Prediction Markets: What They Are and How They Work
Prediction markets let people trade on the outcome of real events: an election, a football final, an interest rate decision or tomorrow's Bitcoin price. They have grown quickly since 2024, and names like Polymarket and Kalshi now appear in news coverage as often as in trading apps. This guide explains how they work, how they differ from a casino or sportsbook, the platforms you will hear about, and what Malaysian players should know before putting money in.
How a Prediction Market Works
Each market asks a yes-or-no question with a fixed end date, such as "Will Team A win the final?" You buy shares in Yes or No. A share pays out a fixed amount, usually one US dollar, if your side is right, and nothing if it is wrong.
The share price moves between 0 and 1 dollar as people buy and sell, and that price works as the crowd's estimate of the probability. A Yes share at 0.30 dollars means traders, on balance, put the chance at about 30%. You can sell your shares at the current price before the market closes, which you cannot do with most ordinary bets.
Prediction Market vs Sportsbook
| Point | Prediction market | Sportsbook |
|---|---|---|
| Who sets the price | Other traders, through buying and selling | The bookmaker |
| Who you trade against | Other users | The bookmaker |
| How the platform earns | Trading fees | The margin built into the odds |
| Cashing out early | Sell your shares at the market price | Only if the bookmaker offers cash-out |
| Topics | Politics, economics, crypto, sport, culture | Mostly sport |
Reading Prices as Odds
Converting a share price into betting odds is simple: divide 1 by the price. A share at 0.40 dollars is the same as decimal odds of 2.50, and a share at 0.80 dollars is odds of 1.25. If you already know how bookmaker odds and their margin work, this makes it easy to compare a prediction market price with a sportsbook price for the same event.
The Main Platforms
| Platform | How it works | Who it serves |
|---|---|---|
| Polymarket | Crypto-based, trades settled in USDC | Global, with a list of blocked and restricted countries |
| Kalshi | An exchange regulated in the United States | The US, plus a growing list of other countries |
| Novig | A sports-focused prediction app | Mainly the United States |
| ProphetX | A sports exchange where users trade against each other | Mainly the United States |
| Swipe1 | A mobile app where you swipe to predict, built on BNB Chain | In early-access beta |
Polymarket is the largest and the one most Malaysian readers ask about; our Polymarket guide for Malaysian users covers how it works, its fees and its country rules. Kalshi announced in October 2025 that it was available in more than 140 countries and has since signed partners in Brazil and Canada. Swipe1 is new: it was still in an early-access season when we checked, and its rewards were points rather than cash.
Fees and Costs
Prediction markets do not build a margin into prices the way a bookmaker does, but they are not free. Platforms charge trading fees on some or all markets, the gap between the buying and selling price (the spread) costs you on every trade, and moving money in and out, often through crypto, adds its own fees. On a thinly traded market, the spread alone can be larger than a sportsbook's margin.
Risks to Understand
- Resolution disputes. Every market has written rules for how the result is decided. Unclear wording has led to disputed outcomes, so read the rules before you buy.
- Crypto handling. Platforms such as Polymarket use crypto, with the same risk of sending to the wrong address or network as any crypto transfer.
- Thin markets. In small markets, a few traders can move the price, and you may not be able to sell at a fair price.
- It is still a wager. Prices that look like probabilities can make a trade feel like an investment. It is a bet on an outcome.
Prediction Markets and Malaysian Law
No prediction market is licensed in Malaysia, and Malaysian law has no specific rules for them. Staking money on the outcome of an event can fall under the country's betting laws, so the same caution applies as for any offshore betting site. Being open to Malaysian users is a choice the platform makes; it does not make the activity lawful here. This page is information, not legal advice.
Frequently Asked Questions
What is a prediction market?
A platform where people buy and sell shares on the outcome of real events. A share pays a fixed amount, usually one US dollar, if its outcome happens, and its price works as the crowd's estimate of the probability.
How is a prediction market different from betting?
On a prediction market you trade against other users and prices are set by supply and demand, while a sportsbook sets the odds and takes the other side. Both involve staking money on an outcome.
How do I convert a prediction market price to odds?
Divide 1 by the share price. A share at 0.40 dollars equals decimal odds of 2.50, and a share at 0.80 dollars equals odds of 1.25.
Which prediction markets can Malaysians use?
Polymarket does not list Malaysia among its blocked or restricted countries, and Kalshi says it is available in more than 140 countries. No prediction market is licensed in Malaysia.
Are prediction markets legal in Malaysia?
Malaysia has no specific rules for prediction markets and licenses none of them. Staking money on an event's outcome can fall under the country's betting laws, so treat them with the same caution as any offshore betting site.
What is Swipe1?
A mobile prediction app built on BNB Chain where users swipe to predict yes or no on events. When we checked, it was in an early-access beta season with points as rewards.