How Polymarket works

Polymarket is not a bookmaker. There is no house setting a line and no margin built into the price by someone who profits when you are wrong. It is an exchange: you are buying a contract from another person who disagrees with you, at a price the two of you agree on.

Every contract pays exactly $1 or exactly $0

A market asks a question with a verifiable answer — will this candidate win, will this index close above that level, will this team win tonight. It issues two contracts, YES and NO. When the question resolves, one of them is worth $1 and the other is worth nothing.

That fixed payout is what makes the price readable. If a YES contract costs 62c and pays $1, you are risking 62c to make 38c. You need it to happen more than 62% of the time to profit — so the price *is* the market's probability, in cents. No conversion, no formula.

Where the price comes from

An order book. Buyers post what they will pay, sellers post what they will accept, and a trade happens when the two meet. Nobody publishes the price; it is wherever the last person willing to buy met the last person willing to sell.

This has one consequence worth internalising before your first trade: there are two prices, not one. The number on the screen is usually the midpoint between the best bid and the best ask. What you actually pay is the ask, and it is always a little worse.

You can sell before it resolves

You are not locked in. Buy at 40c, watch news move it to 65c, and you can sell to someone else for 65c and take the 25c without waiting for the outcome. This is the part that most surprises people arriving from sportsbooks, where a bet is a bet until it settles.

It also means a position has a running mark. Your 40c contract at a 65c market is up 25c on paper, and that is a real number you could realise right now — not a projection.

Multi-outcome markets and the $1 rule

Plenty of questions have more than two answers — an election with six candidates, a tournament with sixteen teams. These are listed as a set of linked YES/NO markets where exactly one will pay. The same arithmetic applies to the whole set: every price added together should come to about $1, because $1 is all that will ever be paid out.

When the set adds up to less than $1 at the prices you can actually trade at, buying every outcome guarantees a profit. That is real, it does happen, and it is much rarer than the screen suggests — see prediction market arbitrage is mostly a mirage.

What it costs

There is no vig in the sense a sportsbook means it — no built-in 4.76% overround on a coin flip. What you pay instead is the spread: the gap between the bid and the ask, which is the market's own cost of doing business. On a heavily traded market that can be a single cent. On a thin one it can be five, which is worse than any sportsbook's margin.

Volume is therefore not a vanity metric. It is the number that tells you whether the price you are looking at is a real price or a quote nobody has taken.

Reading a market before you trade it

1. 1Read the resolution rules, not the title. The title is marketing; the rules decide who gets paid, and they routinely contain a cutoff or a source that changes the answer.
2. 2Check 24-hour volume. A price on an untraded market is one person's quote, not a consensus.
3. 3Look at the ask, not the mid — that is what you will actually pay.
4. 4Check whether the event has already started. A price moving 50 points during a game is the scoreboard, not information.
5. 5Form your own number BEFORE you look at the price, or you will just talk yourself into agreeing with it.

Where Sharply fits

Everything above is the mechanics. The hard part is the judgement: is 62c right? Paste any Polymarket link into the analyser and it reads the resolution rules, gathers the public evidence, forms an estimate without seeing the price first, then compares the two at the ask and tells you whether the gap survives what it costs to trade. If it does not, it says so — which is most of the time, and is the honest answer.