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POL Galaxy Research: Seventy percent of Polymarket retail traders lose money
Galaxy Research's research on 2.9 million live accounts shows that most retail traders on Polymarket are losing money, and more than 69% of accounts end up losing money. The cumulative loss amount to this group reached US$338.9 million.
This study used Polymarket's complete on-chain historical data, covering positions, entry prices, holding periods, and payouts. Galaxy excluded 125,429 accounts that had an average of more than 50 orders on active trading days and were identified as likely automated trading accounts. Although these accounts account for only 4.1% of total wallet addresses, they account for 80.8% of all orders.
Trader Behavior Analysis
Among the remaining accounts, the median retail account loss was approximately $3, indicating that most losses were relatively small, while a small number of accounts lost thousands of dollars. The study also found that losses were associated with higher user churn rates. About 15.2% of accounts no longer trade within 30 days of a loss, compared with only 6.1% after a profit.
The study also examined whether traders increase risk after making a profit or loss. Both groups of traders typically re-enter with slightly smaller positions, but traders who make a profit reduce risk less.
Specialization is another important discovery. About 44% of traders focus more than 60% of their activities on a specific topic. However, professional traders are slightly less profitable than general-purpose traders. Only 28% of professional traders are profitable, compared with 30.4% of general-purpose traders.
Sports are the most important professional trading group, with the lowest profitability. Professional traders in technology and science performed better, with 41.2% achieving profits. Galaxy said this may reflect the traders 'greater expertise, although the data cannot confirm the specific reasons why they performed better.
Profitable traders tend to bet larger amounts and trade more frequently. However, there was no clear link between holding time and profitability. Galaxy's research covers Polymarket's international platforms rather than its independent U.S. exchanges. The study also pointed to an important limitation: The analysis tracks wallet addresses rather than personal identities. As a result, a trader using multiple wallets may appear as multiple accounts in the data.
Legal dilemmas intensify
As platforms such as Polymarket enter more countries and regions, legal issues facing the forecast market are increasingly accumulating. In the United States, a growing number of cities and states believe that contracts involving sports results, player statistics and other uncertain outcomes are very similar to ordinary gambling. For example, the city of Baltimore sued Polymarket and Kalshi in August, alleging that the two platforms provided sports betting services without obtaining the required licenses from Maryland.
New York State followed suit in September, accusing Polymarket's U.S. subsidiary of suspected gambling without a license, noting that allowing users between the ages of 18 and 20 to make transactions was inconsistent with the state's minimum age for mobile sports betting of 21. Legal disputes are not limited to the United States.
South Korean police have opened an investigation against 26 Polymarket users and transferred 18 of them to the prosecutor's office, involving approximately US$12.7 million in gambling money. Authorities are reviewing whether such transactions should be considered illegal gambling under South Korean law.
