A prediction market is a market where you trade on the outcome of a real-world event — an election, a match, a price level — and the market price tells you the crowd's probability that it happens.
How the price becomes a probability
Each outcome trades as a share worth $1 if it happens and $0 if it doesn't. If a share is trading at $0.60, the market is saying that outcome is about 60% likely — because a trader who thinks it's worth more than 60% will buy, and one who thinks it's worth less will sell, until the price settles at the crowd's consensus. The price *is* the probability.
Why they're often more accurate than experts
Two reasons: they aggregate a huge number of independent opinions, and everyone has skin in the game — being wrong costs money, which filters out cheap talk. That combination makes well-traded prediction markets hard to beat, and often sharper than pundits or polls.
Where they can be beaten
'Hard to beat' is not 'unbeatable'. Thinner markets, fast-moving news, and crowd biases (favourites are often overbet, underdogs underbet) leave outcomes mispriced. Beating the market means having a more accurate probability than the price, and betting only when the gap is in your favour — value, not the likely winner.
That's exactly what Momus does on Polymarket: it prices its own fair odds, compares them to the market, and bets only the mispricings. Start with what an AI Polymarket betting agent is, or read can AI beat prediction markets?