Study Reveals Polymarket’s Top 3% Dominate Profits, Leaving Most Bettors Losing Money

In traditional gambling, the house always wins. But in prediction markets like Polymarket and Kalshi, a small group of elite traders—rather than the platform—profits at the expense of casual bettors.

New research from the London Business School and Yale University reveals that the top 3.14% of users dominate these markets. On Polymarket, which has roughly 700,000 monthly active users, this translates to just 21,000 traders controlling most of the gains.

For everyone else, the odds are grim: many are essentially gambling on random outcomes, while others lose money steadily. As the researchers state:

“These accounts generate most of the trading volume but do not systematically improve price accuracy. Prediction market accuracy thus reflects the wisdom of an informed minority, not the wisdom of crowds.”

The study analyzed 1.7 million accounts and $13.76 billion in bets. Only the top 3.14% of users demonstrated consistent predictive success, securing over 30% of total profits. Meanwhile, more than two-thirds of players were net losers, effectively transferring funds to the skilled minority.

The findings dismantle the “wisdom of crowds” theory, which suggests that collective predictions yield accuracy. Instead, the research indicates that prediction markets are subsidized by uninformed bettors funding a select group of high-performing traders—some of whom may possess insider advantages.

Key Takeaways from the Study

• Top 3.14% of Polymarket users capture over 30% of profits.
• Two-thirds of all bettors are net losers.
• The “wisdom of crowds” myth is debunked—accuracy stems from a skilled minority.
• Prediction markets function more like casinos, where a few benefit at the expense of the majority.

Prediction Markets in the Spotlight

This study arrives as prediction markets gain traction, with platforms like Kalshi and Polymarket attracting millions of users. Earlier this year, an anonymous Kalshi user placed a massive bet on the White House confirming alien life or technology, highlighting the speculative nature of these platforms.