How do prediction-market prices become probabilities?
Because a winning share pays exactly $1, its fair price is its probability: a 70% chance of happening makes a Yes share worth about 70¢. Every trade nudges the price toward the crowd's live estimate of that chance, the market is the crowd thinking out loud.
The one-dollar logic
Take a market at 70¢. If the true chance is higher, say 80%, the share's expected value is 80¢, and buying at 70¢ is a good deal. If the true chance is lower, it's overpriced. Money flows toward the mispricing until the price settles near what the crowd believes. That settling point is the probability.
Why money makes it honest
Anyone can voice an opinion; here, opinions cost money to hold. That filter is why prediction-market prices are often sharper than pundit forecasts, being loudly wrong is expensive.
And why it's sometimes still wrong
Crowds overreact to headlines and drift on slow news. The gap between the crowd's price and the real chance is called edge And hunting it is your CEO's whole job. See it play out step by step in How Polymarket works.