Prediction market glossary
In short
A prediction market prices each outcome as a share that pays $1 if it happens, so a price in cents is a chance in percent: 40¢ means about 40%, decimal odds of 2.50 or American +150. The terms below cover prices and odds, trading, how markets resolve, and how PredictRips packs work.
Prices and odds
- Prediction market
- A market where each share pays $1 if an outcome happens and $0 if it doesn't, so the share price reads as the crowd's probability. More
- Implied probability
- The chance a price implies. On a prediction market it is the price in cents (40¢ = 40%); for decimal odds it is 1 divided by the odds. More
- Yes / No
- The two sides of a binary market. Their prices add up to about $1: if Yes is 62¢, No is about 38¢.
- Decimal odds
- The total return per $1 staked if right, stake included. Decimal odds = 1 ÷ probability: a 25% chance is 4.00.
- American odds
- Odds written as +N (profit on a $100 stake) or -N (stake needed to win $100). A 25% chance is +300; a 60% chance is -150.
- Fractional odds
- Profit over stake, as in 3/1 (a 25% chance). Common in UK betting.
- Payout multiple
- What a correct share returns per dollar: 100 ÷ the price in cents. 20¢ pays 5x, 5¢ pays 20x.
- Favourite
- The most likely outcome, priced highest. A favourite at 80¢ pays about 1.25x if right.
- Long shot
- An unlikely outcome with a low price and a high payout. Long shots tend to be overpriced relative to how often they win (the favourite-longshot bias).
- Overround (vig)
- A bookmaker's margin: the amount by which its implied probabilities add up to more than 100%. Two sides at -110 imply 104.8%.
Trading
- Order book
- The list of open buy orders (bids) and sell orders (asks) for a market. A trade happens where a bid meets an ask.
- Bid-ask spread
- The gap between the best price a buyer will pay and the best price a seller will take. On busy markets it is 1¢; it is the main trading cost on an exchange.
- Midpoint
- Halfway between the best bid and the best ask. It is a better read of the chance than the last trade on a thin market.
- Liquidity
- How much money sits in the order book near the current price. High liquidity means you can trade size without moving the price.
- Volume
- How much money has traded on a market, in total or over a window such as 24 hours. A move on heavy volume means more than the same move on light volume.
- 24-hour move
- How many percentage points an outcome's price changed in the last 24 hours. Up 5 pts means the chance rose from, say, 40% to 45%.
- Cash out
- Selling a position before the market resolves, at the live bid. On PredictRips, any card can be cashed out until 2 minutes before its market closes.
- Moneyline
- A market on who wins a game outright, with no point spread.
- Spread (handicap) market
- A market on whether a team wins by more than a set number of points, such as Lakers -4.5.
- Total (over/under)
- A market on whether a combined number, such as points scored in a game, ends over or under a set line.
- Limit order
- An order to buy or sell at a set price or better. It waits in the order book until someone takes it, so you control the price but not when (or whether) it fills.
- Market order
- An order that trades at once against the best prices in the book. You get speed, but on a thin market the price you pay can be worse than the last trade (slippage).
- Maker and taker
- A maker posts an order that rests in the book; a taker trades against it. Venues that charge fees usually charge the taker.
- Slippage
- The gap between the price you expected and the average price you got, because a large order ate through several price levels in the book.
- Open interest
- The value of all positions still open on a market, as opposed to volume, which counts every trade ever made. It shows how much money is riding on the result right now. More
- Last traded price
- The price of the most recent trade. On a thin market it can be stale; the midpoint of the bid and ask is a better read of the chance.
- Arbitrage
- Buying and selling the same outcome on two venues (or two linked markets) to lock in a gap in prices. It is why Polymarket and Kalshi prices on the same event rarely stay far apart. More
- Ladder market
- One question asked at several levels or dates, each its own yes/no market: "Bitcoin above $90k, $100k, $110k", or "...by June, by September, by December". The rungs don't add up to 100%.
