Prediction markets are electronic trading platforms where participants buy and sell interests in the outcome of certain future events, including elections, sports, or economic indicators. Prices in prediction markets are considered to represent the aggregate probability of an event occurring, based on buying and selling activity of the participants. Events available for trading on prediction markets are known as event contracts and are typically offered with binary “yes” or “no” outcomes. Examples could include whether inflation will exceed a certain level by a certain date, or whether a particular candidate will win a certain election.
