Complete Guide to Blockchain Prediction Markets 2026

How Prediction Markets Work in Crypto Gambling

In this original CoinBets.com guide, we’ll take a close look at how blockchain-based prediction markets work, how the technology is reshaping the crypto gambling landscape, and what we can expect to see moving forward.

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The Rise of Blockchain Prediction Markets

The emergence of blockchain technology is rapidly transforming many industries, with its decentralized infrastructure enabling innovative alternatives to traditional systems. One of the sectors where blockchain is having a very significant impact is online gambling, with prediction markets and crypto casinos growing in popularity.

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How Prediction Markets Work

The concept behind prediction markets is quite simple. Users place bets on future events, and then that collective knowledge (or “wisdom of crowds”) is transformed into a tradable commodity via blockchain and smart contracts.

This system allows users to speculate on virtually any real-world events, ranging from sports and politics to economics, weather, and celebrities. Whatever that subject is, the underlying mechanism is the same and straightforward. People bet on what they think the likelihood of a specific event happening is, and those predictions are recorded on a blockchain-based decentralized ledger – guaranteeing transparency and security.

Of course, to facilitate this, blockchain-based prediction markets need reliable data sources. These are called “oracles” and feed real-world outcomes (like sports scores, election results, or stock prices) into the blockchain. Trusted oracles are critical because the blockchain itself can’t access data from beyond its own network.

Following the confirmation of a specific real-world outcome, smart contracts (self-executing programs stored on the blockchain) automatically work out and distribute payouts to the winning bettors.

The entire process is seamless and removes the need for any central authority or middleman to manage odds or resolve outcomes. It is, in effect, peer-to-peer, with individual bettors as the only people involved in the process.

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The Intersection of Prediction Markets and Crypto Casinos

As things stand, crypto casinos and peer-to-peer prediction markets may seem quite separate. Most crypto casinos are still centralized platforms run by operating companies. However, the integration of the two is progressing rapidly.

While the focus of most crypto casinos is still slots and table games, blockchain-based prediction markets can facilitate an entirely new dimension of engagement. In a nutshell, they can add much more variety than traditional sports betting or even esports betting. And because they don’t require significant extra staff or resources to run, blockchain-based prediction markets can be easily integrated into existing crypto casino businesses.

Despite this, at the time of writing, standalone prediction market platforms like Polymarket, Kalshi, and Augur, still dominated the space space. These platforms allow people to bet on virtually anything using a wide range of cryptos. Illustrating just how much scope these platforms have, at the time of writing, these were some of the most popular markets at Polymarket:

• When will the government shutdown end?
• New York City Mayoral Election
• Fed decisions in October?
• World Series Champion 2025
• Netherlands Parliamentary Election
• MegaETH public sale total commitments
• US x Venezuela military engagement by…?
• Who will Trump pardon in 2025
• Will Sam Altman get OpenAI equity in 2025?
• Russia x Ukraine ceasefire in 2025?
• #1 Searched Person on Google this year?
• TikTok sale announced by…?

As you can see, the scope of betting goes beyond the remit of traditional sportsbooks, making prediction betting appeal to a much broader market.

Importantly, because these prediction markets are blockchain-based, everyone can trust their bets are transparent and immutable. This is in stark contrast to traditional betting platforms, which have a high degree of opacity and are often accused of manipulating both odds and payouts.

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Advantages of Blockchain Technology in Prediction Markets

So, now we’ve seen how blockchain-based prediction markets work, let’s just recap their main advantages over traditional centralized betting platforms.

1. Transparency and Trust

The most significant advantage of using blockchain in prediction markets is the transparency it provides. Because each bet is recorded on a decentralized public ledger, that can’t be altered and can be checked by anyone, all participants can trust transactions and outcomes. Conversely, traditional online betting platforms operate behind closed doors, with bettors having to trust an operating company (that is driven by profit) to resolve bets fairly.

2. Decentralization

Because they operate on geographically distributed peer-to-peer networks, blockchain-based prediction markets are not controlled by a central authority. This means no single entity controls the platform or its outcomes. Instead, decentralized prediction markets rely on consensus and oracles to verify outcomes. This significantly enhances the integrity and security of the entire system.

3. Global Accessibility

The decentralized nature of blockchain-based prediction market platforms also has another advantage – no one can stop bettors from accessing them. In the traditional online gambling space, users often face complicated regulatory frameworks and geographical restrictions. Because decentralized networks aren’t located in any one place, they are harder for authorities to regulate. And by using cryptocurrencies, bettors can bypass the traditional banking system.

