With Augur, we'll have thousands reporting on market outcomes using a one-of-a kind consensus based system and a unique token called REPutation. As a reporter, you'll report on events every two months and, in return, receive half of all fees in the system multiplied by the percent of REP you own.

So, what they are relying on is that multiple people reporting a particular event can avoid manipulation. This is something which is touched upon extensively in the book "Wisdom of the Crowds" [0].

But, they also know that people might not be interesting in reporting an event. So, they are provide an incentive which is something like a PoS mining system - you earn coins for reporting based on the percentage of coins you hold in your wallet.

Obviously, this can turn out to be very bad because crowd wisdom doesn't always work. But, it will be an interesting experiment. But, not an experiment worth a billion dollars - during early Jan.

[0] - https://en.wikipedia.org/wiki/The_Wisdom_of_Crowds