Prediction markets were supposed to forecast reality. But a growing number of traders are now betting on something else entirely: what people will believe happened. According to Edward Ridgely, co-founder of pro trading prediction market terminal Stand, the rise of “opinion markets” means the industry is increasingly pricing perception rather than objective outcomes.
“Opinion markets – or information markets – are belief markets,” Ridgely told SiGMA World. “You’re not betting on a neat yes/no fact; you’re betting on what the majority of people will believe or how something will be interpreted.”
The distinction reflects a broader shift in the prediction market ecosystem, where traders increasingly speculate not only on what happens but how events are framed, interpreted, or accepted by the public.
Prediction markets expanding beyond simple outcomes
Traditional prediction markets typically revolve around clearly measurable events: elections, economic data, or sporting outcomes. But as markets expand into areas such as geopolitics, media narratives and reputation, clean resolutions become harder to define.
Ridgely argues that this complexity has created fertile ground for markets centred on belief and consensus. “Most real-world outcomes don’t resolve cleanly,” he said. “Consensus is often the finish line.” In such markets, traders are effectively pricing the likelihood that a particular narrative or interpretation will dominate.
When markets price perception instead of reality
Ridgely says this shift means that many markets no longer attempt to determine absolute truth. Instead, they measure where collective belief settles under financial incentives.
“They’re measuring where belief converges under incentives — what people will back with real money, and how quickly consensus shifts when new information arrives,” he said. At a certain point, the price in a market reflects sentiment rather than fact. This dynamic has drawn attention as prediction markets grow in influence across politics, finance and public discourse.
“You’re not trading truth. You’re trading perception — what people will accept as the answer.”
– Edward Ridgely, Stand Co-Founder
Opinion markets also differ significantly from traditional polling. Polls capture responses at a single point in time, while markets update continuously as traders react to new information. “Polls measure what people say once,” Ridgely said.“Markets measure what people do continuously.”
Financial incentives also change behaviour. “Skin in the game changes everything. People don’t just answer — they size positions.” Because participants risk real capital, traders are more likely to update their views quickly when circumstances change.
Liquidity determines whether markets signal truth
However, Ridgely cautions that prediction markets only produce reliable signals under certain conditions. Market depth and liquidity play a crucial role in determining whether prices reflect a broad consensus or manipulation by a small number of traders.
“Liquidity is the difference between signal and noise,” he said. “Deep markets aggregate information well. Thin markets can be pushed around. Low-liquidity markets, he warned, can produce prices that appear authoritative but fail to represent wider sentiment.
Resolution rules become a critical design challenge
Another growing challenge for market operators is how outcomes are defined and resolved. Ambiguity in contract terms can lead to disputes when events unfold differently than expected. Recent controversy surrounding the prediction platform Polymarket illustrates the challenge. In January, the platform declined to pay out more than $10.5 million in contracts tied to whether the US would “invade” Venezuela, ruling that a reported special forces raid did not meet its definition of an invasion. The decision sparked debate among traders who believed the event should qualify, highlighting how market outcomes can hinge not only on what happens but also on how platforms define and interpret the event itself.
Ridgely pointed to ceasefire agreements as an example of difficult-to-resolve markets. “Did it happen if there’s an announcement, but fighting continues? Did the rules qualify if it’s partial?” he said. “That ambiguity will shape how traders trade.” Clear resolution criteria, he argues, are essential for maintaining trust. “The challenge is making the resolution process credible and explicit.”
Governance and decentralised systems
The rise of belief-based markets could also affect decentralised governance systems such as Decentralised Autonomous Organisations (DAOs). Ridgely believes markets can strengthen decision-making if used carefully, but warns against treating market signals as automatic authority.
“Markets should inform governance, not replace it,” he said. Instead, he suggests they should be used to forecast potential outcomes or reactions to decisions.
Prediction markets’ move to professionalisation
Looking ahead, Ridgely expects prediction markets to evolve rapidly as participation grows. Changes are likely to include more complex market formats beyond simple yes-or-no contracts and increased professional trading activity. “More formats beyond binary yes/no, because the highest-demand questions aren’t clean,” he said.
Infrastructure will also become increasingly important. Platforms that aggregate markets across multiple venues and offer professional trading tools may have an advantage as the sector matures. “The winners will be the platforms that sit across venues, unify access, and give traders the best tools to execute strategies.”
Ultimately, Ridgely believes the expansion of opinion markets reflects a deeper shift in how information is organised and traded online. “Betting on everything is the surface trend,” he said. “The deeper trend is people organising information into markets — and belief is an enormous market.” For prediction markets, that may mark a transition from forecasting events to pricing collective perception itself.
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