On prediction markets the key is to judge how predictable the event itself is. There are four conditions that determine this.

  1. Understanding the drivers. If the structure of the event is clear, you can assign a probability. If the factors are fuzzy, forecasting turns into guessing.

  2. Availability of data. The more data and repeatable patterns, the better. If data is scarce, the market becomes a psychological game.

  3. Similarity of the future to the past. Typical events are predictable. Unique events are almost not.

  4. Impact of the forecast on the outcome. Some markets are self-influencing: expectations change reality.

For Polymarket this matters a lot: sometimes the market predicts the event, and sometimes the event is shaped by the market.

— S. Praevis