How to Define Market Rules

This guide outlines how to design, write, and verify market rules that promote transparency, fairness, and consistency.

Prediction markets depend on clarity, consistency, and trust. Each rule written defines how outcomes are judged and directly shapes user confidence and trading behavior.

This guide provides a practical framework for writing strong, easy to understand market rules. It covers how to:

1. Create clear and fair resolution statements that avoid confusion.

2. Define key terms and include precise timeframes for all outcomes.

3. Identify trusted, verifiable sources to ensure objective resolution.

4. Address edge cases and exceptions to prevent disputes.

5. Apply consistent structure and tone across all markets.

Core Principles of Good Rules

1. Keep It Clear

Write in simple, direct language that anyone can understand. Avoid technical jargon, legal language, or overly complex sentence structures.

Example of Clear language:

Do	Don't
"This market will resolve to 'Yes' if Donald Trump meets with Xi Jinping between July 21, and October 31, 2025, 11:59 PM ET."	"This market will resolve affirmatively should the designated parties engage in bilateral diplomatic discourse within the specified temporal parameters."

2. Make It Certain

Every rule must provide a clear, binary outcome that can be objectively determined. Ensure only one clear outcome is possible. Avoid vague words.

Example of Unambiguous Criteria:

Do	Don't
"An exchange of words, handshake, direct conversation, or other clear personal interaction between the named individuals will qualify as a meeting."	"A meaningful interaction between the parties will qualify as a meeting."

3. Cover All Cases

Rules must address edge cases, exceptions, and potential ambiguities. Explain what does and doesn’t count to avoid confusion later.

Example of Comprehensive Coverage:

Merely standing in proximity, making eye contact, or being present in the same room or event without direct interaction will not qualify.

4. Be Exact with Time

Use clear dates, times, and time zones. Avoid relative terms like "soon," "eventually," or "by the end of the year" without specific dates.

Example of Temporal Precision:

Do	Don't
"By December 31, 2025, 23:59 PM ET."	"By the end of 2025."

5. Use Trusted Sources

Rely on official and reliable information to confirm results.

Example of Authoritative Sources:

The primary resolution source will be official information from the Trump administration; however, a consensus of credible information will also be used.

Good rules help everyone by:

• Avoiding confusion and disagreement.

• Making outcomes clear and fair.

• Giving simple guidance for decisions.

• Building trust and confidence in the market.

Key Components of Market Rules

1. Core Resolution Statement

Every rule must begin with a clear statement of when the market resolves to "Yes" and when it resolves to "No."

This market will resolve to 'Yes' if [specific condition] by [exact date and time]. Otherwise, this market will resolve to 'No'.

2. Definition of Key Terms

Define any terms that could be ambiguous or subject to interpretation. This includes technical terms, proper nouns, and concepts that might have multiple meanings.

For the purposes of this market, 'disarm' refers to a public commitment to relinquish or dismantle its military, whether partially or completely, in the Gaza Strip.

3. Inclusion and Exclusion Criteria

Clearly specify what qualifies and what does not qualify for the "Yes" outcome. This prevents disputes and ensures fair resolution.

Announcements of partial disarmament (e.g., surrendering a class of weapons or agreeing to disarm in stages or a certain region) will qualify as long as it is part of an acknowledged disarmament process. Only official announcements will qualify. Informal statements, plans contingent on future conditions, statements of intent without a formal policy directive, or any other statements that do not constitute a formal policy announcement will not be considered.

4. Resolution Source Specification

Identify the authoritative sources that will be used to determine the market outcome.

Primary resolution sources will include official statements from Hamas leadership; however, a wide consensus of credible reporting confirming a policy of disarmament has been instituted will also qualify.

5. Edge Case Handling

Address potential edge cases, exceptions, and scenarios that might affect resolution.

If at any point it becomes impossible for this team to win the World Series based on the rules of the MLB (e.g., they are eliminated in the playoff bracket), this market will resolve immediately to 'No'.

