Prediction marketPolymarketshot to prominence amid the recentU.S. election,attracting monthly trading volume just shy of$2.5 billion in Octoberwith over $1.2 billion more already racked up in November. Some usersmade millions betting on the election—but ultimately, data suggests that most bettors have actually lost money using the platform to date.
Polymarkethas allowed users to bet on most events and cultural questions circulating this year, from who will win the U.S. Presidential election to which actor will be the next James Bond. It’s been around for years, but exploded in popularity over the course of 2024 thanks to election hype.
During election season, Polymarket was increasingly quoted bymainstream media outletsas an alternative source to traditional polling. In fact, Polymarket founder and CEO Shayne Coplan believes that the prediction market was more accurate than the polls—after anumber of polls tipped Harris to winwhile Trump was steadily leading on Polymarket in recent weeks.
While Polymarket has earned a growing reputation as a crystal ball, a large majority of users have actually lost money.
According to blockchain data collected by multipleDunedashboards, 86% of accounts have a negative realized profit and loss margin, meaning that a large majority of users have been wrong about their bets and/or sold at a loss.
Fortunately, theaverage bet sizeisn’t too large, with $100-$500 being the most common span at nearly 28%, followed by $10-$50 at 26% and $0-$10 at 18% of the share.
Additional data fromLayerHubpaints a slightly starker balance, pointing to about 88% of users in the red when it comes to realized profits. According to LayerHub’s analysis, out of approximately 371,000 unique wallets on the platform, nearly 237,000 of them have posted a loss of $100 or less. That’s the largest category by far.
Only 4,004 wallets on Polymarket have realized profits of $1,000 or more, per LayerHub. That’s just over 1% of total unique wallets on the platform.
Prediction markets need both high-information (potentially including insiders) and low-information users to create enough liquidity and potential profit to work effectively, expert Thomas Reitz of the University of IowatoldDecryptin October. “It’s a balancing act,” he said.
In Polymarket’s case, based on the data, it’s apparently the “dumb money” that’s taking most of the losses so that the “smart money” can amass sizable profits.
It’s also worth noting that the platform has seen an influx of users illegitimately using the platform in the attempt to farm apotential future token airdrop. This is done by repeatedly buying and selling positions on Polymarket in a method called “volume farming.” By doing this, many accounts end up losing money, albeitjust a couple of bucks.
Polymarket now faces a potential ban in Franceas the country’s National Gaming Authority (ANJ) opened an investigation on Wednesday. The ANJ said it is currently “examining [Polymarket’s] operation” to assess its compliance with French gambling legislation.
This scrutiny emerged after trader Theo4,identifiedas French national,profited $47 millionacross four accounts from $45 million worth of bets. Nearly all of this money was waged on Trump securing a second term in the White House, although Polymarket has disputed anyfoul play.
Chainalysissaid late Wednesdaythat Theo4’s total profits may actually tally to $78.7 million based on additional accounts that appear to be connected. Whichever multi-million-dollar haul Theo4 ended up with, it’s clear that the whale’s huge win is a rarity among Polymarket users.
Edited byAndrew Hayward
