According to Reddit, Predictions is a gamified extension of Reddit Polls, which piloted last year.
The idea is to allow users to wager tokens on the predictions they make in their favourite subreddits with at least 10,000 members.
Only moderators and moderator approved users can create a Predictions Tournament (a series of questions), but they can add as many questions as they want, even after the tournament has started.
Each user gets 1000 tokens when joining a Predictions Tournament. Tokens have no value other than to determine participants' rankings. Once users have spent all their tokens, they are out of that particular tournament.
Predictions are now generally available to subreddit mods.
An example of a Predictions Tournament can be seen here.