Researchers Question the 'Wisdom of the Crowd' on Polymarket

Research conducted by academics from London Business School and Yale University has cast doubt on the effectiveness of Polymarket's predictive capabilities. Analyzing transactions from 2023 to 2025, the study suggests that success on the platform is largely attributed to a small group of "informed minority" traders rather than the collective wisdom of its user base.

Out of the vast pool of 1.7 million accounts and $13.76 billion in transactions, only 3.14% of users were classified as "skilled winners." This elite group, along with market makers, contributed to more than 30% of the platform's profits.

Interestingly, the research also indicated that high earnings do not necessarily correlate with trader expertise. Only 12% of the most successful accounts employed a strategic approach, while the majority—around 60%—suffered losses when market conditions shifted, often due to inexperience or sheer luck. A significant portion of participants, about 67%, found themselves operating at a loss.

Additionally, the researchers uncovered potential insider trading, identifying 1,950 accounts that made trades just prior to major events and then ceased trading. A notable example involved bets on the resignation of former Venezuelan President Nicolás Maduro, which occurred just before the U.S. announced a military operation to capture him.

These findings challenge claims from Polymarket and Kalshi's leadership, who argue that predictive markets surpass expert analysis due to the collective intelligence of their participants. The study's conclusions are particularly relevant in light of recent legal actions, including charges against active-duty serviceman Gannon Ken Van Dyke for allegedly using insider information to make trades on Polymarket.