The changing faces of predictions
As little as a few months ago, if someone had said the word predictions, many might have assumed someone was talking about horoscopes or referring to ancient myths, legends, or histories. Julius Caesar, for example, was told to ‘beware the Ides of March’. While the line is from Shakespeare’s play Julius Caesar, the warning is said to have come from a seer named Spurina who warned about the danger on the 15th (Ides) of March. If only someone had put a bet on that, or maybe they did!
In the modern era, as well as astrologers predicting our personal futures via signs of the zodiac, Chinese horoscopes, or tarot cards, many of us do a bit of predicting ourselves. We will often take a position on the outcome of future events, stating things like,
“I bet X will win that race.”
“I think Y will win an Oscar.“
or
“I’d put money on Z getting elected.”
Bringing betting (or not betting) to all
Image by Can Karakaya from Pixabay
In the US, betting and gambling have always been a rather contentious issue, and while some states have legalized and regulated markets, others do not allow their citizens to bet for real money. However, all that is changing as federally regulated prediction markets are over a parallel, nationwide, quasi-betting system across a wide range of events and sectors.
If you did an internet search on the word prediction this month, the topic most likely to be at the top of your search is prediction markets – they are all over the news, going mainstream, and making headlines. You don’t need to have the gift of second sight to see that the likes of Kalshi, Crypto.com, Polymarket, and Under are making serious headway.
But what exactly are they, and how is crypto fueling their growth?
First things first. Predictions markets are not gambling platforms. While they have much in common, legally they are very different beasts. Traditional gambling platforms allow customers to bet against the ‘house’; the odds are calculated by the bookie, and state regulators control them. Prediction markets are platforms that allow people to trade shares on specific outcomes. To take a position on the outcome of a future event and back that up by buying a YES or NO. Traders place a real-money-backed guess on the outcome of events across culture, politics, sport, and economics.
Prediction markets are legal because they are classified as markets and not online betting. In truth, the apps are a cross between a stock trading platform and a sportsbook. Rather than betting against the house, traders buy (and sell) contracts at an agreed price in the hope that the event will resolve in a way that benefits their position (their prediction). Because of how these sites work, contract prices tend to vary significantly, and you can often find better odds-on prediction markets than on traditional sites.
What Are Prediction Market Apps?
Prediction market apps are platforms where users trade contracts based on the outcome of real-world events. Instead of placing a traditional bet, users buy shares in a YES or NO outcome.
Each contract represents a probability. For example, if a contract is priced at $0.70, the market is implying a 70% chance that the event will happen. If the prediction is correct, the contract settles at $1. If not, it expires at $0.
This creates a system that blends elements of financial trading and betting, where prices move dynamically based on user activity rather than fixed odds set by a bookmaker.
How Prediction Market Apps Work
Although the concept may sound complex, the process is relatively simple:
- Choose an event – for example, a sports result, election outcome, or economic indicator.
- Buy a YES or NO contract depending on your prediction.
- Watch the price change as other users trade on the same event.
- Sell your position early if the market moves in your favor.
- Hold until resolution to receive the final payout.
This ability to trade in and out of positions is one of the key differences compared to traditional betting.
Enter crypto and blockchain.
The growth of prediction market apps is being accelerated by crypto, which enables deep liquidity, global access, and tokenized events. Liquidity was a bottleneck for growth, and crypto enables these financial products to scale quickly. Prediction markets struggled with thin liquidity in the past, and crypto now allows tokenized event contracts that can be accessed and traded 24/7. Blockchain tokenization and crypto integration are directly enabling more liquidity. One of the best prediction market apps, Crypto.com, a CFTC-regulated platform, uses institutional market makers to ensure reliable liquidity.
Between January and October, the sector generated over $27.9 billion in trading volume. The apps use either Web3 or blockchain technology, and they differ in their underlying resolution systems, trading infrastructure, and mechanisms. However, crypto rails allow instant deposits and withdrawals and no border friction. While traditional betting sites are limited by state regulation, crypto-fueled prediction markets can be accessed globally. Customers could be trading their YES with someone else’s NO anywhere in the world (in theory). While some countries have yet to approve prediction market trading, all the leading apps have a US nationwide reach (which is more than can be said of any gambling platform).
