Aside: in the future where smart contracts are broadly usable, there needs to be some way (even centralized) to identify who’s trusted in such a contract and why you should trust them. In a normal office pool, it’s just Dave from accounting who runs the pool, but on the block chain that breaks down.
In centralized markets, one person determines the final market outcomes - which means there can be mistakes or outright manipulation. With Augur, we'll have thousands reporting on market outcomes using a one-of-a kind consensus based system and a unique token called REPutation. As a reporter, you'll report on events every two months and, in return, receive half of all fees in the system multiplied by the percent of REP you own.
With Augur, we'll have thousands reporting on market outcomes using a one-of-a kind consensus based system and a unique token called REPutation. As a reporter, you'll report on events every two months and, in return, receive half of all fees in the system multiplied by the percent of REP you own.
So, what they are relying on is that multiple people reporting a particular event can avoid manipulation. This is something which is touched upon extensively in the book "Wisdom of the Crowds" [0].
But, they also know that people might not be interesting in reporting an event. So, they are provide an incentive which is something like a PoS mining system - you earn coins for reporting based on the percentage of coins you hold in your wallet.
Obviously, this can turn out to be very bad because crowd wisdom doesn't always work. But, it will be an interesting experiment. But, not an experiment worth a billion dollars - during early Jan.
At scale for brackets, at least, there's a natural centralized authority to trust on the matter, which is the organization running the tournament (NCAA). The official records are theirs (for better and for worse) and any API they produce would be the authority of record. That they likely don't have such an API is a different, interesting problem.