A recent scandal involving a Green Beret arrested for betting on a classified U.S. 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 end up losing money. The study, conducted by researchers from London Business School and Yale, analyzed 1.72 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 right direction. In contrast, the remaining 97% of traders primarily provide liquidity and generate volume, but ultimately end up on the losing side of trades against the informed minority.

To distinguish between skill and luck, the researchers simulated each trader's bets 10,000 times, keeping all parameters constant except the direction of the trade. The results showed that among the biggest winners, only 12% consistently outperformed the simulated benchmark, while many apparent winners did not sustain their performance over time. The study also found that when skilled traders account for a larger share of trading activity, market accuracy improves, particularly in the final stages before an event's resolution.

However, the same edge that makes skilled traders valuable to price discovery raises concerns when they may be acting on non-public information. The researchers highlight a specific case where three newly created Polymarket accounts placed unusually large bets on a contract related to the U.S.

removal of Nicolás Maduro from power in Venezuela, collectively making over $630,000. While there is no evidence of wrongdoing, the incident underscores the risk of insider trading in prediction markets.

The study's findings challenge the conventional wisdom 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.