Researchers find 3% of traders drive Polymarket accuracy, not crowd wisdom
Updated
Updated · CoinDesk · Apr 26
Researchers find 3% of traders drive Polymarket accuracy, not crowd wisdom
11 articles · Updated · CoinDesk · Apr 26
A working paper from London Business School and Yale analyzed every Polymarket trade from 2023 to 2025, covering 1.72 million accounts and $13.76 billion in volume.
Only 12% of the biggest winners consistently outperformed chance, and about 60% of 'lucky winners' became losers when tested on separate events, highlighting the dominance of a small, skilled minority.
The study challenges the industry's core claim about crowd wisdom, showing most traders provide liquidity but lose money to informed participants, and raises concerns about potential insider trading in rare, high-impact events.
Are you among the 97% of traders losing money to a skilled minority on Polymarket?
If 'wisdom of the crowd' is a myth, what makes prediction markets so accurate?
Are prediction markets the new frontier for criminals using classified government and corporate secrets?
When a single whale wagers $45 million, can we still trust the market's prediction?
How can regulators stop manipulation without destroying the forecasting power of these markets?
Should your company's insider trading policy now explicitly ban betting on world events?
The 3% Profit Elite: How a Tiny Minority Captured 70% of $3.7B in Prediction Market Profits (2022–2025)
Overview
From 2022 to 2025, prediction markets like Polymarket showed that over 84% of traders lost money, while a tiny elite of less than 0.04% captured more than 70% of total profits by using advanced strategies such as market making and exploiting behavioral biases. Large whale bets, like an $80 million wager in 2024, caused short-term price distortions that undermined market reliability but also attracted liquidity, improving long-term efficiency. Accuracy in these markets depends heavily on event type, liquidity, and timing, with a small informed minority driving price discovery. By 2026, regulated platforms like Kalshi dominated U.S. volume due to clearer rules, while decentralized platforms faced regulatory challenges, shaping a bifurcated market landscape.