A recent academic study conducted by researchers from Yale and the London Business School analyzed two years of trading activity on the Polymarket platform. The research covered 1.72 million accounts and 210,322 individual markets to evaluate the distribution of trading success.
The findings indicate that approximately 3% of all accounts generated 27% of the total dollar profits on the platform. Yale economist Theis Jensen, a co-author of the paper, suggests that this share of skilled traders is likely to decline to below 1% as market competition intensifies.
The study utilized statistical testing to differentiate between trading skill and luck. Experts note that increased competition leads to more accurate pricing, which narrows the spreads and makes it more difficult for traders to identify mispriced assets.
While institutional participation is growing, large firms often avoid markets with low liquidity to prevent their own orders from eroding potential gains. This dynamic creates opportunities for smaller, specialized traders to maintain an edge in niche market segments.
The authors conclude that as institutional capital continues to flow into prediction markets, the competitive advantage will likely concentrate among the most sophisticated funds. Improved pricing accuracy also benefits general users by reducing the likelihood of taking unfavorable positions.
