On any PolySouq market you see one side at a high percentage, say 90%, and the other at a low one, say 10%. Many people back the favourite because it feels "safer"; others chase the underdog because its displayed payout is large. Both instincts are incomplete. In prediction markets built on a parimutuel pool, the payout is set by how much money sits on each side: the more crowded your side, the smaller your share of the losing pool. This guide shows with numbers why the favourite pays little, what break-even probability your estimate must beat in each case, why your payout moves after you enter, and how to decide on value rather than popularity.
Risk notice: trading on PolySouq uses real money, and you can lose the full amount you put into any market. Only trade what you can afford to lose; nothing guarantees a profit. The platform is for adults 18+ and eligibility and terms apply. For significant financial decisions, seek independent financial advice.
In a parimutuel pool everyone who backs an outcome puts money into that side's pot. At settlement the winners get their stakes back in full, then split the losing pool after a 10% commission is taken from it, each in proportion to their share of the winning side. The formula:
What you receive = your stake × (1 + losing pool ÷ winning pool × 0.9)
The direct consequence: if your side holds 90% of the money, you share a small losing pool with many people, so your profit is small. If your side holds only 10%, you share a large losing pool with few people, so your profit is large if you are right. The percentage shown on a market is exactly each side's share of the total money. The full formula is in the payout formula guide with worked examples.
A market holds $9,000 on "Yes" and ,000 on "No", so the platform shows 90% vs 10%. Assume your stake is
Notice the asymmetry: on the favourite you risk
Break-even is the probability at which a trade neither wins nor loses on average over the long run. It is calculated as your stake ÷ what you receive if you win. In the example: 100 ÷ 110 = 90.9% for the favourite, and 100 ÷ 910 = 11.0% for the underdog.
(Figures for a
Two important notes:
In a parimutuel pool the payout is not locked when you enter. The figure shown on entry is an estimate that assumes the pool freezes as it is; the final payout is computed only at settlement. Go back to the
Money joining your side after you dilutes your share; money joining the other side increases it. The underdog is more sensitive to this because its pot is small, so a moderate amount arriving can change the payout a lot. Your own stake is part of your side too: a large stake in a small pool dilutes your own payout. There is no selling or exit before settlement; the only exception is cancelling a football stake before kickoff for a full refund. See the exit rules and why odds change.
These rules mean the favourite in a pool with almost no opposition can return close to zero profit even when you are right. Details in the voids and refunds guide.
The right question is not "who will win?" but "is my probability estimate above break-even?" That is where expected value comes in: the average you would win or lose if the same situation repeated many times.
Expected value = (your probability × profit) − ((1 − your probability) × your stake)
A positive expected value does not mean profit on any single trade and guarantees nothing. It is only as good as your probability estimate, and the payout itself can change until settlement. The step-by-step method is in the expected value calculation guide.
Academic research on pool-based markets suggests crowds sometimes overrate long shots, meaning a big payout does not always reflect a real opportunity. That is why there is no rule such as "always back the underdog" or "always back the favourite".
See also trading psychology and risk and capital management.
Before any trade on a prediction market trading platform: read the pool split, compute break-even (your stake ÷ estimated payout), compare it with your independent estimate, and ask whether the gap justifies the risk after commission. Start with small amounts in markets you understand, such as football matches or the Bitcoin and Ethereum up/down markets.
Pool payouts are not locked on entry, and you can be right and still receive less than you saw. There is no selling or exit before settlement other than cancelling a football stake before kickoff. This content is educational and is not financial or investment advice.
Because most of the money is on its side, so many winners share a small losing pool. In a 90% vs 10% market, a
Not necessarily. The bigger payout comes with a lower chance of winning. It only makes sense if your probability estimate is above break-even, which is your stake divided by what you receive if you win.
It is the probability at which a trade neither wins nor loses on average. Divide your stake by what you receive if you win. For example, 100 ÷ 110 = 90.9%.
Because of the 10% commission taken from the losing pool at settlement. A side shown at 50% therefore needs an estimate above 52.6% to be worth backing.
No. The displayed payout is an estimate and the final payout is computed at settlement. Money joining your side after you lowers it; money joining the other side raises it.
If your side wins and there are no losers, everyone gets their stake back in full with no profit and no commission. If nobody backed the outcome that happened, the market is void and every stake is refunded.
No. There is no selling or early exit on PolySouq; your stake stays in until settlement. The only exception is cancelling a football stake before kickoff for a full refund.
It is each side's share of the money staked, i.e. the crowd's estimate. It can differ from the true probability, which is why you need an independent estimate before deciding.
Disclaimer: Prediction markets are a legal and legitimate way to trade information about the outcomes of future events. However, trading carries risk and you may lose the full amount you trade — so only trade what you can afford to lose. This content is educational and is not financial or investment advice.