What are prediction markets? Wikipedia says that they:
are exchange-traded markets created for the purpose of trading the outcome of events. The market prices can indicate what the crowd thinks the probability of the event is. A prediction market contract trades between 0 and 100%. It is a binary option that will expire at the price of 0 or 100%. Prediction markets can be thought of as belonging to the more general concept of crowdsourcing which is specially designed to aggregate information on particular topics of interest. The main purpose of prediction markets is eliciting aggregating beliefs over an unknown future outcome.
And regarding accuracy:
The ability of the prediction market to aggregate information and make accurate predictions is based on the efficient-market hypothesis, which states that asset prices are fully reflecting all available information. For instance, existing share prices always include all the relevant related information for the stock market to make accurate predictions.
[...] In the case of the predictive market, each participant normally has diversified information from others and makes their decision independently. The market itself has a character of decentralization compared to expertise decisions. Because of these reasons, the predictive market is generally a valuable source to capture collective wisdom and make accurate predictions.
Prediction markets have an advantage over other forms of forecasts due to the following characteristics. Firstly, they can efficiently aggregate a plethora of information, beliefs, and data. Next, they obtain truthful and relevant information through financial and other forms of incentives. Prediction markets can incorporate new information quickly and are difficult to manipulate.