How does Polymarket actually work?

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Who do you think will win the next Presidential Election? How many tweets will Elon Musk make in January? What will be the largest company by the end of the year?

These are all events that you can bet on through Polymarket, a rapidly growing prediction market that took over $12bn of wagers in 2025. Users can bet on almost everything, from topics like politics, finance, culture, and even weather. Each bet is framed with two options: Yes, or No.

These options are like shares, each with a price between 0 and one dollar that moves as participants trade them. If a ‘Yes’ share costs 75 cents, the market is essentially saying there is a 75% chance that event will happen.

If you buy a share and it’s correct when a bet is resolved, you’re rewarded with $1. So if you had bought a Yes share for 75 cents, you would have earned 25 cents. If you had bought 1,000 shares, that would be $250 profit. But if your share is incorrect, it pays out nothing, meaning you’ve lost all the money you put in.

Because the shares trade in a market, you don’t have to wait until the bet is resolved. You can sell your shares at any time to take profit, or cut losses. All transactions are executed on the polygon blockchain, which means every trade and account is public. You can see users who have profited millions of dollars on Polymarket. But for every winner, there’s a loser.

The biggest controversy on Polymarket comes from how market results are resolved. The site uses UMA to choose which result of a bet is correct. For some events like the Oscars winner, this is easy to decide but others, like whether the US invaded Venezuela, are more ambiguous, and can cause controversial results.

But users are still flocking to prediction markets like Polymarket, because the peer-to-peer betting system means odds are often much better than traditional gambling websites. In fact, Polymarket doesn’t charge fees on most markets. Where it does charge fees, it redistributes a portion to users who set limit orders, which improves market liquidity.

By leveraging the ‘wisdom of the crowd,’ Polymarket argues it has built a forecasting platform that transforms collective intelligence into the most reliable gauge of future events available today.

Critics argue that Polymarket contributes to the broader gamblification of society by turning real-world events into speculative assets.

What do you think?

References

Bonos, L. (2026). Millions in bets ride on what Trump will say, do or invade next. [online] The Washington Post. Available at: https://www.washingtonpost.com/technology/2026/01/28/polymarket-kalshi-trump-prediction-markets/.

Cooper, A., Chasan, A. and Messick, G. (2025). Polymarket CEO says his prediction market is ‘the most accurate thing we have as mankind right now.’ [online] Cbsnews.com. Available at: https://www.cbsnews.com/news/polymarket-predictions-accuracy-shayne-coplan-60-minutes/.

McCullough (2025). Polymarket Historical Accuracy and Bias. [online] Dune.com. Available at: https://dune.com/alexmccullough/how-accurate-is-polymarket.

Polygon (2026). Polygon | Ethereum’s Internet of Blockchains. [online] Polygon | Ethereum’s Internet of Blockchains. Available at: https://polygon.technology/.

Polymarket (2026). Liquidity Rewards. [online] Polymarket. Available at: https://docs.polymarket.com/polymarket-learn/trading/liquidity-rewards.

PolymarketScan (2024). PolymarketScan. [online] PolymarketScan. Available at: https://polymarketscan.org/ [Accessed 4 Feb. 2026].

Scanlon (2026). The Dangerous Power of Prediction Markets. [online] NYTimes. Available at: https://www.nytimes.com/2026/01/23/opinion/prediction-markets-reality-democracy.html.

Token Terminal (2020). Polymarket Trading volume Metrics. [online] Tokenterminal.com. Available at: https://tokenterminal.com/explorer/projects/polymarket/metrics/trading-volume.

UMA (2025). UMA. [online] Uma.xyz. Available at: https://uma.xyz/#how-it-works.

Wellfound (2026). Polymarket: Founder, Leadership & Team. [online] Wellfound. Available at: https://wellfound.com/company/polymarket1/people.