The alleged $400,000 insider bet by a Green Beret on a Venezuelan raid may be just the tip of the iceberg. A recent report by the Anti-Corruption Data Collective (ACDC) analyzed over 435,000 Polymarket contracts and $54.4 billion in trading volume, uncovering unusually high win rates for low-probability bets on military and defense outcomes. These success rates, which have reached as high as 50% in some cases, are difficult to explain through skill or luck alone.
The report suggests that markets tied to government policies, such as military and defense, are more susceptible to information asymmetries, including insider trading or specialized knowledge. This creates an environment in which a small group of informed traders can consistently outperform others. The ACDC report's findings add to existing research indicating that a small percentage of traders drive price discovery and capture a disproportionate share of profits on Polymarket. For instance, a working paper from London Business School and Yale found that roughly 3% of traders account for most price discovery, while separate analysis from Solidus Labs showed that fewer than 1% of wallets capture about half of all gains.
The report examines the June 2025 U.S. strikes on Iran as a case study, highlighting how a small number of traders placed large, well-timed bets on the outcome despite the Pentagon's efforts to keep the operation secret. The pattern of winning longshot bets extends beyond this single event, with the report finding that in five of the six two-hour windows before market resolution, winning longshot bets outnumbered losing ones in Polymarket's military and defense category.
While longshot bets can outperform for various reasons, including mispricing or shifts in public expectations, the consistency of the patterns suggests that some participants may be operating with information advantages that others do not have. To address these concerns, the ACDC recommends implementing 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.
Ultimately, the report calls for a broader debate about the implications of allowing the public to bet on military and defense outcomes, highlighting the need for an evidence-informed discussion about the potential risks and consequences.