Standard Rule Format

1. Opening Resolution Statement

   1. Clear Yes/No criteria.

   2. Specific time frame.

   3. Exact conditions.

2. Definition Section

   1. Key term definitions.

   2. Scope clarification.

   3. Context setting.

3. Qualification Criteria

   1. What qualifies as "Yes".

   2. What qualifies as "No".

   3. Inclusion/exclusion rules.

4. Resolution Sources

   1. Primary sources.

   2. Secondary sources.

   3. Verification methods.

5. Edge Cases and Exceptions

   1. Special circumstances.

   2. Contingency plans.

   3. Dispute resolution.

Example of Well-Structured Rules

Market: "Will Trump meet with Xi Jinping by October 31?"

"This market will resolve to “Yes” if Donald Trump and Xi Jinping meet in person at any time between July 21 and October 31, 2025, 23:59 PM ET. Otherwise, it will resolve to “No”.

An exchange of words, handshake, direct conversation, or any other clear personal interaction between the two will qualify as a meeting.

Simply being in the same room, making eye contact, or attending the same event without direct interaction will not qualify.

The resolution will be based on a consensus of credible reporting from multiple reliable news sources."

Rule Patterns & Examples

1. E-Sports Markets

What to Focus On: Focus on official results, clear elimination criteria, and contingency planning.

Example - "Will T1 win against CTBC Flying Oyster in the upcoming League of Legends match?":

"This market will resolve to “Yes” if T1 win against CTBC Flying Oyster in the named League of Legends match. Otherwise, it will resolve to “No.”

If the game is postponed, the market will remain open until the match is completed.

If the game is canceled entirely, with no make-up match, this market will resolve 50–50.

End Date: October 16, 2025, 23:59 PM ET

Resolution Source: Official from Liquipedia https://liquipedia.net/leagueoflegends/Main_Page"

Good Practices:

1. Define Yes/No criteria

2. Plan for scenarios

3. Include what happens if canceled

2. Sports Markets

What to Focus On: Focus on official results, clear elimination criteria, and contingency planning.

Example - "Will the New York Yankees win the 2025 MLB World Series?":

"This market will resolve to “Yes” if the New York Yankees win the 2025 MLB World Series. Otherwise, it will resolve to “No.”

If, at any point, it becomes impossible for the Yankees to win the World Series based on official MLB rules (for example, if they are eliminated from the playoff bracket), the market will resolve immediately to “No.”

If the 2025 MLB season is permanently canceled or not completed by February 28, 2026, 23:59 PM ET, this market will resolve to “Other”."

Good Practices:

1. Define how a team wins

2. Plan for early resolution

3. Include what happens if canceled

3. Political Leadership Markets

What to Focus On: Focus on official positions, formal announcements, and verifiable events.

Example - "Maduro out in 2025?":

"This market will resolve to “Yes” if Venezuela’s president, Nicolás Maduro, is removed from power for any length of time between January 1 and December 31, 2025, 23:59 PM ET. Otherwise, it will resolve to “No”.

For the purposes of this market, “removed from power” means that Maduro resigns, is detained, loses his official position, or is prevented from carrying out his duties as President of Venezuela within the specified timeframe.

The resolution source for this market will be a consensus of credible reporting from multiple independent and reputable news outlets."

Good Practices:

1. Use clear timeframes

2. Define what "removed from power" means

3. Include all possible cases

4. Use reliable sources

4. Policy Implementation Markets

What to Focus On: Focus on official implementation, not just announcements.

Example - "100% tariff on China in effect by November 1?":

"This market will resolve to “Yes” if a general 100% tariff rate or higher on imports into the United States from China goes into effect for any amount of time by November 1, 2025, 23:59 PM ET. Otherwise, it will resolve to “No.”

For the purposes of this market, “goes into effect” means the official start date of the tariffs, as established by legislation or executive action, must have passed without being delayed or suspended.

