The Green Beret who bet on a classified U.S. raid and got arrested was once seen as an outlier for prediction markets. A new paper suggests otherwise: he embodies an extreme version of the small group whose information actually moves prices on Polymarket, while the crowd loses around them.
3% of traders drive price discovery
Researchers from London Business School and Yale — Roberto Gómez-Cram, Yunhan Guo, Theis Ingerslev Jensen and Howard Kung — tested the industry's core claim that prediction markets work because of the crowd's collective wisdom. Using every Polymarket trade from 2023 to 2025, they studied 1.72 million accounts and $13.76 billion in volume.
The finding is stark: only 3% of traders account for most price discovery. They consistently push prices toward the correct outcome. The other 97% provide liquidity and generate volume, but in aggregate they are on the losing side, with the informed minority's profits directly coming from those positions.
When skilled traders account for a larger share of activity, market accuracy improves, especially in the final run-up to resolution. These traders also react first to new information — Federal Reserve announcements or corporate earnings — while the rest show little consistent response.
Skill vs. luck: 10,000 simulated flips
Distinguishing skill from luck is hard. With over a million traders, many will rack up big wins by chance. To filter this out, the authors reran each trader's bets 10,000 times, keeping everything the same except flipping a coin to decide whether to buy or sell.
That gave a benchmark for what profits would look like with no real edge. If actual results consistently beat the coin flip, that's skill. If not, it's luck.
Among the biggest winners by raw profit, only 12% beat the benchmark. Roughly 60% of those "lucky winners" turned into losers when checked against a separate sample of events. The winner list on prediction markets is mostly a random-number generator.
The few who truly outperform are the ones moving markets — and everyone else is paying their bills.