3% of Traders Control the Odds: The Rigged Math of Election Betting

Three-quarters of all profits on Polymarket went to 0.1% of accounts. That figure, from a Wall Street Journal analysis of 1.6 million wallets traded since November 2022, dismantles the core pitch of the prediction markets: that betting odds capture the "wisdom of the crowd."

Judith Levine, writing in the Guardian, takes the industry apart. Her argument is simple. The platforms market themselves as populist instruments that push elites aside. "This data is bottom-up, not elites-driven," a Kalshi spokesperson told Reuters. The trading data says otherwise.

Who actually moves the odds?

A working paper from the London Business School and Yale University examined public Polymarket trading records. Almost every wagerer performed no better than chance. The accuracy, the scholars found, "comes from a minority of persistently skilled traders, around 3% of accounts." The crowd "generates most of the volume but little of the information."

The crowd also supplies most of the cash and reaps little of it. The Journal's verdict: "Casual traders are bleeding cash while a small number of sophisticated pros – including trading firms with access to vast streams of data – eat their lunch."

Of at least 2.3 million Polymarket accounts, just 2,000 netted a total of almost half a billion dollars. The median user, per Pew Research, placed 46 trades across 10 active trading days in 2026.

How do the professionals operate?

The London and Yale authors say the pros react quickly to public and financial news. They gather poll data and pay for big data streams that can cost $200,000 annually. The Journal reports they deploy "algorithms to predict price movements and manage risk" — "faster than any human." At scale, they execute tens of thousands of trades a day.

A widely cited 2025 Vanderbilt University study had credited Polymarket with beating polls in the 2024 election, especially in swing states, citing "Wisdom of Crowds" theory. The newer research reframes that result: a skilled 3%, not a wise crowd, produced the accuracy.

Can the odds themselves be rigged?

Yes, and history offers precedent. Tammany Hall publicized electoral wagers to manufacture momentum. In 1904, the New York Times accused Republicans of manipulating betting odds to help Teddy Roosevelt.

The online version is cheaper. In 2023, expelled Representative George Santos bought Kalshi contracts on whether he would attend the State of the Union address, posted on social media that he would, then stayed home and collected $18,000. "There was absolutely no intent to deceive any person," his lawyer protested.

Polymarket has investigated dozens of potential fraud cases tied to the midterms. Congressional aides bet on their own candidates this spring despite a federal insider-trading ban. The newsletter CoinMarketCal explains the structural weakness: "A well-funded trader can move a thin contract without any change in voter sentiment."

Do the odds change elections?

A Brennan Center-funded study found "prediction market odds shift voters' expectations substantially." Rajiv Sethi, an economics professor at Barnard College, told NPR that beliefs about outcomes can reshape the outcome itself when "a candidate is thought to be losing momentum or the campaign is flagging."

Who regulates this?

Half the states ban political betting in some form, and bipartisan popular opposition is strong. Federal action looks remote. CFTC chair Michael Selig previously worked as a corporate lawyer for prediction markets and crypto. Donald Trump Jr's venture firm, 1789 Capital, has invested half a billion dollars in Polymarket. The day after the 2025 inauguration, Kalshi announced it was "beyond excited" that Trump Jr had joined as a paid adviser. Trump Sr, who made $1.4bn on crypto in 2025, declared in May that prediction markets "will thrive" under his presidency.

What is the business worth?

Volume estimates diverge sharply. The Anti-Corruption Data Collective puts midterm betting above $220m in 2026, up from $92.4m in the 2024 cycle. Kalshi and Polymarket spokespeople told CNN the true figure is $1.4bn. The platforms earn trading fees and returns on funds held between buys and payouts, and they increasingly license their data to CNN, Fox, Dow Jones and Palantir. Kalshi carries a $22bn valuation; Polymarket, $9bn.

Levine's conclusion is blunt. Betting on cricket or aliens may be harmless. Election markets, she argues, "commodify a politics already gravely corrupted by money and gamify a discourse ever thinner on content or nuance." Her prescription: they should be banned.