A recent scandal involving a Green Beret who was arrested for betting on a classified U.S. raid may be more than just an isolated incident.

According to a new study, it could be an example of the small group of informed traders who actually influence prices on platforms like Polymarket, while the majority of participants end up losing money. The study, conducted by researchers from London Business School and Yale, analyzed over 1.7 million accounts and $13.7 billion in trading volume on Polymarket from 2023 to 2025. The findings indicate that just 3% of traders are responsible for the majority of price discovery, consistently predicting outcomes and moving prices in the right direction.

In contrast, the remaining 97% of traders provide liquidity and generate volume but tend to be on the losing side of trades. To distinguish between skill and luck, the researchers simulated each trader's bets 10,000 times, using the same markets, moments, and dollar amounts but randomizing the direction of the trades. The results showed that among the biggest winners, only 12% consistently outperformed the simulated results, suggesting that many apparent winners may have simply been lucky. The study also found that when skilled traders account for a larger share of trading, prices tend to move closer to the correct outcome, especially in the final stages before resolution.

However, the same edge that makes skilled traders valuable to price discovery raises concerns when it involves non-public information. The researchers highlight the risk of insider trading, citing a concrete example of three newly created Polymarket accounts that placed large bets on the removal of Nicolás Maduro from power in Venezuela before the operation took place.

While there is no evidence of wrongdoing in this case, the study suggests that insider trades can have a significant impact on prices, albeit rarely. Overall, the findings challenge the notion that prediction markets work due to the collective knowledge of their participants, instead suggesting that they are driven by the actions of a small group of informed traders.