Question 1

How does a prediction market differ from a sportsbook?

Accepted Answer

A prediction market matches participants against each other and earns fees, so the traded price is set by order flow. A sportsbook posts a price, takes the other side, and builds a margin into that price.

Question 2

Can a contract price be read as a probability?

Accepted Answer

Broadly, yes: a contract that settles at a fixed value trades near the market's probability of that outcome, net of fees. How much that reading is worth depends on the depth behind the quote.

Question 3

What decides how a contract resolves?

Accepted Answer

The settlement source and the written resolution criteria — not the headline wording. Two contracts that look identical can resolve differently when their criteria differ on postponements, corrections, or abandonment.

Question 4

Why does liquidity matter so much?

Accepted Answer

Liquidity sets the size that can transact before the price moves. A thin market can display a precise-looking probability that no meaningful size could trade at.

How does a prediction market differ from a sportsbook?

Can a contract price be read as a probability?

What decides how a contract resolves?

Why does liquidity matter so much?

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