What Is a Prediction Market? A Simple Guide
By Ebuka · 2 November 2026
Will the Super Eagles make it to AFCON 2027? You and your friends already have an answer. A prediction market lets you price your prediction.
This guide shows you how a prediction market works and how to read its prices. We use a live market on Signal as the example, so you can follow along and trade from this page.
What is a prediction market?
A prediction market is a place where you buy and sell Yes or No shares on a future event. If your side wins, each share pays you ₦100. If your side loses, it pays ₦0. The share price shows how likely people think the event is.
Every market asks one clear question with a date. For example:
- Will the Super Eagles qualify for AFCON 2027?
- Will the CBN cut interest rates in November?
- Will Bitcoin end 2026 above $100,000?
- Will a Nigerian artist get a 2027 Grammy nomination?
The idea is old. The University of Iowa has run a market like this on US elections since 1988. And now, Signal brings it to Nigeria, priced in Naira.
How a Yes or No share works
Let us use the Super Eagles market. Say Yes trades at ₦72 and No trades at ₦28. Here is what happens when you buy:
- You buy 10 Yes shares. You pay ₦720 (10 × ₦72).
- Nigeria qualifies. Each share pays ₦100. You get ₦1,000, which is ₦280 more than you paid.
- Nigeria misses out. Each share pays ₦0. You lose your ₦720.
- You change your mind. You can sell before the result. If Yes climbs to ₦85 after a big win, you sell your 10 shares for ₦850.
Yes and No prices add up to about ₦100. When one goes up, the other goes down.
Why the price stays between ₦0 and ₦100
A share ends at one of two values: ₦100 if it wins or ₦0 if it loses. Nobody pays more than ₦100 for something that can only pay ₦100. So while a market is open, prices trade between ₦1 and ₦99.
A cheap share means people expect that side to lose. An expensive share means people expect it to win.
Why the price works like a chance
Think of ₦100 as 100%. A Yes price of ₦72 means the market prices the event at 72%. A price of ₦15 means a 15% chance.
Each trader brings a piece of what they know. One person follows team news. Another studies the group table. When they buy and sell, the price moves to match what the whole group believes.
This works well. A study of the Iowa market compared its prices with 964 polls across five US presidential elections from 1988 to 2004. The market came closer to the final result 74% of the time.
A price is a guide, and it can miss. Keep two things in mind:
- A 72% chance still means the event fails about 28 times out of 100.
- In a small market, one big trader can push the price up or down.
How you make or lose money
You have two ways to make money:
- Hold to the end. If your side wins, every share pays ₦100.
- Sell early. If the price climbs after you buy, sell and keep the difference.
You lose money when your side loses or when you sell for less than you paid. If your side loses, your shares end at ₦0. Only trade what you can afford to lose.
Prediction market vs betting
On a betting site, you play against the bookmaker. The bookmaker sets the odds and wins when you lose. On a prediction market, you trade with other people, and their buying and selling sets the price.
| Betting site | Prediction market | |
| Who you play against | The bookmaker | Other traders |
| Who sets the price | The bookmaker | Buyers and sellers |
| How the price shows | Odds, like 1.80 | Naira that reads as a chance, like ₦55 = 55% |
| Leaving early | Only with cash-out, on the bookmaker's terms | Sell your shares any time before the result |
Already know betting odds? Divide 1 by the odds to get the chance. Then turn the chance into a Signal price:
| Betting odds | Chance | Signal price |
| 1.25 | 80% | ₦80 |
| 1.60 | About 62% | About ₦62 |
| 2.00 | 50% | ₦50 |
| 4.00 | 25% | ₦25 |
Is a prediction market legal in Nigeria?
Yes, when a state gaming regulator licenses it. In November 2024, the Supreme Court ruled that each state regulates gaming within its borders. In Lagos, the Lagos State Lotteries and Gaming Authority (LSLGA) issues permits for prediction markets.
Signal holds a Gaming Facilitation Permit from the LSLGA. You can find it on the LSLGA list of licensed operators.
You may have heard of Polymarket or Kalshi. These are big foreign platforms. They work in dollars or crypto, and no Nigerian regulator licenses them. Signal prices every market in Naira and holds a Lagos permit.
How to start trading on Signal
- Sign in to signal.markets with your Busha account.
- Move Naira or crypto from your Busha wallet to your Signal wallet. The minimum deposit is ₦500.
- Pick a market and choose Yes or No.
- Hold until the result or sell early. Winnings land in your Signal wallet, and you can move them back to Busha.
Want a full walkthrough with screens? Read Busha's guide, How Do Prediction Markets Work?.
New to Signal? Explore prediction markets and trade on real-world events.
Trading involves risk. You could lose the money you trade. Read each market’s rules before taking a position.
Frequently asked questions
Q) Is a prediction market gambling?
- In Nigeria, the law treats it as gaming, so a state regulator licenses it. It works differently from a betting site. You trade with other people, and you can sell before the result.
Q) How does a prediction market make money?
- Most prediction markets charge a small trade fee. They earn from trading, so you don't need to lose. [Add Signal's fee details]
Q) Are prediction markets accurate?
- They hold up well. In the study above, the Iowa market beat the polls 74% of the time. Still, treat a price as a guide and expect some surprises.
Q) Can I lose money on a prediction market?
- Yes. If your side loses, your shares pay ₦0. Only trade what you can afford to lose.