The alleged insider trading incident involving a Green Beret's $400,000 bet on a Venezuela raid may be just the tip of the iceberg. A new report by the Anti-Corruption Data Collective (ACDC) has analyzed over 435,000 Polymarket contracts and $54.4 billion in cumulative volume, revealing that low-probability bets on military and defense outcomes have success rates that defy explanation by skill or luck alone. Typically, such 'longshot' bets succeed around 14% of the time, but in military-linked contracts, success rates have reached as high as 50% in some cases. The report suggests that markets tied to specific government policies, such as military and defense, are more susceptible to information asymmetries, including insider trading or specialized knowledge.
This creates an environment where a small group of informed traders can consistently outperform others, not just by reacting faster, but by possessing more knowledge. The ACDC report's findings add to existing research indicating that roughly 3% of traders drive most price discovery on Polymarket, with fewer than 1% of wallets capturing about half of all gains.
The report examines the June 2025 U.S. strikes on Iran as a case study, where 19 longshot bets totaling $164,292 were placed in the hours leading up to the strike, resulting in eight wallets sharing about $1.8 million in profits. The pattern of well-timed bets on military outcomes extends beyond this single event, with winning longshot bets outnumbering losing ones in five of the six two-hour windows before market resolution. While longshot bets can outperform due to various reasons, including mispricing or shifts in public expectations, the consistency of the patterns, especially in markets tied to military decisions, suggests that some participants may be operating with information advantages that others do not have.
The report recommends identity verification for bettors, conditional payouts on suspicious wagers, restrictions on markets whose outcomes are decided by small groups, and limits on how granular contracts can become, and ultimately calls for an evidence-informed debate about whether the public should be betting on these outcomes at all.