Prediction markets, plain English

Prediction markets are markets where the price of a share equals the chance of an event happening. Buy a share at 38 cents and you are saying the market thinks there is a 38 per cent chance the answer is YES. If the answer is YES, the share pays 100 cents. If it is NO, it pays zero. That is the whole game.

This page covers how the maths works, how Polymarket runs the matches, and what a SA trader needs to know before placing a first trade. For a side by side look at how this stacks up against a SA bookie, see the polymarket vs sports betting guide.

What a prediction market actually is

A prediction market is a place where the price of a share is the chance of a future event. The shares are simple. They are either YES or NO. The price sits anywhere between 1 cent and 99 cents.

Worked example. A market asks “Will Bitcoin close above 100,000 USD on 31/12/2026?” The YES share trades at 38 cents. That means the market believes there is a 38 per cent chance Bitcoin closes above that level. If it does, every YES share pays out 100 cents. If it does not, every YES share pays zero. The NO share trades at 62 cents and the maths is the inverse.

Why does this matter? Because the price moves live as news lands. A big rate cut, the YES share might tick to 47 cents within an hour. A regulator move, it might drop to 22 cents the next day. The chart shows the market changing its mind in real time.

Why prices read like probabilities

The 1 cent to 99 cents range is not a coincidence. The market is built so the YES and NO prices add up to 100 cents at all times. If YES is 38 cents, NO is 62 cents. Together they fund the 100 cent payout on whichever side wins.

This is what makes the price look like a probability. Each cent is one per cent of belief. You can read a Polymarket board the way you read a weather forecast. 73 per cent chance of rain, 73 cent share for YES rain in that market.

The catch is that prices reflect what traders are willing to pay right now, not what is true. A market can be wrong. The price is the consensus, not the verdict.

How a Polymarket trade works, step by step

Polymarket lives on the Polygon network. Polygon is a Layer 2 chain on top of Ethereum, designed for cheap, fast trades. Network gas is fractions of a cent per move.

1. Connect or create a wallet. You can log in with an email address or with a wallet like MetaMask. Takes about 2 minutes.
2. Fund with USDC on Polygon. Buy USDC directly with a card, or send USDC from another wallet over the Polygon bridge.
3. Pick a market. Politics, sports, crypto, weather, culture. Each market shows the current YES and NO prices.
4. Place an order. A limit order says “I will buy at 38 cents or lower”. A market order says “I will pay the next available ask, even if it ticks up”.
5. Wait for resolution. Days for a sports fixture, months for an election.
6. Withdraw USDC. Back to your wallet, then off-ramp through a SA exchange like Luno or VALR.

Worked example. You buy 10 YES shares on the Bitcoin market at 38 cents each. Total cost is 380 cents (3.80 USDC). The platform takes a 1 per cent trade fee, so the total comes to 3.84 USDC. If Bitcoin closes above 100,000 USD on 31/12/2026, your 10 YES shares pay out 1,000 cents (10 USDC). Your profit is 6.16 USDC. If it does not, you lose the 3.84 USDC.

Who sets the price, market makers and traders

Polymarket uses a mix of an order book and an automated market maker. The order book is the same idea as on a stock exchange. Traders post bids and asks, and the platform matches them.

The automated market maker (AMM) backstops the book. It is a pool of liquidity that always has a price quoted, even when no human trader is on the other side. The trade-off is that the AMM has a wider spread than a deep order book.

A SA bettor reading a thin-book sportsbook market sees the same pattern. Books like Hollywoodbets price small fixtures with wider margins than the big leagues. The same logic applies on Polymarket. Less liquidity means worse pricing for the taker.

How markets resolve

A market needs a clear outcome. Polymarket uses an oracle to set it. The oracle is normally UMA, a service that posts the result and gives the market a window to dispute it.

For a clean outcome, like an election count or a closing price, the oracle posts the result within a day or two of the event. For an ambiguous outcome, the oracle might delay, take input from disputers, and settle after a vote.

This is where things can go wrong. A market with vague wording, think “Will the rand crash in 2026?”, will struggle to resolve clearly. Always read the resolution criteria before placing a trade. The criteria text on Polymarket is binding, not the headline.

• Clean event. Election count, closing price, fixture result. Resolves in 1 to 2 days.
• Slow event. Court ruling, regulator decision. Resolves in weeks.
• Disputed event. Wording ambiguity or contested fact. UMA dispute window adds 2 to 7 days.

Fees, gas and the real cost of a trade

Three fees affect every trade. The trade fee, the network gas, and the off-ramp on the way out.

• Trade fee. 1 per cent of the order size, taken at fill. Verify the current rate on the platform on the day of trade.
• Gas fee. Tiny on Polygon, usually under 1 US cent per move.
• Off-ramp fee. Charged by your SA crypto exchange when you swap USDC back to ZAR. Varies by exchange. Luno and VALR are the two SA-friendly off-ramps.

For a 50 cent share at 100 shares (a 50 USDC trade), the round trip costs roughly 50 cents in fees plus the off-ramp on the way back. Compare that to a SA sportsbook, where the bookie margin sits at 5 to 10 per cent of every stake. Polymarket is cheaper per trade, especially for larger trades.

Prediction markets vs sportsbooks, the short version

A sportsbook sets fixed odds and takes the other side of every bet. A prediction market matches traders against each other and prices update in real time. The mechanics, the fees, and the legal status are all different.

A SA sportsbook is licensed by the NGB or a provincial regulator. Polymarket is not. A SA sportsbook holds your ZAR. Polymarket holds your USDC on Polygon. A SA sportsbook closes the book once the fixture starts. Polymarket can have a live market on a US election for months.

For the full side by side, see polymarket vs sports betting.

Keep reading

For the rest of the topic, browse the Prediction markets hub. Useful next reads:

• Polymarket vs sports betting, the companion guide to this one.
• Polymarket review, full breakdown of fees, KYC, deposits and SA access.
• Is Polymarket legal in South Africa?, the legal picture for SA users.
• Prediction market glossary, every term defined in plain English.
• Hollywoodbets review, the SA sportsbook comparison point used throughout this guide.