Prediction Markets Turn Into High-Stakes Battleground as Informed Traders Dominate

Prediction markets are evolving into fiercely competitive arenas as better-informed participants increasingly clash with casual retail bettors. What was once marketed as a way to harness collective intelligence now resembles a battleground where disciplined, data-driven traders consistently outmaneuver fast, emotional, sports-bet-style wagering from everyday users. The result is a widening performance gap—one that puts casual participants at a clear disadvantage.

Knowledgeable Traders Capture the Profits

According to 10x Research, most users approach prediction markets the same way they approach sports betting: chasing dopamine, narratives, and quick rewards rather than applying disciplined probability assessment. Meanwhile, a small, highly skilled cohort systematically profits by exploiting mispriced optimism, imbalanced order flow, and late-cycle convergence.

Growing liquidity and a steady flood of retail participants have only strengthened this dynamic. As markets deepen, professional desks ramp up activity, turning prediction markets into more sophisticated trading environments where informational edges translate directly into outsized gains.

Blockchain data reflects the harsh reality for most users. Dune Analytics shows that only about 17% of Polymarket wallets are in profit, meaning the overwhelming majority either stagnate or lose money—underscoring how difficult these markets are for inexperienced traders.

Perfect Records Spark Insider Trading Concerns

As casual users lose ground, a handful of traders with flawless or near-perfect records have raised questions about whether insider information is influencing outcomes.

One standout is the Polymarket trader known as pony-pony, who has maintained a perfect win rate, largely on markets tied to OpenAI developments. Another, AlphaRaccoon, earned more than $1 million in a single day after winning 22 of 23 bets linked to Google search trends. Analysts note that this same trader accurately predicted the early release of Gemini 3.0, profiting over $150,000 before the news became public.

These streaks, while not definitive proof of misconduct, have fueled ongoing concerns about informational asymmetries—including the possibility of insider access or privileged data feeds.

Data Integrity Issues Surface at Polymarket

Adding to the complexity, a structural flaw in Polymarket’s reported data was discovered by Paradigm researcher Storm Slivkoff. The bug caused many dashboards to double-count trading volume due to duplicate entries in on-chain records. The error affected both notional volume (contracts traded) and cashflow volume (dollar value exchanged).

Platforms including DefiLlama, Allium, and Blockworks confirmed the issue and have begun updating their systems to correct the inflated data.

A Market Where Insight Beats Speculation

Prediction markets continue to grow in popularity, but the emerging pattern is unmistakable: those with deeper research, stronger discipline, or better information consistently win, while the average participant struggles to break even. As liquidity increases and professional players expand their footprint, the divide between informed and uninformed traders is only becoming more pronounced—reshaping prediction markets into high-stakes arenas where knowledge isn’t just power, it’s profit.