The market price acts as an implied probability. If a “Yes” contract trades at $0.70, the market is effectively estimating a 70% chance that the event will occur. As new information emerges, traders buy or sell positions, pushing the price up or down.
This mechanism aggregates many participants’ beliefs—sometimes called the “wisdom of crowds”—into a constantly updating forecast of real‑world outcomes.
While implementations differ, the core mechanics are similar across most prediction markets.
1. Markets are created around real‑world questions
Examples might include:
2. Users trade “Yes” or “No” contracts
Participants purchase shares in either outcome. Each contract pays a fixed amount—often $1—if the prediction proves correct.
3. Prices move with market sentiment
If traders believe an outcome is becoming more likely, they buy the corresponding contracts, raising the price. That price becomes a real‑time probability estimate.
4. Contracts settle when the event resolves
Once the outcome is verified, winning contracts pay out while losing ones become worthless.
The system resembles a stock exchange more than a traditional sportsbook because traders buy and sell contracts with one another rather than betting directly against a house.
Despite their forecasting function, prediction markets often look similar to betting platforms because users put money on uncertain outcomes such as elections or sports results. Some regulators argue that event contracts are simply gambling products under a different structure.
Critics also worry about potential issues such as:
Supporters, on the other hand, argue that prediction markets can produce useful information by aggregating public expectations about future events.
India’s Ministry of Electronics and Information Technology (MeitY) has been examining offshore prediction‑market platforms amid a rise in their use by Indian users. Authorities say these services are being used for betting on election outcomes, sports events such as the IPL, and other real‑world developments.
Officials argue that such platforms operate outside India’s regulatory framework for online gaming and betting and are therefore considered illegal services for Indian users.
Reports indicate that the government is concerned about:
The enforcement push has unfolded in stages.
First, MeitY issued warnings and advisories to internet intermediaries and service providers. In April 2026, the ministry instructed VPN providers and online platforms to ensure they do not facilitate access to prediction‑market or betting sites such as Polymarket.
Next, regulators began moving toward formal blocking measures. Reports say the government has already issued a blocking order against Polymarket and is preparing a similar order for Kalshi, likely using powers under Section 69A of the Information Technology Act, which allows authorities to restrict access to online content.
The crackdown follows claims that both platforms continued allowing Indian users to sign up and trade even after regulatory warnings.
Even after restrictions were announced, many users reportedly continued accessing these services.
Authorities say enforcement has been complicated by:
Officials have described the situation as a “whack‑a‑mole” enforcement challenge, where new access points appear as quickly as others are blocked.
India’s move highlights a broader global debate about whether prediction markets should be treated as financial instruments, information tools, or gambling products.
Some jurisdictions allow regulated event‑contract exchanges, while others restrict them because they closely resemble betting on uncertain events. The dispute reflects a larger question facing regulators worldwide: whether these markets represent a new forecasting tool—or simply a new form of online wagering.
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