Imagine you want to hedge a business decision against a short-term political outcome: your team needs to decide whether to delay a product launch until after a late-summer regulatory vote. You can consult analysts, run scenario planning, or—if you prefer a monetary signal—buy a contract that pays if the vote goes a certain way. That is the practical promise of regulated prediction markets: they turn questions about uncertain future events into tradable contracts whose prices summarize collective information and incentives....

A common misconception is that a prediction market simply asks, “What will happen?” and then prints the most likely answer. In practice, a US prediction market does something more specific: it creates a tradable contract whose value changes as participants revise their beliefs about a defined future event. The price is not a prophecy. It is a moving summary of expectations, incentives, liquidity, and settlement rules. That distinction matters. A contract trading at 70 cents may be read as roughly...