Most Polymarket Users Lose Money, While Top 1% Claim 76.5% of Gains, Study Finds

Source: Slashdot

Overview

In Polymarket’s prediction market, most people end up losing money, according to the Washington Post. The losses are typically modest—just a few dollars per user.

Key Findings

• Since Polymarket launched in 2022, a few thousand participants have lost the bulk of the money.
• An even smaller group—0.05 % of users—has captured most of the overall profits, based on a new analysis by finance researcher Pat Akey and colleagues (SSRN paper).
• The profit‑making rate on Polymarket is roughly comparable to that of online gamblers betting on sports and other real‑life events, according to the U.K. gambling regulator’s 2024 data.
• Odds of making a profit are slightly higher in weather and technology markets and a bit lower in sports markets.

Profit Distribution

• Only 1,200 users accounted for more than half of the total profits, amounting to $591 million—over $100,000 per person on average.
• The researchers note that the top 1 % of users capture 76.5 % of all trading gains.

Characteristics of Top Users

• The most successful participants are not occasional bettors; they appear to be professional traders executing thousands of trades, many of which are likely automated.
• One user generated $3 million since January by making over a million trades related to the Oscars, as reported by TRM Labs.
• These top traders consistently pick winning outcomes at a rate that is statistically unlikely to be due to chance, suggesting they possess an edge—whether through expertise, deep research, or possibly inside information.

Conclusion

The researchers conclude that while prediction markets can provide informational benefits, those advantages come at a cost to unsophisticated participants. The market is dominated by a small, highly skilled minority that captures the majority of gains.