage of making bets on combinations of outcomes is that, in theory, conditional information can be better incorporated into the market price.{{Citation needed|date=February 2026}}
One difficulty of combinatorial prediction markets is that the number of possible combinatorial trades scales exponentially with the number of normal trades. For example, a market with merely 100 binary contracts would have <math>2^{100}</math> possible combinations of contracts. These exponentially large data structures can be too large for a computer to keep track of, so there have been efforts to develop algorithms and rules to make the data more tractable.<ref>{{Cite journal|last1=Sun |first1=Wei |last2=Hanson |first2=Robin |last3=Laskey |first3=Kathryn |last4=Twardy |first4=Charles |date=16 October 2012 |title=Probability and Asset Updating using Bayesian Networks for Combinatorial Prediction Markets |journal=Proceedings of the Twenty-Eighth Conference on Uncertainty in Artificial Intelligence (UAI2012) |arxiv=1210.4900 |bibcode=2012arXiv1210.4900S}}</ref><ref>{{Cite arXiv|last1=Sun |first1=Wei |last2=Laskey |first2=Kathryn |last3=Twardy |first3=Charles |last4=Hanson |first4=Robin |last5=Goldfedder |first5=Brandon |year=2014 |title=Trade-based Asset Model using Dynamic Junction Tree for Combinatorial Prediction Markets |class=cs.GT |eprint=1406.7583}}</ref>
=== Election prediction markets === Election prediction markets are a type of prediction market in which the ultimate values of the contracts being traded are based on the outcome of elections. The main purpose of an election stock market is to predict the election outcome, such as the share of the popular vote or share of seats each political party receives in a legislature or parliament.{{Citation needed|date=February 2026}}
Before World War II, election betting was widespread in the U.S., dating back to George Washington’s election and becoming organized by Lincoln's era. Though often illegal, it operated openly through “betting commissioners” who held stakes and charged a 5% commission. New York was the hub, with activity shifting from poolrooms to the Curb Exchange (precursor to AMEX) and Wall Street offices. By the 1930s, wagers involved large sums from anonymous business and entertainment figures. In some elections, the volumes traded rivaled those of stocks and bonds, with daily odds reported in major newspapers like ''The'' ''New York Times''.<ref>{{cite journal |last1=Rhode |first1=Paul W. |last2=Strumpf |first2=Koleman S. |title=Historical Presidential Betting Markets |url=https://www.uvm.edu/~awoolf/classes/fall2004/election/Historical_Presidential_Betting_Markets.pdf |journal=Journal of Economic Perspectives |page=128}}</ref>
The CFTC has attempted to restrict election markets, arguing they resemble gaming rather than the financial derivatives it oversees. It previously allowed limited academic use, such as with PredictIt, but withdrew support in 2022 and became involved in litigation with the project. The CFTC also targeted Polymarket, a cryptocurrency-based prediction market, resulting in the company moving offshore and paying a $1.4 million fine.<ref>{{Cite web |last=Schwartz |first=Leo |title=Kalshi points to a Trump win. Its 28-year-old CEO says the betting market is more reliable than polling |url=https://fortune.com/2024/10/23/kalshi-trump-kamala-prediction-market-polymarket-election-tarek-mansour/ |access-date=2024-11-27 |website=Fortune |language=en}}</ref>
In October 2024, prediction market Kalshi won a lawsuit against its regulator, the Commodity Futures Trading Commission, with a federal appeals court in Washington allowing it to revive the first fully regulated election prediction markets in the United States. Kalshi's court victory over the CFTC opened the market for election markets.<ref name=":2" /><ref name=":3" /><ref name=":4" /> In late 2025, MetaMask integrated Polymarket into its wallet interface, expanding user access to blockchain-based prediction markets through a self-custodial application.<ref>{{Cite news |last=Ayan |first=Amin |date=2025-12-06 |title=MetaMask Enters Prediction Markets With Polymarket Integration |url=https://finance.yahoo.com/news/metamask-enters-prediction-markets-polymarket-101200633.html |archive-url=http://web.archive.org/web/20260106082618/https://finance.yahoo.com/news/metamask-enters-prediction-markets-polymarket-101200633.html |archive-date=2026-01-06 |access-date=2026-03-25 |work=Yahoo Finance |language=en-US}}</ref>
==See also== * {{annotated link|Futarchy}} * {{annotated link|Futures exchange}} * {{annotated link|Prediction games}} * {{annotated link|Betting exchange}} * {{annotated link|Forecasting}} * {{annotated link|Simon–Ehrlich wager}} * {{annotated link|Collective intelligence}}
==References== {{Reflist|30em}}
