By Nolan Dalla
On the evening of Tuesday, November 5, 2024, most Americans were watching television. That was election night. Returns from each state started coming in, and the vote count began. By midnight, the 2024 presidential race appeared to be way “too close to call.” None of the major news networks nor the biggest media outlets announced the winner. Hours passed. Not until 4:35 am on Wednesday morning was the victor finally declared. Associated Press became the first major news organization to report Donald Trump as the 47th president-elect, once he secured the vital swing state of Wisconsin.
However, those who were watching elsewhere and paying close attention to global prediction markets knew the ultimate outcome way earlier in the night. Betting contracts at major prediction markets shifted heavily in Trump’s favor several hours earlier.
Stock exchanges overseas and international bond markets followed suit in solidifying confidence in a Trump victory projection which all foreshadowed the election outcome well in advance of conventional media reporting. Indeed, it was prediction markets which established themselves as the most reliable foreseers of our future. In short, prediction markets were more accurate in forecasting the 2024 presidential election than traditional polls and expert pundits.
This new reality of predicting and projections should teach everyone a valuable lesson. Even if you don’t invest or gamble on such events, there’s no disputing prediction markets will become increasingly important – perhaps essential – as accessible sources and convenient tools. This applies not just to national elections and other political subjects, but nearly all facets of our daily lives.
Much like the internet and artificial intelligence, prediction markets are destined to impact everything we do, likely in ways we have yet to realize.
WHAT IS A PREDICTION MARKET?
A prediction market is very simply — a means of exchange. The market constitutes a bond of agreement between multiple parties. Participants buy and sell contracts. A contract can be any position about an upcoming future event, including a wide variety of subjects and outcomes. The pricing on each contract reflects the participants’ belief as to how likely (or unlikely) a specific event is to occur. Almost all prediction markets operate online.
Prediction markets typically include:
- sports events (all major sports worldwide)
- politics (elections, appointments/resignations, current events)
- economics (market indexes, interest rates, economic indicators)
- entertainment and culture (awards, movies, music)
- technology (product launches, scientific breakthroughs)
- people (deaths, marriages/divorces)
- weather (rainfall, snowfall, temperatures, records, natural disasters)
Since trading is participant-to-participant (also called peer-to-peer), prediction markets do not specifically make any public offers or create odds. That’s all participant-driven. Moreover, they do not profit by charging a vig, as is customary with sportsbooks, or a commission as with stock trading. Rather, money is exchanged between participants. Betting exchanges make their money and take their cut by charging fees on every trade. So, they are neutral on every event and question.
THE WISDOM OF CROWDS
Most of us have opinions about future events. Social media makes this easy to share with others. We like to predict what will happen. It’s fun. It’s also useful. This is true for sports, politics, entertainment, and many other subjects of interest to us. Sometimes, our opinions are correct. Other times, our predictions turn out to be wrong.
Why are we wrong? Most people are susceptible to biases. After all, we’re only human. We may be misinformed because of inaccuracies or the spread of misinformation. We’re always subject to our own emotions, which clouds objectivity. Accordingly, we can’t stop these factors from impacting our judgment. Might there be a way to diffuse these distractions and enhance clarity?
Photo: The White House
Read the full article in the Fall 2025 RECAP issue of Rounder Magazine
