Prediction markets have grown into a mainstream information-finance infrastructure, with monthly trading volume exceeding $14 billion and major platforms collectively valued at around $40 billion. Meta, led by Mark Zuckerberg, is developing a prediction market app called Arena, signaling that big tech has validated the business model. However, most Asian jurisdictions still treat these markets as gambling, leading to capital outflows, loss of information sovereignty, and inadequate user protection.
Prediction markets find product-market fit
Prediction markets remained largely conceptual for years. Around 2020, a few small projects began accumulating significant trading volume and overcoming regulatory hurdles, marking the industry's formal emergence. Growth accelerated thereafter, with monthly volume now surpassing $14 billion and leading platforms valued at roughly $40 billion combined. Meta's entry, reported by The New York Times, further confirms the sector has moved beyond experimentation into a proven business model.
How prediction markets work
Each contract settles as a binary yes/no: if the event occurs, the contract pays $1; otherwise, it pays $0. The trading price thus reflects the real-time probability. For example, a contract trading at 40 cents implies a 40% market probability. Prices form through an order book, not a central authority. After the event, an oracle confirms the outcome. Decentralized oracles allow proposers to post collateral and submit a result, with a challenge period; centralized oracles apply official results directly.
Information advantages over traditional methods
The "skin in the game" mechanism forces participants to back their judgments with money, improving accuracy. Research shows prediction markets reduce forecast errors by up to 25% compared to official models. In financial and monetary policy, a February 2026 Fed economist study found that prediction markets have statistically matched actual FOMC rate decisions since 2022, outperforming fed funds futures and Bloomberg consensus. In politics, Polymarket correctly predicted 14 of 16 winners in South Korea's June 2026 local elections, even where exit polls were inconclusive. For corporate events, when a stablecoin interest cap was discussed in March 2026, prediction markets immediately priced a 97.6% probability of Coinbase's stock decline, acting as a real-time risk indicator.
Asia's regulatory gap
In the United States, a court ruling that election prediction contracts are not gambling cleared the way for institutional players like ICE, Robinhood, and CME. In contrast, most Asian jurisdictions still classify prediction markets as gambling, focusing on public order rather than financial innovation. This creates three major problems. First, regulatory arbitrage: users flock to unregulated offshore platforms, causing capital outflows and loss of oversight and tax revenue. Second, loss of information sovereignty: data reflecting local social sentiment accumulates on foreign servers, giving foreign institutions better insight than domestic analysts. Third, abandonment of user protection: without formal frameworks, users operate in blind spots with no safeguards.
The path forward
Asian regulators need to shift from blocking to channeling. The discussion should focus on how to responsibly harness prediction market data within formal systems, rather than pushing activity into the shadows. Limitless Research is already working to process prediction data from Asian markets into information assets. More participants are needed to build a healthy data ecosystem. The goal should be transparent oversight and turning generated data into national and social assets.