Only 3% of traders drive prediction markets' accuracy, not the crowd, study finds

Researchers show market accuracy comes from a tiny group of informed traders, not broad participation. What to know : A new working paper analyzing every Polymarket trade from 2023 to 2025 finds that about 3% of traders account for most price discovery, undermining the idea that prediction markets rely on the wisdom of the crowd. The researchers distinguish skill from luck by simulating each trader’s bets 10,000 times with coin-flip directions, concluding that only a small share of top winners consistently outperform chance and that many apparent winners regress when tested on separate events. Only 12% of the biggest winners by raw profit cleared that benchmark, and roughly 60% of "lucky winners" turned into losers when tested against a separate sample of events.