Follow this link to a great article on markets. While the article does not go into great detail explaining the mechanics of how a person would bid or make money doing this, the uses of markets to predict the future is shown very well.
On a related note, I think it was a shame that the plan to use a market like one of these to predict future terrorist actions was killed by politics and outrage. This is just a tool that regularly predicts better than any other tool available. Any other! So, use the tool and help save people from becoming victims. It's not about making money off of suffering, it's about using collective wisdom to alleviate suffering. Until we find another, yet unknown, tool that works better than the marketplace, let us use the best we have. Anything else is shortsighted and foolish.