How to Start a Prediction Market: Practical Checklist
A compact, step-by-step checklist that walks organizers from event wording to settlement, with a side-by-side look at hosted vs self-hosted markets.
By Top Prediction Markets EditorialReviewed November 2, 20266 min read
Answer first
Start by defining the event and resolution rules precisely. Then choose between a hosted platform (faster, less work) and self-hosting (more control, more cost), and follow a short checklist to launch, monitor liquidity, and document settlement.
Decide between a hosted platform and a self-hosted market
In simple terms, the choice is about trade-offs between convenience and control. A hosted platform gives you a ready-made interface, built-in users, and automated settlement. Self-hosting gives you complete control over wording, fees, and settlement mechanics but requires technical work, legal attention, and ongoing maintenance.
The key thing to know: neither option removes the need for clear resolution rules. Even on a hosted site you must define the event, the resolution source, and deadlines clearly.
| Feature | Hosted platform | Self-hosted market |
|---|---|---|
| Setup time | Minutes to a few hours — form-based creation on the platform | Days to weeks — deploy software, domain, payment integration |
| Technical skills required | Low — non-technical organizers can create markets | High — developer + ops skills for reliability and security |
| Upfront cost | Low or none; platform takes a fee | Higher: hosting, domain, developer time, possibly oracles |
| Fees and revenue model | Platform fees per trade or spread; transparent | You set fees; keep revenue but handle compliance |
| Control over resolution rules | Often flexible, but some platforms enforce standards | Complete control — you decide sources and tiebreakers |
| Liquidity support | Some platforms run automated market makers (AMMs) or promotional liquidity | You must provide liquidity or integrate an AMM yourself |
| Participant base | Access to existing users and traffic | You must recruit all participants yourself |
| Settlement and payouts | Automated by platform | You implement on-chain or manual settlement |
| Dispute handling | Platform usually mediates | You must run dispute resolution or appoint an arbiter |
| Regulatory/identity requirements | Platform enforces KYC/limits as needed | You are responsible for compliance and KYC if required |
Step-by-step checklist to start a prediction market
Follow these steps in order. Each step has a short note on what you’ll see in the interface and what can go wrong.
- Define the event precisely
Write the question in a single clear sentence. Avoid ambiguous words like "likely" or "substantially." Choose binary vs multi-outcome. Binary is Yes/No. A Yes contract — an event contract that pays $1 if the event happens — is easiest for newcomers. Set the trading window: open and close dates, and the resolution deadline (when the outcome is determined). Decide exact resolution conditions and list edge cases.
What you see: the market title, the exact question sentence, and the open/close/resolution dates.
What can go wrong: vague wording leads to disputes; missing edge cases (time zones, partial outcomes) make resolution ambiguous.
- Pick platform and contract mechanics
Hosted platform: compare fees, user base, dispute process, and how they enforce resolution wording. Self-hosted: choose software (open-source market frameworks or custom code), hosting, and whether settlement will be on-chain or off-chain. Decide fee models (percentage of trades, maker/taker fees, listing fees). Account for fees in communications so participants know costs. Decide settlement method: automated (platform pays via escrow or smart contract) or manual (organizer releases funds after resolution).
What you see: platform settings pages or your deploy scripts; fee schedules and settlement options.
What can go wrong: hidden fees; platform rules that conflict with your wording; deployment errors in self-hosted setups.
- Draft robust resolution rules
Select authoritative data sources (e.g., a named public database, scoreboard, press release). Prefer primary sources over secondary reporting. Define a tiebreaker: if two sources disagree, which source resolves it, or who is the appointed arbiter. Set a resolution deadline: a final date/time when the market will be settled even if data is missing. Add an appeals process and a timeframe for objections.
What you see: a rules textbox and fields for named sources and arbiter contact.
What can go wrong: using vague sources like "media reports"; failing to name a tiebreaker; no timeframe for appeals.
