The Most Complete List of Prediction Market Sites.

 A prediction market is a specialized marketplace where participants trade contracts based on the outcomes of future events. These markets function as powerful forecasting tools by aggregating the collective knowledge and beliefs of traders who put real money or tokens behind their predictions. The contracts traded can range from binary outcomes (yes/no) to more complex scalar predictions about specific values or ranges. Modern prediction markets operate across various platforms, from regulated exchanges to decentralized blockchain-based protocols, enabling participants to speculate on everything from election results and corporate decisions to product launches and economic indicators. 

 Prediction markets operate through a system where traders buy and sell contracts that pay out based on event outcomes, with prices reflecting the market's estimated probability of those outcomes occurring. Market makers provide liquidity by maintaining order books or through automated market making algorithms, while smart contracts often handle the settlement process automatically when outcomes are determined. Participants can take long or short positions on their predictions, with prices typically ranging from 0 to 1 (or 0 to 100%), representing the market's collective estimate of the probability. The market price dynamically adjusts as new information becomes available and traders execute transactions, creating a real-time probability forecast that tends to become more accurate as more informed traders participate. 

 Prediction markets work effectively because they combine economic incentives with collective intelligence, creating a powerful mechanism for information aggregation and price discovery. Traders are motivated to conduct thorough research and reveal their true beliefs because they have "skin in the game" through their financial stakes, while market forces help correct for individual biases and overconfidence. The market structure enables rapid incorporation of new information through price adjustments, while the diverse participant base helps capture distributed knowledge that might not be available to any single expert or institution. Additionally, the transparency and automation provided by modern trading platforms and blockchain technology help ensure efficient operation and reliable settlement of contracts. 

 Prediction markets have demonstrated remarkable accuracy across various domains, often outperforming traditional forecasting methods and expert opinions. Their accuracy stems from the efficient market hypothesis, where prices quickly incorporate all available information and the profit motive incentivizes participants to reveal their true beliefs through trading activity. Research has shown particularly strong performance in political forecasting, sports outcomes, and corporate decision-making, though accuracy can vary depending on market liquidity and the complexity of the predicted event. The track record of prediction markets has been validated through various performance metrics, including calibration scores and Brier scores, which consistently show their forecasting power. 

 The legal status of prediction markets varies significantly by jurisdiction and the specific type of market being operated. Many traditional prediction markets operate under regulatory frameworks overseen by bodies like the CFTC, while others function through research exemptions or in carefully structured ways to comply with existing regulations. Decentralized prediction markets have emerged as a new frontier, operating on blockchain technology and often structured to avoid classification as gambling or securities trading. The key legal considerations typically involve anti-gambling statutes, securities regulations, commodity futures laws, and compliance with KYC/AML requirements.