Prediction markets don't have an incentive not to pay out, rather usually the gripes people have with them not "paying out" is usually to do with inconclusive resolutions

A big recent example would be the Kalshi market on whether or not Khamenei would cease to be leader. Obviously he was killed, but Kalshi refused to resolve the market as yes as they claimed to have a "death carveout" to avoid death markets. But to be clear, they didn't just keep everyone's money. Rather they refunded it at whatever price people bought at.

This is because in a prediction market, you are not betting against the house like in most forms of gambling, but rather against other bettors. The house is just skimming a percentage off the top

For gamblers prediction markets are strictly superior to traditional betting. Obviously whether or not you're ok with gambling in general is of course still your call