Most Retail Polymarket Traders Lose Money, Galaxy Study Shows

A study by Galaxy Research examined 2.9 million Polymarket wallets and found that 69.2% of retail accounts ended below break-even. Those traders collectively have lost $338.9 million.

The analysis uses Polymarket's complete on-chain settlement data, curated by oracle network Stork. It focuses on the international platform, which operates independently from the US app.

How Galaxy Separated Humans From Scripts

Galaxy set a threshold of 50 orders per active day to identify likely automated accounts. The firm acknowledged that this cutoff was a judgment call, as trading frequency does not have a natural break.

This filter excluded 125,429 accounts that placed 80.8% of all orders and ended up $246.8 million ahead.

For the remaining retail wallets, the median account is down roughly $3. Larger losses are concentrated in the tails, with the bottom 1% losing at least $4,804.

Losses also seem to drive traders away. Within 30 days after a loss, 15.2% of accounts had not traded again, compared to 6.1% after a win. Galaxy warned that it cannot link multiple wallets to a single individual, so some apparent quitters may have moved to new addresses.

The findings align with a Yale study indicating that 3% of Polymarket traders captured 27% of profits. In July, BeInCrypto reported that roughly two-thirds of 194,000 addresses ended up losing money on Polymarket's World Cup winner market.

Sports Specialists Bring Up the Rear

Galaxy categorized 44.1% of traders as specialists, meaning over 60% of their markets were in a single topic. Sports traders account for 47% of that category.

Just 25.1% of sports specialists ended up profitable, the lowest rate among all topics. In comparison, tech and science specialists achieved 41.2%, while generalists reached 30.4%.

Polymarket's recent marketing efforts focus on its separate US exchange. According to Front Office Sports, the company pays LeBron James $15 million annually to promote football markets. Galaxy argued that this expenditure targets the sports-focused traders who performed the worst in its international data.

Galaxy stated that nothing in its report "undermines the case for prediction markets as truth machines." It suggested that a losing majority might be necessary because informed traders require uninformed flow to trade against.

"Polymarket can be an unprofitable endeavor for most participants and a forecasting tool for nonparticipants at the same time," it said.

The report noted that the next year could reveal whether the size or composition of the prediction market trader base changes.