Playing Knew The News is completely free. The game uses a virtual, fake currency to allow the player to make predictions on news events. To start with, each user is equipped with $1,000 at registration.
On Knew The News, user submit questions, and other users make predictions about what they expect to be the outcome.
Those question are called "markets" and the predictions which the users make are so-called "positions". Using virtual money, users trade predictions: They buy stakes on outcomes, and sell if they change their mind.
Whenever the outcome of a question emerges, trading of predictions is stopped and all open positions are evaluated. Predictions on the correct outcome will be awarded with virtual money, based on the value of the option at the moment the prediction was made.
Prediction markets actually have a long and colorful lineage. Betting on elections was common in the U.S. until at least the 1940s, with formal markets existing on Wall Street in the months leading up to the race. Newspapers reported markets conditions to give a sense of the closeness of the contest in this period prior to widespread polling. The markets involved thousands of participants, had millions of dollars in volume in current terms, and had remarkable predictive accuracy.
Further reading: "Prediction markets" on Wikipedia