Insider Trading Crisis Unfolds on Polymarket

A recent study by the Anti-Corruption Data Collective (ACDC) has uncovered unusually high win rates in defense bets on Polymarket, suggesting a potential insider trading crisis. The research analyzed over 435,000 markets and $54.4 billion in cumulative volume from January 2021 to mid-March 2026, finding that low-probability bets on military and defense outcomes win at rates that are difficult to explain through skill or luck.

Longshot bets in military-linked contracts have succeeded at rates of over 50% in some cases, compared to a 14% baseline across political markets. The ACDC report's findings add to a growing body of research pointing to a concentrated group of traders driving prices and capturing most profits on Polymarket. 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 ACDC report examines the June 2025 U.S. strikes on Iran as a case study, finding that a small number of traders placed large, well-timed bets on the outcome despite the Pentagon's efforts to keep the operation secret. The report's authors recommend identity verification for bettors, conditional payouts on suspicious wagers, and limits on how granular contracts can become. The findings raise questions about the role of insider trading in Polymarket's military and defense markets and whether the public should be betting on these outcomes at all.

Polymarket has touted its market surveillance teams and cooperation with the Department of Justice on the Venezuela case, but the ACDC report suggests that more needs to be done to prevent insider trading and ensure fair markets. The report's conclusions have implications for the broader crypto market, highlighting the need for greater transparency and regulation in decentralized betting platforms.

The ACDC's research is particularly significant given its independence as a nonprofit research group funded through the Fund for Constitutional Government. The report's findings are likely to spark further debate about the role of insider trading in crypto markets and the need for more effective regulation to prevent such activities.