Galaxy Finds 7 in 10 Polymarket Retail Traders Lost Money

Most retail traders on Polymarket lose money. A Galaxy Research study of 2.9 million human-paced accounts found that more than 69% finished below break-even. The group recorded aggregate losses of $338.9 million.

The research used Polymarket’s full on-chain history, covering positions, entry prices, holding periods, as well as payouts. Galaxy excluded 125,429 accounts that averaged more than 50 orders per active trading day, treating them as likely automated. These accounts made up just 4.1% of wallets but accounted for 80.8% of all orders.

Behavior of Polymarket Traders

Among the remaining accounts, the median retail account lost around $3, which indicates that most losses were relatively small, while a smaller group lost thousands. Galaxy also found that losing money was linked to higher churn. About 15.2% of accounts did not trade again within 30 days after a loss, compared with 6.1% after a win.

The study also examined whether traders increased risk after winning or losing. Both groups usually returned with slightly smaller positions, but traders reduced risk less after a win.

Specialization was another major finding. Around 44% of traders focused more than 60% of their activity on one topic. However, specialists were slightly less likely to be profitable than generalists. Only 28% of specialists finished profitably, compared with 30.4% of generalists.

Sports made up the largest specialist group and had the lowest profitability rate. Tech and science specialists performed better, with 41.2% finishing profitably. Galaxy said this could reflect stronger subject knowledge, although the data cannot establish why these traders performed better.

Profitable traders also tended to make larger bets. They also traded more frequently. Holding time, however, did not show a clear link with profitability. Galaxy’s research covered Polymarket’s international platform, not its separate US exchange. It also noted an important limitation: the analysis tracks wallet addresses rather than individual people. A trader using multiple wallets could therefore appear as several accounts.

You may also like:

• New York Sues Polymarket Over Alleged Unlicensed Gambling and Underage Trading
• Vitalik Buterin Endorses Trueo as Prediction Market Moves to Ethereum
• Report: CFTC Eyes Unusual $5B Trading Pattern on Kalshi ETH Perpetuals

Legal Woes

The legal problems around prediction markets are starting to pile up as platforms like Polymarket expand into more countries and markets. In the US, cities and states are increasingly arguing that contracts on sports results, player stats, and other uncertain outcomes look a lot like ordinary gambling. Baltimore, for example, sued Polymarket and Kalshi in August, claiming that both platforms were offering sports bets without the licenses required in Maryland.

New York followed in September, suing Polymarket’s US arm over alleged unlicensed gambling and claims that users aged 18 to 20 could trade, despite the state’s 21-year minimum age for mobile sports betting. The legal questions go beyond the US.

South Korean police opened cases against 26 Polymarket users and referred 18 to prosecutors over about $12.7 million in bets. Authorities there are examining whether its trading should be treated as illegal gambling under Korean law.