Galaxy Study: Over 69% of Traders on Polymarket Lost Money

A study by Galaxy revealed that over 69% of retail traders on Polymarket lost money. In total, 2.9 million accounts reviewed by Galaxy showed that traders incurred cumulative losses of $338.9 million. The analysis excluded 125,429 accounts that averaged more than 50 orders on an active trading day, as they were likely automated. These accounts made up only 4.1% of all wallets but accounted for 80.8% of all orders. Among the remaining accounts, the median loss for a retail trader was about $3, indicating that most losses were relatively small. However, a smaller group of traders experienced losses reaching thousands of dollars. More than 15.2% of accounts did not return to trading within 30 days after a loss, whereas only 6.1% stopped trading after a win.

The study also found that traders specializing in a single topic were less profitable. About 44% of traders focused more than 60% of their activity on one topic, yet only 28% of them ended up profitable, compared to 30.4% of more diversified traders. Sports specialists had the lowest likelihood of profitability. Meanwhile, specialists in technology and science fared better, with 41.2% of traders being profitable. Overall, profitable traders tended to place larger bets and trade more frequently. However, the holding time of positions did not show a clear correlation with profitability.

At the same time, platforms like Polymarket face increasing legal challenges. In August, the city of Baltimore filed a lawsuit against Polymarket and Kalshi, claiming that both platforms offer sports betting without the necessary licenses in Maryland. In September, New York joined the case, filing a lawsuit against the U.S. division of Polymarket for alleged unlicensed gambling and allowing users aged 18–20 to trade, despite the minimum age of 21 for mobile sports betting. South Korean police also opened cases against 26 Polymarket users and referred 18 cases to prosecutors regarding $12.7 million in bets. Authorities are considering whether trading on the platform should be deemed illegal gambling under Korean law.