Polymarket users lose millions to 'bot-like' bettors in mispriced bets study

Researchers at the IMDEA Networks Institute analyzed 86 million bets on Polymarket, a crypto-based prediction market, and found that hundreds of users exploited mispriced wagers to generate risk-free profits at the expense of other participants. The amount extracted through these arbitrage trades totaled almost $40 million. The top three wallets placed over 10,200 bets combined, profiting $4.2 million.

Polymarket, a prominent prediction market platform, is set to re-enter the U.S. market during the 2025 NFL season. The company has been absent from the U.S. since 2022 but is now poised to capitalize on the growing interest in sports betting and prediction markets. Polymarket's re-entry is marked by an aggressive ad campaign targeting Americans, with a focus on states where gambling is currently illegal outside tribal exceptions [1].

The company has acquired a federally registered exchange, which will allow it to offer sports prediction market contracts. Polymarket's ads, purchased through Meta (owner of Facebook and Instagram), feature taglines such as "Legal football trading is coming to ALL 50 states this fall" and "BIG NEWS Texas. Trading on football will be LEGAL this fall." These ads highlight states where gambling is illegal, indicating a strategic move to capitalize on the legal gray areas [1].

Polymarket's marketing materials place the platform alongside traditional sportsbooks, listing contract "odds" alongside those from DraftKings, FanDuel, and BetMGM. This positioning is part of the company's strategy to differentiate its prediction market contracts from traditional gambling products, arguing that they should be overseen by the federal Commodity Futures Trading Commission (CFTC) rather than state regulators [1].

In a separate development, researchers at the IMDEA Networks Institute analyzed 86 million bets on Polymarket and found that hundreds of users exploited mispriced wagers to generate risk-free profits. The total amount extracted through these arbitrage trades was nearly $40 million. The top three wallets placed over 10,200 bets combined, profiting $4.2 million [2].

The findings highlight the potential for market manipulation and the importance of regulatory oversight in prediction markets. Polymarket's re-entry into the U.S. market coincides with increased competition from other prediction market platforms, such as Kalshi. The two companies have engaged in a public war of words, with Kalshi's CEO Tarek Mansour and Polymarket's CEO Shayne Coplan each positioning themselves as the market leader [1].

The competitive landscape in the prediction market space is heating up, with Polymarket and Kalshi vying for dominance. As the NFL season approaches, both companies will be focusing on attracting U.S. consumers and differentiating their platforms. The findings of the IMDEA Networks Institute study serve as a reminder of the need for robust regulatory frameworks to prevent market manipulation and ensure fair play.

References:
[1] https://www.sportico.com/business/sports-betting/2025/polymarket-nfl-sports-prediction-market-1234867823/
[2] https://www.ainvest.com/news/thumzup-strategic-pivot-dogecoin-mining-high-conviction-play-renewable-powered-scrypt-mining-layer-2-staking-2508/