Understanding Probability Markets vs Traditional Betting

A trader took a massive loss on Polymarket, buying "Liverpool to Win" at $0.66 and losing $1.58M. But here's the critical distinction everyone misses:

Buying at $0.66 doesn't signal "Liverpool will likely win."

It actually means: "I believe the true probability exceeds 66%."

That's fundamentally different. Polymarket operates as a probability market—a mechanism for price discovery based on collective belief. It's not a sportsbook making odds. Traders stake capital on outcome probabilities, not on predicting guaranteed results. When positions go wrong, it reflects miscalculated probability assessment, not merely bad luck.

This particular trader repeatedly misinterpreted how these markets function, treating price points as predictive signals rather than probability estimates. That's a costly mistake.