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November 12, 2025
Introduction
The 2024 presidential election brought prediction markets into the mainstream. While traditional polls were heavily biased and swung back and forth, platforms like Polymarket and Kalshi consistently priced Donald Trump as the favored candidate weeks before election day. Their accuracy introduced millions to the idea that markets can often forecast the future better than polls or “experts”.
Prediction markets go well beyond just politics. They are now used for sports betting, financial markets, and countless other categories. They’re used to forecast everything from inflation readings to movie openings, slowly becoming the ultimate truth machine.
What Are Prediction Markets?
Prediction markets let people trade contracts tied to future events. Instead of buying stock in a company, you’re buying “yes” or “no” positions on whether something will happen.
The key difference is that traders put money behind their beliefs. That financial stake forces people to think harder, dig into data, and react quickly when new information arrives. Over time, prices converge toward the market’s best estimate of an event’s true probability.
How Event Contracts Work
Most markets rely on binary event contracts, which trade between $0 and $1.
If the event happens, the contract pays $1.
If it doesn’t, it expires at $0.
A price of $0.65 implies a 65% chance the event will occur.
Example:
If you buy 100 “yes” contracts at $0.30 on the S&P 500 finishing above 7,000 by year-end, you’ll earn $100 if you’re right and lose $30 if you’re wrong. The structure is simple and easy to interpret.
Major Platforms
A few players dominate the space:
Kalshi: The first CFTC-regulated U.S. exchange for event contracts. After a major 2024 court win, it now offers election markets alongside economic and cultural events.
Polymarket: A blockchain-based platform built on Polygon. Fast, global, and known for its real-time liquidity during the 2024 election cycle.
PredictIt: An academic platform with low betting limits used mainly for research.
Brokerages: Firms like Interactive Brokers, Robinhood, and WeBull are beginning to integrate event contracts, signaling broader adoption.
Why They Work: Collective Intelligence
Prediction markets combine many independent views into a single probability. There’s actual skin in the game. Traders update their positions as news breaks or conditions change, so the market continually adjusts to new information.
Unlike polls, which can be biased or stale within days, prediction markets move instantly. Studies show they consistently outperform expert forecasts and polling averages because good forecasters are rewarded and poor ones lose money.
Applications Beyond Politics
Prediction markets have expanded into countless use cases:
Financial earnings: Often times, companies beat earnings and their stock price plummets. Invesetors can now simply predict whether a company will beat or miss their earnings. Many investors use these types of contracts as a hedging mechanism as well.
Economic indicators: Markets now exist for inflation prints, unemployment data, and Fed decisions.
Risk management: Businesses hedge regulatory or operational risk through event contracts.
Culture and sports: Everything from Oscars to F1 races gets priced in real time.
Regulation
In the U.S., prediction markets fall under the CFTC’s oversight. The agency treats event contracts as derivatives rather than gambling products, though state-level rules can still conflict especially for sports-related markets.
Kalshi’s 2024 court victory clarified that political markets can operate legally under federal derivatives law. Even so, the regulatory picture is still evolving, and the industry expects more updates in the coming years.
How To Get Started
If you decide to participate:
Pick a platform that fits your use case: regulation (Kalshi), global access (Polymarket), or smaller stakes (PredictIt).
Stick to domains you understand such as tech events, elections, economics, etc.
Manage risk - never wager money you can’t lose, and diversify across markets.
Track taxes as profits are usually treated as capital gains in the U.S.
Prediction Markets & Crypto
Blockchain and crypto have also reshaped how people participate in prediction markets. Platforms like Polymarket run entirely on-chain, letting traders use stablecoins to take positions. For many crypto users, that often creates a challenge: how do you participate in these markets without selling long-term holdings you believe in?
Some traders solve this by borrowing against their crypto rather than selling it to use for prediction markets. Companies like Arch Lending allow Bitcoin and crypto holders to unlock liquidity while staying exposed to potential upside. It’s a practical way to fund market activity, meet short-term cash needs, or diversify strategies without triggering taxable events.
The Future of Forecasting
Prediction markets are on the brink of mainstream adoption. As liquidity grows and regulation stabilizes, we’ll likely see markets for climate events, technological breakthroughs, and social trends. With enough participation, these forecasts could become critical tools for businesses, policymakers, and investors.
Conclusion
Prediction markets turn the world’s collective intelligence into a constantly updated probability stream. Their structure is simple, their incentives are strong, and their track record continues to improve. Whether you’re watching elections, tracking economic indicators, or curious about cultural trends, these markets offer a clear window into what people expect to happen.
About Arch
Arch is building a next-gen wealth management platform for individuals holding alternative assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrency investments are volatile and risky. Always conduct your own research before making investment decisions.