- Prepare the market launch
Write a short organizer statement that repeats the exact resolution rules and named sources. Create a FAQ for traders: trading hours, fees, how disputes are handled, and who the organizer is. Seed initial liquidity if needed. Common approach: the organizer buys a small number of contracts to make prices meaningful.
What you see: the public market page with organizer statement and FAQ; initial order book if you seed liquidity.
What can go wrong: insufficient liquidity makes prices jumpy; omissions in the FAQ create repeated questions.
A simple example: If a Yes contract costs 62¢ and pays $1 if the event happens, buying one contract costs $0.62. If the event happens, the contract pays $1, so the gain before fees is $0.38. If the event does not happen, the contract expires at $0, so the loss is $0.62.
- Launch and monitor
Announce the market with the short statement and link to full rules. Encourage early participation for better price discovery. Monitor liquidity and participation daily. If volume is very low, consider seeding more liquidity or extending promotion. Track news and be ready to clarify resolution scope if relevant events occur.
What you see: traffic metrics, open orders, recent trades, and news alerts.
What can go wrong: sudden news changes the interpretation of rules; low volume prevents meaningful price discovery.
- Resolve and document the outcome
At resolution, cite the named authoritative source and the exact data point used. Publish a brief resolution report: what happened, which source was used, and how payouts were calculated. Retain logs (screenshots, timestamps, or oracle feeds) for at least as long as any appeal window. If a dispute arises, follow the previously stated appeals process.
What you see: the resolved market status, payout notifications, and a published resolution report.
What can go wrong: source discrepancies; missing timestamps; unclear documentation that prolongs appeals.
What it looks like when a market resolves and disputes arise
When a market resolves smoothly you’ll see the contract move to a settled state, payouts triggered, and an entry in the market history citing the named source and data point. Publish the resolution report immediately and keep raw evidence (screenshots, API responses, archived pages).
If a dispute happens, the usual problems are: competing sources, late data appearing after your deadline, or a participant arguing the wording. Use your pre-declared tiebreaker or arbiter. If you’re on a hosted platform, the platform usually mediates; if self-hosted, be prepared to run resolution yourself.
Keep logs for at least as long as the appeal window and be transparent about what you used to decide.
When to choose hosted or self-hosted for your project
Use a hosted platform if you want speed, low setup cost, and access to existing traders. It’s good for public polls, classroom projects, and short-term events.
Choose self-hosting if you need bespoke resolution rules, custom fees, or specific identity/record-keeping policies. It suits organizations with technical support, research groups wanting experimental mechanics, or markets tied to internal decision-making.
If unsure: start on a hosted platform to validate interest. If the market gains traction or needs special rules, migrate to a self-hosted solution later.
Further reading
Frequently asked questions
How precisely should I word the market question?
Be concise and specific: one sentence, define the outcome in measurable terms, name the authoritative source, and set an explicit resolution time.
Can organizers participate in the markets they create?
Policies vary by platform. Decide and state your policy up front so participants know whether organizers will trade or seed liquidity.
What minimum liquidity should I expect for a useful market?
There’s no universal threshold. Aim for enough initial orders to move price by a few percentage points; if prices don’t move after a day, seed more liquidity or promote the market.
What do I do if sources disagree at resolution time?
Your resolution rules should name a primary source and a tiebreaker. If you didn’t, appoint an agreed arbiter and document the decision process.
Are prediction markets legal?
Rules vary by location and platform. See our dedicated guide on whether prediction markets are legal in the US.
Related guides
Beginner Guide
How Prediction Market Payouts Work
Learn what a payout is, how prices map to expected payouts, and a simple worked example showing the math when you buy a Yes contract.
Beginner Guide
How Do Prediction Markets Work?
Prediction markets let people buy and sell contracts that pay out if an event happens. Prices reflect the market’s collective forecast and update as new information arrives.
Beginner Guide
What Are Prediction Markets?
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