Analysis Finds Up to 99.96% of Prediction-Market Users Merely Provide Liquidity

Polymarket allows traders to use crypto assets to wager on outcomes ranging from elections to economic events, with contract prices often treated as real-time measures of collective expectations. The decentralized prediction market relies heavily on transparent blockchain records and wallet activity to establish credibility, making signs of trading on nonpublic information or coordinated bets a significant test of market integrity and a potential focus for regulators.

A Bloomberg Businessweek analysis flagged about $200 million of Polymarket trading during the first half as potentially linked to insider activity. The top 1% of profitable accounts captured more than half of all gains, while over 50% of winning wallets were created within 24 hours before placing their bets. Some traders also appeared to split positions across multiple related wallets before withdrawing proceeds through Coinbase, intensifying scrutiny of the platform’s fairness.

Polymarket and Kalshi allow users to wager through contracts on the outcomes of political, economic and other events, with contract prices also viewed as a crowd-based measure of probability. Although such prediction markets can aggregate information, retail participants face information gaps and competition from professional quantitative firms, raising questions about whether profits are distributed fairly.

A recent Wall Street Journal analysis of Polymarket and Kalshi data found that just 0.1% of professional accounts captured 67% of total profits, while more than 70% of Polymarket users lost money. The report did not disclose the data cutoff date, sample size or actual profit amounts, but the figures show that gains were highly concentrated.

Prediction markets use trading prices to reflect the probability of events and have long been viewed as an application of the “wisdom of crowds.” After analyzing Polymarket data, a Yale University research team found that market accuracy comes mainly from a small group of informed traders. The finding suggests that price discovery may depend on specialized information rather than the collective judgment of most participants.

The study examined trading records from 2023 to 2025 and found that about 3% of participants captured roughly 30% of market profits, while 67% of traders absorbed all losses. It did not disclose the total dollar value of profits. Very few traders consistently outperformed random chance. When most winners moved on to predict different events, their performance clearly reverted to the norm or even turned negative.