Prediction markets allow you to bet on nearly any event for which the outcome is uncertain. For example, prior to the 2012 U.S. presidential election, you could have wagered on whether Barack Obama or Mitt Romney was going to win the electoral vote. You can also bet on which country will host the next Summer Olympics; whether Steven Spielberg will win an Oscar in the coming year; and whether Israel will make peace with Hamas before the year ends.
The odds attached to any given bet are based on the likelihood of a particular outcome coming true. For example, suppose the prediction market had assigned a 65 percent chance that Barack Obama would win a second term as president. In that case, you would have had to wager 65 cents for the chance to earn $1.
So, what types of events can you bet on? The simple answer is anything and everything. Having said that, the top prediction market betting sites can’t provide odds on every event imaginable. So, you’ll need to pick and choose from the available bets. We’ll cover several types of wagers you can make below to give you an idea about what is available.
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Political And Election Prediction Markets
When most folks think about betting on political events, they instinctively think of elections. And to be sure, that’s where you’ll find a lot of the action. U.S. presidential races tend to attract the most attention, though you’ll sometimes see smaller races involving high-profile senators and representatives of Congress. But the political prediction markets extend far beyond elections.
For example, you can place a wager on whether Obama will visit certain countries that share a “strained” relationship with the U.S. Will he visit Cuba by the end of the year? Will he make a trip to Iran to smooth things over with the country’s leaders? How about North Korea? The outcomes for each of these events are uncertain. That makes them ideal for the prediction markets.
You can also place wagers on key figures within the current administration. For example, a lot of people have wondered whether Obama’s Attorney General Eric Holder will depart his position. Many folks have likewise wondered about Tim Geithner, Secretary of the Treasury. If you predict their departure accurately, you would win a payoff.
The prediction markets are not focused exclusively on the U.S., of course. If you follow politics in other countries, you’ll have even more opportunities to profit. Do you suspect the UK’s Labour Party is going to take the next election? Or, do you think the Conservatives will rally to take the vote? Forecast correctly and you’ll stand to make a healthy profit.
| REVIEW | MIN DEPOSIT | AVG RETURNS | VISIT BROKER |
|---|---|---|---|
 | $10 | 80% | VISIT SITE |
 | $50 | 160% - 180% | VISIT SITE |
 | $250 | 95% | VISIT SITE |
 | $250 | 80% - 90% | VISIT SITE |
Betting On The Financial Markets
The financial markets have long been the domain of speculators and investors. Foreign currency markets alone command trillions of dollars in daily volume. Traders make predictions on the price movements of various currency pairs, options, swaps, and other instruments. Betting on exchange rates between currencies has been simplified thanks to binary options. With binary contracts, you make a prediction, commit to a trade, and earn a profit (or sustain a loss) based on the accuracy of your forecast. Very simple.
But financial prediction markets encompass a lot more than currency pairs. For example, you can place a wager on whether the Dow Jones Industrial Average will close higher by the end of the day. Or, will the U.S. economy slip into a double-dip recession by the end of 2013? Will Congress vote to raise the U.S. debt limit?
Economic and financial events throughout the Eurozone are also fair game. You can place a wager on whether Spain will default on its debt, whether the UK will lose its AAA credit rating, and whether the IMF will offer Portugal a bailout. The point is that prediction markets can make odds available for nearly any uncertain future event.
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Entertainment Prediction Markets
Political and financial markets are, of course, hotbeds of speculative betting activity. That’s been the case for years. Another area that attracts predictive betting is the entertainment industry. You can place wagers on how much money certain films will earn during their opening weekends or whether a given film will win an Academy Award.
Will a particular summer blockbuster have the largest opening weekend of the year? Will the Hobbit make more than $70 million during its opening? Will Spielberg’s Lincoln walk away with the Academy Award for Best Picture?
The market for predictive betting in entertainment also includes events involving individuals. For example, do you think Russell Crowe will win an Academy Award for Best Supporting Actor? Will Keira Knightley win for Best Actress? And who will win for Best Director: Ben Affleck, Ang Lee, or Quentin Tarantino? If you follow certain actors or directors, this is a great opportunity to make a profit on your knowledge.
Can you think of any other areas for which prediction markets can assign odds? How about a field for which the outcome is almost always uncertain: the weather.
Earning A Profit By Forecasting The Weather
It sometimes seems as if weather forecasters only need to be correct 51 percent of the time in order to keep their jobs. Even with the help of fancy Doppler radar technology, predicting the weather is problematic. Will it be sunny tomorrow? Will it rain or snow? If so, how many inches are expected to fall?
Predictive betting on weather-related events gives you an opportunity to pit your forecasting skills against the masses. For example, do you think New York will see more than twenty inches of snow between now and the end of April? If so, place a bet on that outcome. What about trends in the global weather? Are you convinced that the current year will go down as the warmest year on record? If so, you can make a profit by betting on your prediction (assuming it comes true).
Prediction Markets Emerge Wherever Uncertainty Exists
This is a critical point to drive home. An opportunity to wager on a particular outcome will exist whenever the future is uncertain. Think of it this way: if the outcome of an event was certain, no one would bet against it.
As an example, consider a typical roulette wheel. You can place a wager on red, black, even, odd, or double-zero (among many other bets). There’s no way to know for sure where the roulette ball will ultimately land. That’s the reason you can place a bet on the outcome of each spin of the wheel. In a broader context, that is essentially why prediction markets exist.
You’ll find prediction markets creating odds around current events, such as the price of gasoline and the occurrence of a major earthquake. You’ll find them dealing with foreign affairs, from protests and elections in other countries to the likelihood of a terrorist attack. You’ll see odds around the real estate market, construction projects, and events related to technology.
Do you have a passion for space and science? If so, you might want to place a wager on whether NASA will find extraterrestrial life by the end of next year. Do you follow social issues with interest? Place a bet on how high the marginal single-filer federal income tax rate will climb next year.
It’s important to realize that predictive betting is accompanied by substantial risk. There is no guarantee you’ll be able to accurately forecast the outcome for a given event. On the other hand, keep in mind that even “conservative” or “safe” investments, such as buying a house, have proven to be riskier than many people imagined.
Here’s the bottom line: betting in prediction markets can be fun, exciting, and lucrative. But if you intend to participate, do so with the right expectations.
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