4. Lower Fees

Additionally, because blockchain prediction markets use cryptocurrencies and smart contracts, transaction fees are generally very low. On the other hand, traditional betting platforms using fiat currencies are forced to rely on third-party payment processors, banks, and other intermediaries. These charge high fees which are often passed on to the user.

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Real-World Applications: What Can You Bet On?

As we’ve already seen, the scope for prediction market bets is huge and always expanding. However, some categories dominate the space. Below, we’ll run through a few.

Political Elections

Do you ever start chatting about politics at work, or when you’re out having drinks with friends? Of course, you do. Everyone does. It’s one of those things people get passionate about.

So, it’s not surprising that political election results are one of the most popular types of bets on prediction market platforms. This was illustrated by various bets about US president Trump and various European elections dominating Polymarket at the time of writing this article.

Sports Results

The sheer size of the traditional sports betting industry (US$77.18bn in 2025, according to Statista), shows how popular wagering on sports is. Whether it’s football, basketball, tennis, or Formula 1, millions of people bet on sports every day. However, blockchain-based prediction markets allow for a new level of transparency and trust, as well as a much wider range of markets.

Financial Markets

The traditional global financial markets offer plenty of betting opportunities. For example, whether a company’s stock price will rise or fall by a certain percentage by a given date to whether a particular central bank will raise interest rates.

Of course, the highly volatile cryptocurrency markets provide many exciting possibilities too. For example, at the time of writing Kalshi was taking bets on how high the Bitcoin price would go before the end of the year, and whether or not Trump would create a National Bitcoin Reserve.

Geopolitics and Wars

As terrible as international disputes and wars are, they provide plenty of betting opportunities. At the time of writing, Polymarket was taking bets about the Israel vs Hamas conflict, the Ukraine vs Russia war, US vs Venezuelan tensions in the Caribbean and many other flash points.

Weather Patterns and Climate Change

While writing this guide, hurricane Melissa was approaching Cuba and rapidly strengthening – surpassing all of the forecasts and causing thousands to flee. But as terrible as that was, it created a lively prediction market, with people betting on max wind speeds and landfall locations. Indeed, in today’s unstable environment, climate and weather events are popular markets to bet on.

Celebrities and Popular Culture

On a lighter note, platforms like Polymarket and Kalshi also offer lots of celeb and culture betting markets too. For example, who will be the top artist on Spotify for the year, Oscar nominations, movie review scores at Rotten Tomatoes, and video game release dates.

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How Blockchain Prediction Markets Differ from Traditional Betting

Right, now let’s recap how blockchain prediction markets differ from conventional betting platforms.

Decentralized vs. Centralized

A traditional sportsbook will be centralized – operated by a company, based in a physical location, with employees. The company will have high operational costs, including salaries, rent, data feed suppliers, payment processor fees, and even the electricity bill.

Yet the goal of the company will be to make as big a profit as possible. So, the fact that bettors have to trust the operator to set competitive odds, manage bets, and distribute winnings fairly, is quite an ask!

On the other hand, a blockchain-based prediction market platform operates in a decentralized manner. It doesn’t even require an operating company – it can be governed by a DAO (decentralized autonomous organization). In any case, operational costs will be lower.

Crucially, rather than outcomes being determined by a single controlling entity (the bookmaker), they are determined by consensus mechanisms and data provided by trusted oracles. This peer-to-peer approach massively reduces the risk of manipulation, improves efficiency, and ensures real fairness.

Verifiability

The fact is that with a traditional betting platform, bettors have to trust the operator to settle bets correctly and fairly.

Even if the betting operator is licensed by a reputable regulator, like the UK Gambling Commission (UKGC) or Malta Gaming Authority (MGA), users have no real way of knowing if manipulation is taking place or not. And, even if a customer does suspect foul play and raises a dispute, the process will be very time-consuming.

Conversely, users of blockchain-based prediction market platforms can audit the results on the blockchain themselves. Additionally, the resources a bad actor would need to manipulate most blockchains would be so prohibitive that it’s unlikely to happen. Put simply, blockchain prediction markets are “trustless” – meaning there’s no need to put your trust in anyone.

Market Creation

One of the most engaging features of blockchain-based prediction markets is the ability for users to create their own markets.

While not entirely unheard of, this kind of functionality is rare on traditional betting platforms. Most markets are created and controlled by the platform operator. However, users of decentralized platforms like Augur can easily propose markets for any real-world event – as long as it complies with the platform’s rules.

