A new academic paper analyzing every Polymarket transaction from 2023 through 2025 concludes that the platform's accuracy reflects "the wisdom of an informed minority, not the wisdom of the crowd."
The working paper, revised April 25, was written by Roberto Gómez-Cram, Yunhan Guo and Howard Kung of London Business School and Theis Ingerslev Jensen of Yale. It covers 1.72 million accounts, 210,322 markets and roughly $13.76 billion in trading volume.
Just 3.14% of accounts qualify as "skilled winners," meaning their order flow consistently predicts both short-term price moves and final outcomes, according to the paper. Together with market makers, they capture more than 30% of all gains while making up under 3.5% of accounts.
The authors built a sign-randomization test, re-running each trader's history 10,000 times with the buy/sell direction flipped at random. By that benchmark, raw P&L is a poor proxy for skill: only 12% of the top earners overlap with the skilled group, and roughly 60% of "lucky winners" reverted to losses when tested on a separate sample of events.
Skill is also unusually persistent. 44% of accounts classified as skilled in a training sample stayed skilled in a held-out sample, compared with about 10% in a parallel test the authors run on active mutual funds.
The 67% of accounts classified as unlucky or unskilled losers absorb the platform's entire pool of aggregate losses.
On suspected insider activity, the authors flag 1,950 accounts that opened shortly before a single event and went dormant after it resolved. Those accounts move prices roughly 7 to 12 times more per dollar than skilled traders but are too concentrated in isolated events to drive overall accuracy.
The paper devotes a case study to three accounts that opened between Dec. 27 and Jan. 3 and collectively cleared more than $630,000 betting on Maduro's ouster before the U.S. military operation was disclosed. That episode lines up with the Commodity Futures Trading Commission's first-ever insider trading complaint involving event contracts, filed Thursday against U.S. Army Master Sgt. Gannon Ken Van Dyke for trading on classified information ahead of the raid.
The findings land at a sensitive moment for the sector. Polymarket is reportedly in talks to raise $400 million at a $15 billion valuation, and lawmakers in Washington, New York, and California have introduced bills or executive orders aimed at insider participation.
The paper takes direct aim at a marketing line that has become standard across the industry. The authors quote Kalshi CEO Tarek Mansour describing prediction markets as harnessing "the power of the wisdom of the crowds," and Polymarket CEO Shayne Coplan telling 60 Minutes last year that financial stakes aggregate information more effectively than experts.
"It's the most accurate thing we have as mankind right now, until someone else creates some sort of a super crystal ball," Coplan said of Polymarket.
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