From the Google blog

Here is an (old) article from Google's blog about how it used predictive markets. It's a quick read and a good primer for anyone still confused about predictive markets.

"We designed the market so that the price of an event should, in theory, reflect a consensus probability that the event will occur. To determine accuracy of the market, we looked at the connection between prices of events and the frequency with which they actually occurred. If prices are correct, events priced at 10 cents should occur about 10 percent of the time."

--From the Official Google Blog