#Definition
Play Money markets use virtual currency with no real-world financial value, while Real Money markets use actual currency (fiat or crypto).
#Comparison
#Real Money Markets
- Incentives: Traders have "skin in the game," leading to more careful analysis and generally more accurate probabilities.
- Regulation: Heavily regulated (e.g., Kalshi, Polymarket).
- Participants: Speculators, hedgers, arbitrageurs.
#Play Money Markets
- Incentives: Reputation, leaderboard status, or prizes.
- Regulation: Generally unregulated.
- Participants: Casual users, students, researchers.
- Accuracy: Can still be surprisingly accurate (e.g., Metaculus, Manifold), but may suffer from "funny money" biases where users take unrealistic risks.
#Hybrid Models
Some platforms (like Manifold) allow users to donate their play-money winnings to charity, creating a bridge between virtual and real value.