Only active tariffs will qualify. Tariffs that are paused, delayed, or only announced but not implemented will not be considered."

Good Practices:

1. Check official start dates

2. Keep language specific

3. Clarify what counts as active

5. Organizational Announcement Markets

What to Focus On: Focus on official announcements, credible leadership, and formal policy changes.

Example - "Will Hamas agree to disarm by December 31?":

"This market will resolve to “Yes” if Hamas officially announces that it will disarm in the Gaza Strip by December 31, 2025, 23:59 PM ET. Otherwise, it will resolve to “No.”

Only credible announcements made by the widely recognized leadership of Hamas will qualify.

For the purposes of this market, “disarm” means a public commitment to relinquish or dismantle military forces, either partially or completely, within the Gaza Strip."

Good Practices:

1. Require formal announcements

2. Define terms clearly

3. State what qualifies and what doesn’t

Tips to Write Better Rules

What to Watch For	Better Approach
Time is unclear, like “by the end of the year”.	Use exact dates and times, e.g., “by December 31, 2025, 23:59 PM ET”.
Words are too broad, like “big progress”.	Use specific and measurable details, e.g., “official announcement of the new policy”.
Some terms may confuse readers.	Clearly define each key term.
Information comes from only one place.	Confirm with several trusted sources.
Unusual cases are not covered.	Add simple rules for canceled or impossible events.
Mix of formal and casual statements.	Rely on official and verified information only.

Resolution Source Guidelines

Primary Sources (Most Reliable)

1. Official government statements.

2. Formal organizational announcements.

3. Official data releases.

4. Legal documents and court rulings.

Secondary Sources (Acceptable with Verification)

1. Credible news organizations.

2. Expert analysis from recognized authorities.

3. Academic or research institution reports.

4. International organization statements.

Sources to Avoid

1. Social media posts (unless from official accounts).

2. Unverified reports.

3. Opinion pieces without factual basis.

4. Single-source claims without corroboration.

Verification Standards

1. Multiple independent sources confirming the same information.

2. Official documentation supporting claims.

3. Credible expert consensus.

4. Time-stamped and verifiable information.

Time Specification Best Practices

Always Include:

1. Specific date

2. Time zone

3. Cutoff criteria

Examples:

1. "By December 31, 2025, 23:59 PM ET".

2. "Between January 1, 2025, 12:00 AM ET and December 31, 2025, 23:59 PM ET".

3. "On or before November 1, 2025, 23:59 PM ET".

Conditional Clauses

Early Resolution Conditions:

"If at any point it becomes impossible for [condition] to occur, this market will resolve immediately to 'No'."

"If [organization] is dissolved or ceases to exist, this market will resolve to 'No'."

Contingency Planning:

"If the [event] is permanently canceled, this market will resolve to 'Other'."

"If [condition] occurs before the specified date, this market will resolve immediately to 'Yes'."

Definition & Clarification Strategies

1. Define Key Terms Early

Place definitions immediately after the core resolution statement to avoid confusion.

2. Use Specific Examples

Provide concrete examples of what qualifies and what doesn't.

3. Address Common Misconceptions

Anticipate how participants might misinterpret terms and address these explicitly.

4. Use Inclusive and Exclusive Lists

Clearly state what is included and what is excluded from the criteria.

Example of Effective Definitions:

"For the purposes of this market, 'disarm' refers to a public commitment to relinquish or dismantle its military, whether partially or completely, in the Gaza Strip. Announcements of partial disarmament (e.g., surrendering a class of weapons or agreeing to disarm in stages or a certain region) will qualify as long as it is part of an acknowledged disarmament process.

Only official announcements will qualify. Informal statements, plans contingent on future conditions, statements of intent without a formal policy directive, or any other statements that do not constitute a formal policy announcement will not be considered."

Conclusion

Strong rules create confidence and fairness in every market. By keeping language clear, outcomes measurable, and sources reliable, you help participants trade with trust and understanding, building a transparent, accurate, and credible prediction ecosystem.