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Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t.
So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the apps will limit the size of the bets you’re allowed to make.
We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is w…
The spreads on most markets always seemed like a hint that polymarket transferred wealth from the impatient that don't really understand how it works, to those that play mostly as patient market makers with just an educated guess. The problem is that volume is generally too low to make significant money.
Someone calculates what they think the odds of an outcome happening are and then they allow people to take positions on either side at worse odds than what they think the real odds are. As long as their prediction is correct, over time they make money. It's why putting $1 on a 50/50 bet on a sportsbook will usually only pay out around $1.91 instead of $2 if you win.
> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
If you're a regular bookmaker, who is on the hook for any losses, then yes you would ban successful users. But in this case you just skim off a fee for each "trade" so there's no incentive to ban anyone.
Earlier quoted context omitted.
Someone flips a coin and looks at it, what orders are you willing to put in? The potential for insiders should be represented by a complete loss of liquidity.
And yet, many people bet on things like the duration or contents of press conferences, of pre-taped shows, etc.
Just curious but how are bets arbritated on these website? Meaning who decides if an outcome was yes or no? Answers to things like "Who will win the next Best Picture Oscar?" are fairly obvious and binary. Can we make bets whose answers are not binary yes/no? What about "Will celebraty X and Y break up?"? Does Polymarket go to X and Y to confirm if they broke up or something :D
To give an example, I wagered on a market a while ago that Trump would say "Mamdani" before the end of the week. He responded to a question Mamdani where the reporter asked about the mayor by name and Trump said "Mandami" instead of "Mamdani" (switched the m and n). Kalshi ruled that that didn't count as Trump having said the word.
Trump ultimately said Mamdani correctly the next day so it ended up not mattering and I think the rules have since been updated to accept obvious mispronunciations, but I think it's a good example of how much gray area some of these markets can have.
> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is w…
insider trading on events probably wouldn't show any trends, right? These are point in time events (they call them markets), but they are finite and short lived. An insider would be a one and done thing, so it would be pretty hard to spot them or trend any sort of month over month insider scheming imo. Also... > We study trading gains and losses on Polymarket, the largest prediction market This is not a natural thing…
Quick question: did your team consider the implications of capital recycling on the maker side? Liquidity providers tend to have superior tech and information, so the general edge is expected. However, the ability to effectively reuse the same capital to sell outcome sets seems like it could offer a scale advantage that enables them to capture even more opportunity. On the other side, takers expressing directional views have their capital committed to one position at a time. Do you think this contributes to the gains being so concentrated among them?
> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
There are also political markets, where it is clear campaigns manipulate the prices for the same reasons they will publish polls showing they are gaining or ahead. The CA governor market is especially far from reality. This is compounded by the fact that Americans can't trade this market so the distance from reality is especially bad for American election markets.
That being said, that most people don't make money on PM isn't surprising. The same thing is true for most markets. You only invest (business) time into something if you are getting a return. So those that are actually good at making predictions put the time into making trades, so they are the bulk of the trades and the bulk of the profit. Same thing happens with day traders on the equity markets.