==Sources== ;Academic papers * Bell, Tom W. [http://www.tomwbell.com/writings/PredEx.pdf Prediction Markets For Promoting the Progress of Science and the Useful Arts] – PDF file – ''George Mason Law Review'' (14 Geo. Mason L. Rev 37) (2006) * Berg, Joyce E., & Thomas A. Rietz. [http://www.biz.uiowa.edu/faculty/trietz/papers/AEI-Brookings.pdf The Iowa Electronic Market: Lessons Learned and Answers Yearned] – PDF file – 2005-01-00 * Beylin, Ilya, [https://chicagounbound.uchicago.edu/ucblr/vol4/iss1/3/ Event Contracts Are a Step Too Far for Derivatives Regulation]-- PDF file -- 4 U. Chi. Bus. L. Rev 77 (2025). * Erikson, Robert S., & Christopher Wlezien. "Are Political Markets Really Superior to Polls as Election Predictors?" ''Public Opinion Quarterly'' 72(2), Summer 2008, pp. 190–215. * Gjerstad, Steven. [https://web.archive.org/web/20060611003852/http://econ.arizona.edu/downloads/working_papers/Econ-WP-04-17.pdf "Risk Aversion, Beliefs, and Prediction Market Equilibrium,"] University of Arizona Working Paper 04-17, 2005. * {{Cite journal |last1=Graefe |first1=A. |last2=Armstrong |first2=J.S. |year=2011 |title=Comparing face-to-face meetings, nominal groups, Delphi and prediction markets on an estimation task |url=https://repository.upenn.edu/cgi/viewcontent.cgi?article=1159&context=marketing_papers |journal=International Journal of Forecasting |volume=27 |issue=1 |pages=183–195 |doi=10.1016/j.ijforecast.2010.05.004|s2cid=883456 }} * {{Cite journal |last1=Gruca |first1=Thomas S. |last2=Berg |first2=Joyce E. |last3=Cipriano |first3=Michael |year=2005 |title=Consensus and Differences of Opinion in Electronic Prediction Markets |journal=Electronic Markets |volume=15 |issue=1 |pages=13–22 |doi=10.1080/10196780500034939}} * Hanson, Robin. [http://hanson.gmu.edu/PAMpress.pdf The Informed Press Favored the Policy Analysis Market] - PDF file - 2005-05-05 * Manski, Charles F. [https://web.archive.org/web/20070927032000/http://www.aeaweb.org/annual_mtg_papers/2006/0106_1015_0703.pdf Interpreting the Predictions of Prediction Markets] – PDF file – Revised Aug 2005—Manski suggests that there needs to be a better theoretic basis for interpreting market prices as probability, and provides a simple model for this. * {{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2004 |title=Historical Presidential Betting Markets |url=http://users.wfu.edu/strumpks/papers/JEP_2004.pdf |journal=Journal of Economic Perspectives |volume=18 |issue=2 |pages=127–142 |citeseerx=10.1.1.360.4347 |doi=10.1257/0895330041371277}} Provides a detailed history of political prediction markets in the US, and shows early markets in the 19th and early 20th Centuries provided accurate forecasts and satisfied market efficiency. * {{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2008 |title=Historical Election Betting Markets: An International Perspective |url=http://users.wfu.edu/strumpks/papers/Int_Election_Betting_Formatted_FINAL_NoComments.pdf |journal=Perspectives on Politics}} Discusses history of prediction markets internationally, as well as additional details on the historical US markets. * {{Cite journal |last1=Rosenbloom |first1=E. S. |last2=Notz |first2=William |year=2006 |title=Statistical Tests of Real-Money versus Play-Money Prediction Markets |journal=Electronic Markets |volume=16 |issue=1 |pages=63–69 |doi=10.1080/10196780500491303}} * {{Cite journal |last1=Servan-Schreiber |first1=Emile |last2=Wolfers |first2=Justin |last3=Pennock |first3=David M. |last4=Galebach |first4=Brian |year=2004 |title=Prediction Markets: Does Money Matter? |journal=Electronic Markets |volume=14 |issue=3 |pages=243–251 |doi=10.1080/1019678042000245254}} * Spann, Martin & Skiera, Bernd.[https://web.archive.org/web/20090320150037/http://www.ecommerce.wiwi.uni-frankfurt.de/typo3/uploads/tx_ecompublications/Spann_Skiera_Inernet-based_virtual_stock_markets.pdf "Internet-Based Virtual Stock Markets for Business Forecasting"] – PDF file – Discusses theory, design options and presents empirical comparisons on forecasting accuracy of prediction markets * Storkey, A.J. [https://web.archive.org/web/20110807032053/http://www.unifr.ch/econophysics/paper/show/id/1106.4509 Machine Learning Markets] – Journal of Machine Learning Research C&WP 15:AISTATS. 2011. * Storkey A.J., Millin, J., Geras, K. [https://arxiv.org/abs/1206.6443 Isoelastic agents and wealth updates in machine learning markets] – International Conference in Machine Learning. 2012. * Wolfers, Justin, & Eric Zitzewitz. [https://web.archive.org/web/20081211152006/http://bpp.wharton.upenn.edu/jwolfers/Papers/Predictionmarkets.pdf Prediction Markets] – PDF file – 2004-05-00 * Wolfers, Justin, & Eric Zitzewitz.[https://web.archive.org/web/20051029173425/http://bpp.wharton.upenn.edu/jwolfers/Papers/InterpretingPredictionMarketPrices.pdf Interpreting Prediction Market Prices as Probabilities] – PDF file – Draft version 2007-01-08 – Expands on the work of Manski, providing a more general model wherein it is somewhat rational to interpret market prices as probabilities * Watkins, Jennifer H.[http://repositories.cdlib.org/hcs/WorkingPapers2/JHW2007 Prediction Markets as an Aggregation Mechanism for Collective Intelligence] – Proceedings of 2007 UCLA Lake Arrowhead Human Complex Systems Conference, Lake Arrowhead, CA, 25–29 April 2007.
==External links== * [http://videolectures.net/uai08_hanson_cpm/ Video of Robin Hanson's ''Combinatorial Prediction Markets'' lecture at the 'Uncertainty in Artificial Intelligence' conference in Helsinki, 2008] *[https://www.ubplj.org/index.php/jpm?utm_source=substack&utm_medium=email/ Journal of Prediction Markets]
{{Subject bar|auto=yes|wikt=prediction market|portal1=Economics|portal2=Science}} {{DEFAULTSORT:Prediction Market}}
Category:Prediction markets Category:Social information processing Category:Market (economics) Category:Survey methodology Category:Forecasting