Cryptocurrency Payouts

Finally, because blockchain-based prediction markets use cryptocurrencies for betting and payouts, transactions are faster and cheaper. Using crypto also removes the increasingly common problem of banks and card issuers blocking gambling transactions.

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Popular Blockchain-Based Prediction Platforms

As Web3 matures, many blockchain-based prediction platforms are being launched, but let’s take a moment to look at some of the trailblazers:

Polymarket

Developed by Shayne Coplan and founded in 2020, Polymarket lets users wager on a massive range of markets using the USDC stablecoin.

Although the platform is managed by a company (Adventure One QSS Inc.), the markets are based on the Polygon network and operationally decentralized. The platform has a very user-friendly interface and is particularly known for its extensive political and financial markets.

Kalshi

Originally founded in 2018 by former financial analysts Tarek Mansour and Luana Lopes Lara, Kalshi is a New York City based financial exchange and prediction market. Unlike its main competitor, Polymarket, it initially focused on fiat and gaining regulatory approval from the CFTC (Commodity Futures Trading Commission).

However, by 2025, the platform had partnered with Solana and Coinbase’s Base network. Specifically, the company said it aimed to combine Solana’s high transaction speeds with Base’s scalability to catalyze blockchain-based prediction market innovation.

Augur

One of the first successful decentralized prediction markets. Crowdfunding for the project started in mid-2015 and the Ethereum-based project officially launched in mid-2018. After attracting controversy when users created “death pools”, or assassination markets on famous people, the Augur Project has since matured and remains one of the leading freeware prediction market platforms.

Gnosis

This project began life in 2015 as a decentralized prediction market on the Ethereum blockchain (via the now-discontinued Gnosis Olympia dApp). In late 2020, the GnosisDAO (Decentralized Autonomous Organization) was established. Today several prediction markets are available in third-party dApps like Azuro, Omen, and Reality Card, which are built on the Gnosis Chain.

Gnosis has also developed Conditional Tokens, which is a new digital asset class designed specifically to facilitate highly liquid prediction markets.

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The Future of Blockchain Prediction Markets and Crypto Casinos

Fueled by technological innovation and a growing desire for digital freedom, there’s a clear global trend toward decentralization. And nowhere is that more evident than in the online gambling industry. While there are too many factors at play to cover here, there are a couple of things we should be looking out for.

Firstly, cross-chain prediction markets, like Grail Market, which enable users to bet across different blockchain networks, will significantly improve liquidity and market variety.

Indeed, the proliferation of cross-chain compatibility will boost blockchain and crypto adoption across all sectors in the next few years. In a similar vein, the integration of decentralized finance (DeFi) into prediction markets will open the door to more sophisticated betting mechanisms. For example, allowing the lending and borrowing of funds to participate in prediction markets.

And, of course, there’s the whole AI revolution to factor in. With the ability to rapidly analyze vast amounts of data, artificial intelligence and machine learning will enhance prediction market outcomes and improve the accuracy of forecasts.

Interestingly, as AI tech becomes more accessible, it may also create something of a paradox. Why? Because it may also allow some individuals to consistently beat the odds. Hopefully, it won’t rip a hole in the space-time continuum though.

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Potential Risks and Challenges

Finally, we can’t discuss anything blockchain or crypto-related without touching on some of the potential risks and challenges ahead. Chiefly, these concern regulatory and legal hurdles.

Unsurprisingly, governments and regulatory authorities fear decentralization because it takes away their power to control. For more than a decade, we’ve seen politicians and bodies like the SEC (US Securities and Exchange Commission) trying to suppress crypto. And despite it being obvious they are on the wrong side of history, we shouldn’t expect them to quit their shenanigans just yet.

For example, we’ll probably see a crusade launched against peer-to-peer betting, with old politicians claiming it “finances terrorism, destroys the climate, and kills puppies.”

Aside from the regulatory challenges blockchain-based peer-to-peer betting is likely to face over the coming years, there is one glaring technical concern. That is oracles. For blockchain prediction markets to work properly, oracles must be able to be relied on and trusted – they are a concerning single point of failure. A case-in-point being the Proov protocol used by Luck.io. In that case, some suggest the oracles may be centrally controlled.

A blockchain and the smart contracts running on it can be watertight, but if the data being provided by the oracles themselves is manipulated or corrupted, then the entire system is compromised. That’s why it is essential for prediction market platforms to manage oracles correctly, building in extra redundancy and checks.