Predictions betting is a relatively new type of wagering that allows bettors to wager on the outcome of future events. Prediction gambling websites offer a wide variety of betting options that range from politics to entertainment and everything in between. If you ever get the itch to wager on some future event, no matter what it is, prediction betting is just for you.
Predictions Betting Sites
Making predictions is similar to trading options on the stock market. They don’t offer lines or odds like traditional sportsbooks. Instead, they create a forum for individuals to buy and sell contracts that are based on the outcomes of future events.
Before we get any further, note that prediction bets are always created in a yes or no format. You’ll never see ambiguous questions such as “how much will a gallon of gas cost in 2012?” Instead, you will see the same question presented as “will gas cost more than $5 per gallon on July 21st, 2012?”
The prices of these contracts work just like the stock market. If the outcome of the bet is perceived by enough people to be likely, the price of that contract will rise. Conversely, the less likely the event is, the less you will pay for that contract. Over time, the prices of these contracts change according to the market’s conditions. Just like the stock market, the values of these contracts are determined by the whims of the collective public.
At the end of the term of the bet, the contract will expire with a value of either 0 or 100. If the outcome is a no, the contract is worth 0. If the outcome is a yes, the contract is worth 100. There are no middle grounds because every bet is created so that the outcome is either yes or no. Each point in a contract is worth $0.10. That means a contract that closes at 100 is worth $10.00 and a contract that closes at 0 is worth $0.
Bettors may buy and sell contracts before they expire, just like stock options. For example, if you purchase 100 contracts of some random bet and then suddenly the value of that contract increases, you can sell that contract for an immediate profit. Alternatively, you can hold on to that contract and hope that it expires at 100.
This all sounds more complicated than it actually is. Let’s use an example to help explain what we’re talking about.
Let’s say you purchase one contract on whether or not Osama Bin Laden will be captured by Jun 30th 2014. The current price of the contract is sitting at 13.1, which means you pay $1.31 for this contract. Now let’s say that 5 minutes later, Osama Bin Laden is captured. That contract you just bought would expire at a value of 10. Your total profit would be:
Closing value of the contract – cost of the contract = profit
$10 – $1.31 = $8.69
That doesn’t look like much profit but it’s actually a huge return. If you had purchased 10 of those contracts, your total profit would have been $86.90. With 100 contracts, you would have profited $869.
Bid vs. Ask Price
When you go to purchase or sell a contract, you will see two different prices listed: the bid and the ask price. The bid price is the most anyone is willing to pay for that contract. The ask is the lowest anyone is willing to sell that same contract for. In other words, you purchase at the ask price and you sell at the bid price.
You have to remember that the prediction trading market is a person-to-person market. This means that when you place orders, they are not automatic purchases. They have to be matched with someone else willing to sell to you at that price.
Whenever you place buy orders, you’re asked to state the price at which you wish to buy the contract. If your request is higher than the lowest ask price, the transaction will be completed. If not, your order will wait in line until someone comes along with an ask price that is lower than your bid price.
Different Types to Choose From
The types of prediction bets are limited only to the imagination. For the most part, prediction betting sites stick with major issues in order to attract enough bettors to create a strong market. Some of the more popular types of prediction bets include:
Business is always a big topic because it regularly appears in the news and it affects millions of people. In recent times, prediction bets in the business category have covered topics such as the possibility of major companies going bankrupt and the effects of US legislation on large businesses.
Weather is a universal topic and it gets a fair amount of action. Popular weather topics include bets based on Hurricane season, global warming and precipitation amounts. One good thing about betting on the weather is that there’s no chance for you to bet against anyone who has inside information.
Entertainment is also a popular topic for prediction betting. These bets can be based on all sorts of entertainment events such as the winners of upcoming reality TV shows, the winners of Academy Awards and even box office returns. There’s no limit to the types of entertainment bets that prediction betting sites can come up with.
Financial Prediction Betting
With financial bets, you can actually bet on the stock market without investing in the market in any way. Financial bets can be based on any number of things, including the Dow Jones Index, S&P 500, mortgage rates, credit ratings and much more. These are good bets for the savvy researcher because these aren’t based completely on luck.
A Few Other Types
The topics mentioned so far are just the tip of the iceberg. There are an infinite number of bets to come up with and they fall into many different categories. Other than the topics listed above, some of the most popular types of prediction bets include politics, future technology, current news events and science. The types of available prediction bets change all the time so you’ll have to check back with your betting site for information on the latest bets.