Most traders new to prediction markets overlook a fundamental detail about how Polymarket actually works—and this blind spot is exactly why many end up losing on controversial event bets.

Here's the reality: Polymarket itself doesn't have the power to determine what actually happened. You might assume the platform decides outcomes, but that's where newcomers get tripped up.

Instead, event resolution flows through the UMA Optimistic Oracle—a decentralized mechanism that operates independently. This is the actual arbiter. Think of it as a built-in checks-and-balances system:

When an event concludes, the oracle doesn't just accept the first claim that comes in. It opens a window for participants to dispute resolutions they believe are incorrect. This contestation period is crucial. If someone challenges a resolution with evidence, the system can overturn it. Only after this window closes without successful disputes does the outcome become final.

Why does this matter? Because understanding this separation changes how you approach controversial bets. If you're betting on something politically charged or subjectively interpretable, you're not just betting against other traders—you're betting that your interpretation will survive the oracle's dispute mechanism.

New players often treat Polymarket like a simple betting app where outcomes are pre-determined. They don't account for resolution risk. They don't consider that controversial calls might get challenged, delayed, or even reversed. That's the gap costing them real money.

The takeaway: Before you place on any contentious market, understand not just what you're betting on, but how it will be resolved and by what mechanism.