Prediction Markets FAQ: Politics, World Events & Weather

Getting Started with Prediction Markets

How do I start betting on prediction markets? To start trading on prediction markets, first choose a reputable platform like Polymarket, Kalshi, or PredictIt. Create an account, verify your identity, and deposit funds. Start with small amounts to learn how the platform works. Research the events you want to trade and understand the resolution criteria before placing bets.

How do prediction markets work exactly? Prediction markets allow you to buy and sell shares that pay out based on whether future events happen. If you buy a "Yes" share for $0.70 that a candidate will win, you'll make $0.30 profit if they win (paying $1 total) or lose your $0.70 if they don't. The current price reflects what the market thinks the probability is.

Are prediction markets legal in the US? Prediction markets exist in a complex legal gray area in the US. Some platforms like Kalshi operate with CFTC approval for specific event types. Others like PredictIt had special academic research exemptions. Polymarket operates internationally. Always check current regulations and platform terms before participating.

How much money can I make on prediction markets? Your potential profits depend on finding mispriced events and the amount you're willing to risk. Some traders make consistent profits by identifying market inefficiencies, while others lose money. Like any form of trading, there are no guarantees, and you should never bet more than you can afford to lose.

Political Prediction Markets

How do I bet on election results? Most prediction markets offer contracts on major elections. You can buy "Yes" or "No" shares on whether specific candidates will win. Look for markets on presidential races, congressional elections, and gubernatorial contests. Research polling data, electoral dynamics, and historical patterns before trading.

How accurate are election prediction markets? Election prediction markets have been more accurate than polls in many cases. They correctly predicted the Electoral College winner in most recent US presidential elections and often provide better probability estimates than polling averages. However, they're not perfect and can be influenced by trader biases.

How do I predict who will win the next presidential election? To predict presidential election outcomes, analyze prediction market prices alongside polling data, historical election patterns, economic indicators, and campaign dynamics. Look at both national markets and state-by-state markets for Electoral College insights. Remember that early markets can be very volatile and less reliable.

What political events can I bet on besides elections? You can trade on cabinet appointments, Supreme Court nominations, impeachment proceedings, policy passage, resignation dates, international diplomatic outcomes, and specific political milestones. Some markets even cover when politicians will make certain announcements or policy decisions.

How do I know if political prediction markets are manipulated? Watch for unusual price movements without corresponding news, very large trades that seem disconnected from fundamentals, or prices that seem dramatically different from other indicators. High-volume markets with many participants are generally more resistant to manipulation than small, illiquid ones.

World Events and Current Affairs

How do I bet on world events and international news? Look for markets covering geopolitical developments, international conflicts, economic announcements, natural disasters, and major world leader decisions. Successful world event trading requires following international news closely and understanding how global events interconnect.

What types of world events have prediction markets? Common world event markets include international conflicts and resolutions, economic indicators like GDP announcements, natural disaster impacts, major technology launches, sports events, entertainment awards, cryptocurrency prices, and significant policy decisions by international bodies.

How do I predict geopolitical events? Successful geopolitical prediction requires following multiple news sources, understanding historical context, analyzing economic factors, and considering cultural and political dynamics. Look at expert analysis, but remember that even experts are often wrong about timing and specific outcomes.

How reliable are prediction markets for international events? International event markets can be less reliable than domestic political markets due to information asymmetries, cultural barriers, and lower participation from local experts. Use them as one input among many, especially for events in regions where market participation may be limited.

Weather and Natural Events

Can I bet on weather and natural disasters? Some prediction markets offer contracts on major weather events like hurricane landfalls, extreme temperature records, drought conditions, and significant natural disasters. These markets are less common but can be found on platforms that specialize in diverse event types.

How do I predict weather-related events? Weather prediction markets require understanding meteorological data, seasonal patterns, climate trends, and the specific resolution criteria. Follow weather services, climate scientists, and seasonal forecasts. Remember that weather prediction becomes less reliable over longer time horizons.

What weather events typically have prediction markets? Common weather-related markets include hurricane season activity, specific storm landfalls, extreme temperature events, drought declarations, major snowfall events, and sometimes climate-related policy outcomes. Resolution typically relies on official weather service data.

Trading Strategies and Tips

How do I develop a winning prediction market strategy? Develop expertise in specific areas, follow news and expert analysis closely, understand market psychology and biases, start with small positions to learn, diversify across different types of events, and keep detailed records of your trades and reasoning to improve over time.

What mistakes should I avoid in prediction markets? Avoid emotional trading based on your preferences, betting more than you can afford to lose, ignoring resolution criteria, following the crowd without independent analysis, failing to research events thoroughly, and making large bets on low-probability events without proper risk management.

How do I research events before betting? Read multiple news sources, check expert analysis and forecasts, review historical data for similar events, understand the specific resolution criteria, consider potential sources of bias in available information, and look at related markets that might provide insights.

When should I buy vs sell in prediction markets? Buy when you think the current price underestimates the probability of an event occurring. Sell when you think the price overestimates the probability. You can also sell shares you previously bought if you think the price has risen too high, locking in profits.

Platform and Technical Questions

Which prediction market platform should I use? Popular platforms include Polymarket (crypto-based, international), Kalshi (US-regulated, various events), and newer platforms like Manifold (play money). Each has different event types, user interfaces, and regulatory status. Research current platform availability in your jurisdiction.

How do I withdraw money from prediction markets? Withdrawal processes vary by platform. Most require identity verification and may have minimum withdrawal amounts or fees. Some platforms use cryptocurrency, others traditional banking. Check the platform's specific withdrawal policies and processing times before depositing funds.

What happens if a market resolves incorrectly? Reputable platforms have dispute resolution processes. If you believe a market resolved incorrectly, you can usually appeal within a specified time frame. Platforms typically have clear resolution criteria and may consult multiple sources to determine outcomes. However, final decisions are generally binding.

How are prediction market prices calculated? Prices are determined by supply and demand, just like stock markets. When more people want to buy "Yes" shares, the price goes up. When more want to sell, it goes down. The price at any moment reflects the collective wisdom of all participants about the event's probability.