Prediction market odds explained: from price to chance to payout
In short
Price is chance
Every share pays $1 if its outcome happens and $0 if not. So the price someone will pay for it, in cents, is the chance they put on it, in percent. Yes at 62¢ and No at 38¢ add up to about $1, because one of them must happen.
Price to payout
Your payout multiple is $1 divided by the price: 50¢ pays 2x, 25¢ pays 4x, 10¢ pays 10x, 2¢ pays 50x. Money in divided by the price is the number of shares; each pays $1 if right. At 25¢, $10 buys 40 shares, which return $40.
Profit is the payout minus the stake: $30 in that example. If the outcome doesn't happen, the shares pay nothing and the stake is lost.
The same odds in other formats
Decimal odds equal the payout multiple: a 25¢ price is 4.00. American odds are plus for underdogs and minus for favourites: 25¢ is +300 (a $100 stake profits $300) and 75¢ is -300 (you stake $300 to profit $100).
What the table leaves out
You buy at the ask and sell at the bid, so the real cost is a cent or two above the midpoint on busy markets and more on thin ones. Some venues charge a fee on top. And a price is the crowd's view, not a fact: long shots tend to be overpriced, so the cheap side returns less on average than its price implies.
Selling before the result
You don't have to hold to the end. If the price rises from 25¢ to 40¢, selling 40 shares returns $16 before any spread or fee. PredictRips cards work the same way: hold to the result for $1 a share, or cash out at the live bid (about 85% of it in USDC) until 2 minutes before the market closes.
What $10 at each price returns if right (decimal odds are the payout multiple)
| Price | $10 returns | Profit | Decimal | American |
|---|---|---|---|---|
| 90¢ | $11.11 | $1.11 | 1.11x | -900 |
| 75¢ | $13.33 | $3.33 | 1.33x | -300 |
| 60¢ | $16.67 | $6.67 | 1.67x | -150 |
| 50¢ | $20.00 | $10.00 | 2.00x | -100 |
| 40¢ | $25.00 | $15.00 | 2.50x | +150 |
| 25¢ | $40.00 | $30.00 | 4.00x | +300 |
| 10¢ | $100.00 | $90.00 | 10.00x | +900 |
| 5¢ | $200.00 | $190.00 | 20.00x | +1900 |
| 2¢ | $500.00 | $490.00 | 50.00x | +4900 |