Skilled Polymarket traders are a 3% minority, and everyone else funds their gains: study

A new academic paper analyzing Polymarket transactions from 2023-2025 reveals that the platform's accuracy stems from a small, skilled minority, not the crowd. Only 3.14% of accounts are identified as "skilled winners" whose trading consistently predicts market movements and outcomes. These skilled traders, along with market makers, capture over 30% of all gains while constituting less than 3.5% of users. The study used a sign-randomization test to assess skill, finding that raw profit and loss is a poor indicator, with only 12% of top earners overlapping with the skilled group. Skill proved persistent, with 44% of skilled accounts remaining so in a separate sample, significantly higher than active mutual funds. The remaining 67% of accounts are classified as unskilled or unlucky losers who absorb the platform's aggregate losses. The paper also flagged 1,950 accounts showing potential insider activity, though these were too event-specific to drive overall accuracy. This research emerges as Polymarket reportedly seeks significant funding and faces increasing regulatory scrutiny over insider trading concerns in prediction markets.

(Source：The Block)