Event contracts are so much more than alternative gambling tools. Although some are using event contracts to speculate and gamble, there are so many different use cases.

At the heart of our ideas is that options and prediction markets are very similar. Whether it be their adoption curves or pricing behaviors, their similarities make us think that there is much more than meets the eyes.

Event contracts are financial products you can build a portfolio around. With small, targeted positions on real-world outcomes, anyone can find an edge. Work by Prof. Karl Whelan has shown that prediction markets overprice unlikely events. Further research is required, but it is our belief that anyone can generate alpha for themselves just by playing on the economics of prediction markets. Those economics as of now are:

• Overestimation bias: Humans tend to overweight low probability evets (i.e. I say there is 3% chance Elon becomes a trillionaire in 2025, but the real probability is 1%).

• Loss Aversion: Humans weight losses 2x more than wins. Thus, as people look at the risk/reward on buying high probability events, they prefer to not engage with the market out of risk aversion. For example, you see the probability of something happening is currently on the market at 97%, although you know that the probabilities are at 99%, you may be hesitant to bring yourself to the market due to such high risk.

• RISK PREMIUM: The extra amount you pay on top of fair value for unlikely events. We have found that there is significant risk premium for high probability events.

The most important and concrete of which is the risk premia. Risk premium exists in a broad range of products in traditional finance, whether it be bonds or most importantly options. For years, retail and institutional traders alike have made generational wealth in the simple process of selling the risk premium to those either looking to speculate or hedge their risks. Risk premiums are required in any healthy risk transferring market: without them people wouldn't be willing to take on the risks of agents looking to hedge.

Risk premium has been used by both retail and institutional traders, and has created generational wealth through small, but consistent profits. This will happen in the prediction markets as well, as those who are looking to hedge risk, try to offload it in the prediction markets.

Our view is that prediction markets will continue to grow in their market share against traditional financial products as people realize how effective it is to hedge risk on the prediction markets. Most people only ever see the entertainment side of prediction markets, but under the hood we have a highly advanced and useful product. The ability to hedge ANY risk coupled with clear definitions on payout make these products irresistible.

So, this opens the question to what we at Icy Dicey are doing. We are creating a platform to help people capitalize on the risk premium in prediction markets. Our advanced analytics are going to allow you to be as informed as the top-level quants at Susquehanna and Citadel. Our job is to show average investors the math behind those trades, so that regular users can find their edge the same way professionals do. That’s the bet: give people the tools, show them the probabilities, and create interest around a new asset class instead of around making a quick buck.