A comprehensive study of Polymarket reveals extreme profit concentration in prediction markets. The research, covering 2.4 million users and $67 billion in trading volume from 2022 to 2026, shows the top 1% of traders captured 76.5% of all gains. Despite this inequality, prices remain well-calibrated and markets efficiently aggregate information across millions of trades.

Winning traders employ sophisticated strategies using limit orders at advantageous prices. By contrast, losses primarily stem from liquidity-taking behavior. Longshot betting serves as a descriptive marker of losing participants but plays a diminished role when accounting for trading scale. The study finds that for about one in five losers, liquidity costs alone could have turned their performance positive.

While profit distribution heavily favors experienced traders, monthly performance shows only weak persistence. This suggests the concentration reflects trading conditions rather than persistent skill. The research indicates that prediction markets provide valuable information at the cost of unsophisticated participants, creating a clear trade-off between market efficiency and equitable outcomes.