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At first glance, trading on a prediction market looks a lot like sports betting: you pick a side, put money in, and get paid if you’re right. But the mechanics underneath are fundamentally different, and those differences matter for how you should think about participating.

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What prediction markets actually do

A prediction market is a mechanism for aggregating information. When thousands of people trade on the probability of an event, the market price reflects the collective judgment of everyone who has skin in the game. People with better information are incentivized to trade on it. People with worse information lose money over time. The result is a probability estimate, not a house-set line, but a price that emerges from the market itself. This is why prediction markets have repeatedly been shown to outperform expert panels and polling in forecasting accuracy. The crowd, when properly incentivized, is hard to beat.

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The key differences

No house edge. In traditional betting, the bookmaker sets odds with a built-in margin. On Worm, you’re trading against other participants. The platform takes a small fee on winning trades, but there’s no structural edge working against you. Prices move. A betting line is fixed when you place your bet. A prediction market price changes continuously as new information arrives. If you’re early and right, your position becomes more valuable as others catch up to your view. You can exit early. You’re not locked in until resolution. If you change your mind, you can sell your position at the current market price, realizing a profit or cutting a loss without waiting for the event to conclude. The goal is accuracy, not entertainment. Prediction markets are designed to surface true probabilities. That makes them a tool for people who believe they have an information edge, not just fans looking to add stakes to a game they’re watching.

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Should you treat it like gambling?

That depends on why you’re trading. If you’re trading based on genuine research and a view that the market price is wrong, you’re doing what prediction markets are designed for. If you’re trading on instinct or for the thrill, the experience will feel a lot like gambling, and over time, it will perform like it too. Worm is built for people who want to be right. New to prediction markets? Read How Markets Work to understand how prices are set, how trades fill, and what happens at resolution.