Bettors Secure $40 Million from Polymarket Arbitrage Strategies

A recent study has unveiled that a select group of bettors profited nearly $40 million by employing arbitrage strategies on the blockchain-based prediction platform, Polymarket. The analysis, conducted by researchers from the IMDEA Networks Institute—including Oriol Saguillo, Vahid Ghafouri, Lucianna Kiffer, and Guillermo Suarez—examined over 86 million bets placed from April 2024 to April 2025. The findings highlight how political betting, particularly related to the 2024 U.S. elections, generated higher returns compared to traditional sports betting.

Between April 2024 and April 2025, traders on Polymarket placed wagers that yielded approximately $4.2 million in profits from over 10,200 bets. The study, which is currently awaiting peer review, offers one of the most comprehensive assessments of arbitrage activities within decentralized prediction markets to date.

Exploiting Market Inefficiencies

The analysis revealed that many of the profitable accounts utilized automated systems to detect and act on arbitrage opportunities. Unlike conventional sportsbooks, which rely on professional oddsmakers to balance odds and prevent arbitrage, Polymarket allows traders to establish probabilities themselves. This dynamic results in prices for outcome shares, ranging between $0.01 and $1, reflecting the market’s implied probability of an event occurring.

In theory, the total odds across all possible outcomes should amount to 100%. However, the study notes that temporary fluctuations can lead to situations where total odds exceed this threshold. During these moments, savvy traders managed to cover both sides of an event, effectively locking in profits.

The researchers observed that traders not only exploited mismatches within individual markets but also employed intricate strategies linking related markets. Political betting markets emerged as the most lucrative, particularly during last year’s election cycle, where trading volume on Polymarket surged past $2.6 billion monthly.

Record-Breaking Gains and Future Implications

The scale of these arbitrage strategies allowed for profit margins ranging from 1% to 5%. In exceptional circumstances, significant mispricings led to remarkable outcomes, such as one user transforming a mere $0.02 worth of opposing shares into nearly $59,000.

The findings suggest that blockchain-based prediction markets like Polymarket will continue to be susceptible to such arbitrage strategies, similar to existing decentralized finance platforms where these tactics are already prevalent. The ongoing evolution of these markets may further attract bettors looking to capitalize on market inefficiencies, indicating a robust landscape for future trading activities.

As the research continues to circulate, the implications for both bettors and the broader financial ecosystem remain significant, pointing to a growing intersection of technology and wagering in the digital age.