For users, this has a direct impact on usability. Faster transactions mean funds can be deposited and withdrawn almost instantly, and global access allows more participants to enter the market. More participants generally lead to tighter pricing and better opportunities to enter or exit trades at fair value.
In simple terms, crypto helps prediction markets function more like real financial exchanges, where liquidity and speed are critical to efficiency.
Regulatory battles
While they are regulated at the federal level and classified as financial derivatives, some state regulators believe prediction markets constitute illegal gambling. This has led to claims and counterclaims in court, but for now, the rulings have been in favor of the prediction markets. For example, Kalshi is suing the state of Montana after it attempted to impose gambling restrictions on the app. Interestingly, a former CFTC chair has said that he never expected prediction markets to add sports event contracts and believes that any “betting on sports is gambling”.
Access for all
What is clear is that they are shaking up the US market and causing a stir. Prediction market apps mean that, for the first time, all US citizens can take an online position on the outcome of a future event for real money without breaking the law. However, they do not offer the same level of granularity as traditional sports books. When it comes to predicting the outcome of sports events, traders can usually only take a position on the biggest, headline events. Punters wishing to bet on niche events like cycling or snowboarding are not going to get any joy on the predictions market apps – or not for now, at least.
So, while they do not go as deep as traditional sportsbooks, the range of opportunities to take a position on is wider. It is possible to make trades in all kinds of markets, including taking a bet on the value of a given cryptocurrency on a certain day. For crypto fans, this means they can potentially offset any value losses by betting against the value. So, while from an investor’s point of view you want the value of your Ethereum to increase, you could ‘hedge’ by predicting a lower value. If the real value goes up, you win. If it falls, you could also see yourself winning (while technically losing wallet value).
Prediction Markets vs Sports Betting
While prediction markets and sportsbooks may appear similar, they operate very differently.
In traditional sports betting, users place wagers against the house, which sets the odds and builds in a margin. In prediction markets, users trade against each other, and prices are determined by supply and demand.
Another major difference is flexibility. Prediction markets allow users to exit positions at any time, while sportsbooks usually lock bets in until the outcome is decided.
Finally, prediction markets often cover a wider range of topics beyond sports, including politics, finance, and global events, making them more versatile but sometimes less specialized.
Insider trading concerns
There has been some concern about the accuracy of prediction markets – rather than an expert bookie setting the odds, it all comes down to traders’ knowledge, hunches, and maybe being prepared to go against the crowd if you believe you are better informed than other traders. Having said that, there has recently been criticism of potential insider trading affecting the markets. In fact, the top federal regulator has vowed to crack down and is investigating ‘hundreds of possible cases’.
This has come about mainly because Polymarket has seen some incredibly lucrative trades in recent times over airstrikes on Iran and the capture of Venezuela’s leader earlier in the year. The White House has even issued a reminder to staff that it is illegal to use government information for profit on prediction sites. As Donald Trump Jr is an adviser to Kalshi and an investor in Polymarket, there is no doubt that the President’s family has a financial stake in how these markets are regulated.
Pros and Cons of Prediction Market Apps
Prediction market apps offer a unique alternative to traditional betting, but they are not without drawbacks.
Pros:
- Market-driven pricing without bookmaker margins
- Ability to trade positions in real time
- Access to a wide range of events beyond sports
- Increasing global accessibility through crypto
Cons:
- Can be difficult for beginners to understand
- Limited coverage for niche sports markets
- Regulatory uncertainty in some regions
- Potential risks related to market manipulation or insider information
Key Risks to Consider
Despite their growing popularity, prediction markets come with specific risks that users should understand.
Market volatility can lead to rapid price changes, especially in low-liquidity environments. There are also concerns about information asymmetry, where some participants may have access to better or faster information.
Regulatory changes are another factor. While prediction markets currently operate under federal frameworks in the US, ongoing legal challenges could impact availability in the future.
Final Thoughts
Prediction market apps are reshaping how people engage with future events, blending elements of finance, technology, and entertainment into a single platform.
Crypto has played a major role in accelerating their growth by improving liquidity, accessibility, and transaction speed. At the same time, regulatory debates and concerns around market integrity show that the space is still evolving.
For users, these platforms offer a new way to think about predictions—not just as guesses, but as tradable positions. Whether they become a mainstream alternative to sports betting or remain a niche product will depend on how the industry balances innovation, regulation, and user trust in the years ahead.
