What is a Prediction Market? A Complete Guide for 2026

According to CoinWorld, prediction markets like Polymarket and Kalshi are crowdsourcing platforms where users can trade contracts on future events, ranging from elections to cryptocurrency prices, with odds determined by real money. Unlike polls, these markets provide real-time, economically incentivized probability estimates. Major platforms include Polymarket, which processes over $1 billion in cryptocurrency transactions monthly, and the regulated, USD-denominated Kalshi. Key risks include settlement disputes, insider trading, and manipulation in low-liquidity markets. Profitable strategies include information arbitrage, selling hype, and statistical arbitrage, but success requires trading in high-liquidity markets where one has a clear informational advantage.