Polymarket Bloodbath: 69% of Retail Traders Lose $338.9M, Galaxy Research Reveals

A new study by Galaxy Research has found that more than 69% of retail traders on Polymarket, the decentralized prediction market platform, lost money, with aggregate losses totaling $338.9 million. The research, released this week, analyzed Polymarket's full on-chain history, covering 2.9 million human-paced accounts, and excluded 125,429 accounts deemed likely automated due to high order frequency.

The study revealed that the median retail account lost around $3, indicating that most losses were small, though a minority suffered significant losses. Losing traders were more likely to churn, with 15.2% not trading again within 30 days after a loss, compared to 6.1% after a win. Specialization did not guarantee success: only 28% of specialists finished profitably, versus 30.4% of generalists, with sports specialists performing worst and tech/science specialists best at 41.2% profitable. Galaxy noted limitations, including that the analysis tracks wallet addresses, not individuals, and covers Polymarket's international platform only.

The findings come amid escalating legal scrutiny for prediction markets. Baltimore sued Polymarket and Kalshi in August over alleged unlicensed sports betting, and New York followed in September, accusing Polymarket's US arm of unlicensed gambling and allowing underage trading. In South Korea, police have opened cases against 26 Polymarket users and referred 18 to prosecutors over approximately $12.7 million in bets, examining whether such trading constitutes illegal gambling. As Polymarket expands globally, these regulatory challenges could reshape the platform's operations and the broader prediction market landscape.