An analysis of 1.6M Polymarket accounts since November 2022: 0.1% of users get 67% of the profits, with the highest-frequency traders seeing the most success
A WSJ analysis shows a small number of accounts on Polymarket and Kalshi—often pros using data-driven algorithmic trading—take home most of the winnings
Context & Ripple Effects
Earlier coverage had already shown that a very small share of Polymarket accounts generated most price discovery, while separate studies raised concerns about suspicious profits and wash trading. This analysis adds a distributional result: participation may be broadening, but profitable participation is concentrated among a much narrower professional layer.
That matters as Kalshi and Polymarket expand contract types and seek more trading activity. The platforms’ ability to present prediction markets as useful information markets depends not only on volume, but on who supplies informed pricing and under what market-integrity conditions.
First-order effects
- High-frequency, data-driven professional traders capture a disproportionate share of winnings on Polymarket and Kalshi, leaving less profitable flow for casual participants.
- The reported concentration reinforces that the accounts most able to trade rapidly on information and data have an immediate advantage in setting and exploiting prices.
Second-order effects
- Platforms have stronger incentives to attract sophisticated liquidity and tools, even as they must retain enough retail participation to sustain contract activity.
- The gap between informed traders and other users intensifies the relevance of prior concerns about suspicious trading and inflated volume, increasing pressure for credible surveillance and market-quality safeguards.
Third-order effects
- If this pattern persists, prediction markets may operate less like crowd-forecasting systems and more like specialist-led trading venues, with a small informed cohort producing much of both pricing and returns.
- Their long-run legitimacy will hinge on whether platforms and regulators can distinguish efficient professional participation from manipulation, privileged-information trading, or activity that merely inflates liquidity.
The trend: Prediction markets are becoming more platformized and financially professionalized, concentrating price formation and profits among specialized traders while raising higher expectations for market integrity.