A recent scandal involving a Green Beret who bet on a classified US raid may be more than an isolated incident, according to a new study. The research suggests that this individual may be part of a small group of informed traders who significantly influence prices on platforms like Polymarket, while the majority of participants incur losses.

The study, conducted by researchers from London Business School and Yale, analyzed over 1.7 million accounts and $13.76 billion in trading volume on Polymarket between 2023 and 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 correct 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 randomly deciding whether to buy or sell. The results showed that only 12% of the biggest winners by raw profit consistently outperformed the simulated benchmark, suggesting that many apparent winners may have simply been lucky.

The study also found that the activity of skilled traders improves market accuracy, particularly in the final stages before an event's resolution. Furthermore, these traders tend to be the first to react to new information, such as Federal Reserve announcements or corporate earnings. However, the same edge that makes skilled traders valuable to price discovery raises concerns when they may be trading on non-public information. The researchers highlight a specific case where three newly created Polymarket accounts placed large bets on the removal of Nicolás Maduro from power in Venezuela, collectively making over $630,000 when the event occurred.

While there is no evidence of wrongdoing, the incident underscores the risk of insider trading in prediction markets. Overall, the study challenges the notion that prediction markets work due to the collective knowledge of their participants, instead suggesting that they are driven by a small group of informed traders.