That seems like a severe oversimplification, akin to describing the stock market as nothing but 'buying based on how you think others will buy'. Yes, there's elements of a Keynesian beauty contest, but the fundamentals still exist: dividends are paid out or not, companies go bankrupt or not, and any traders who are totally unmoored from reality will discover that the hard way.

The easiest way to predict the resolution the majority will choose is to simply look at what the reality is. *Was* Obama elected? *Did* Putin invade Russia? etc. The truth is the Schelling point for all voters; how do conspirators know which way to vote on what contracts? Their communication will be unreliable and harder than the truthful voters, who merely have to look at a data source to decide; combined with the incentive for each of them to defect and screw over their co-conspirators, this produces a fundamental bias towards the majority voting for the true outcome, which produces a fundamental that voters must acknowledge or lose money, which anchors the prediction markets & prevents them from spinning off into navel-gazing.

Just like Bitcoin: if you can trust the majority of hash power (vote power), you're fine. If you can't, you're not.