DKNG
HOOD
The house doesn’t even have to win
A new academic paper dug through every Polymarket trade since 2022 and came to a pretty savage conclusion: if you’re trading prediction markets like they’re a casual side quest, odds are you’re donating money to someone smarter, faster, or both.
The study found that 68.8% of users lost money, while the top 1% of traders captured 77% of all gains. The top 0.1%? They took home more than half the platform’s total profits. In other words, the distribution looks less like a friendly marketplace and more like a laser-focused vacuum cleaner for edge.
Execution is the real alpha
One of the paper’s biggest takeaways is that being right isn’t enough. The strongest predictor of profits wasn’t necessarily picking the correct outcome — it was placing limit orders instead of crossing the spread like an impatient tourist at the airport.
That matters because it turns the whole thing into a reminder about market structure. If you’re paying up for the trade, you can be directionally correct and still walk away poorer. The study’s authors even found that a one-standard-deviation increase in maker-volume share cut the chance of losing by 9.3 percentage points.
Why investors should care
This lands right as Robinhood keeps leaning into event contracts and Kalshi fights its way through state-level regulatory drama. So the product category is getting more attention, not less. But attention doesn’t equal easy money.
A few numbers to keep on your radar:
- More than 100,000 Polymarket wallets lost at least $1,000 since January 2025
- The losers gave up $131 million
- Almost all of that money flowed to a small cluster of high-frequency accounts
For public-market investors, that’s the same old story in a shinier costume: retail-friendly product, steep learning curve, and a few sharp operators doing the heavy lifting.
Big picture
Prediction markets may be a legit new corner of finance, but this study says the average participant is still bringing a butter knife to a chess match. If you’re watching names like Robinhood or DraftKings, the growth story may be interesting — just don’t confuse platform excitement with easy trading profits.