- Multi-outcome market
- A question with several mutually exclusive answers, such as who wins an election. Each outcome has its own price, and the prices add up to about 100%.
Resolution
- Resolution
- When a market is settled: right shares pay $1 and wrong shares pay $0, under the market's written rules and named source.
- Resolution source
- The official result, price feed or publication a market's rules name as the decider, such as an election authority or an exchange's closing price.
- Dispute
- A challenge to a proposed resolution. The venue's own process decides it, which can delay settlement by days.
- Void (cancelled market)
- A market the venue cancels instead of settling Yes or No. Holders get what the venue's rules say, often the price at cancellation.
- End date (close)
- The time a market stops trading. Settlement can come later, once the result is confirmed.
Polymarket and exchanges
- Polymarket
- The largest prediction market by volume: a crypto-native exchange where shares settle in USDC. Its markets are typically resolved through UMA's optimistic oracle. More
- Kalshi
- A US prediction market exchange regulated by the CFTC, trading in US dollars. More
- CFTC
- The US Commodity Futures Trading Commission, the federal regulator of futures and event contracts, including US prediction market exchanges.
- Event contract
- The regulatory term for a prediction market share: a contract that pays a fixed amount if a stated event happens.
- CLOB (central limit order book)
- The order book that matches buyers and sellers by price and time. Polymarket runs one off-chain and settles trades on-chain.
- USDC
- A stablecoin worth 1 US dollar, issued by Circle. Polymarket settles trades in it, and PredictRips keeps balances in it. More
- Polygon
- The blockchain network Polymarket's international exchange settles on; positions are tokens held in the trader's wallet.
- UMA optimistic oracle
- The system most Polymarket markets settle through: someone proposes the result with a bond, anyone can dispute it during a challenge window, and an undisputed or voted result becomes final.
- Negative-risk market
- Polymarket's format for multi-outcome events: a No share on one outcome can be converted into Yes shares on all the others, which keeps the outcome prices adding up to about 100%.
- Geoblock
- A venue refusing trades from certain countries or states, because of local law or its own terms. Reading prices is usually still possible. More
Forecasting
- Calibration
- Whether things priced at X% happen about X% of the time. Heavily traded prediction markets are reasonably well calibrated; thin ones less so. More
- Brier score
- A standard score for probability forecasts: the average squared gap between the forecast (0 to 1) and what happened (0 or 1). Lower is better; always saying 50% scores 0.25.
- Favourite-longshot bias
- The pattern that long shots are priced a little too high and favourites a little too low, in betting and prediction markets alike.
- Wisdom of crowds
- The idea that many independent guesses, combined, beat most individual experts. A market price is one way to combine them, weighted by how much each trader is willing to risk.
- Base rate
- How often something like this has happened before. A good first estimate before the news of the day moves it.
- Kelly criterion
- A formula for the share of a bankroll to stake when you think the true chance differs from the price. Most people who use it stake a fraction of it, because estimates are noisy.
Packs
- Prediction pack
- A fixed-price bundle of random positions on live prediction markets. A PredictRips pack holds 3 cards, each a live Polymarket position. More
- Rip
- To open a pack and reveal its cards.
- Tier (Favorite, Mid, Long shot)
- How likely a card's market is. Favorites pay about 1.1x to 1.8x if right, Mids about 2x to 6x, Long shots (priced 1 to 8 cents) up to 100x. Each pack lists its tier odds before you pay.
- Pack value (expected value)
- The average value of a pack's cards at open, as a share of its price. On PredictRips it is about 90%, shown before you pay.
- House edge
- The share of the price the operator keeps on average. On PredictRips packs it is about 10%. More
- Return to player (RTP)
- What a pack returns on average as a share of its price. Held to the result a PredictRips pack returns about 89%; an instant cash-out about 74%. More
- Provably fair
- A draw you can verify after the fact: the operator commits to a secret seed (by publishing its hash) before you play, then reveals it so you can recompute each result. More