Full dataset available at https://huggingface.co/datasets/vgregoire/polymarket-users
The problem is that volume is generally too low to make significant money.
Someone calculates what they think the odds of an outcome happening are and then they allow people to take positions on either side at worse odds than what they think the real odds are. As long as their prediction is correct, over time they make money. It's why putting $1 on a 50/50 bet on a sportsbook will usually only pay out around $1.91 instead of $2 if you win.
Also...
> We study trading gains and losses on Polymarket, the largest prediction market
This is not a natural thing to say and I fucking hate that it's impossible to know anymore if I'm wasting time replying to an AI/bot or not
I agree: insiders are hard to study because they are finite and short-lived. We're pretty confident there are insiders out there trading on Polymarket; however, our conclusion is that they don't account for a significant fraction of the total trading gains on the platform.
Insiders are going to be earning large amounts in single trades, either by betting a lot when it's odds-on or a small amount when it's out the odds (for a large return).
I think it's just bad tense, which I think makes it not AI amusingly.
Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t.
So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the apps will limit the size of the bets you’re allowed to make.
This seems to be similar to OnlyFans, and the economy at large...
The effect is so strong that I'm starting to wonder if we should have laws against power laws, like we have in engineering when we try to make things stable.
I don't believe in them because when you consider operational costs, less money comes out of the lottery than goes in, so if everyone simply didn't bet on the lottery, they would have more money than if they bet on it.
But everyone who bets thinks "but what if I win?"
> If you simulate this economy, a variant of the yard sale model, you will get a remarkable result: after a large number of transactions, one agent ends up as an “oligarch” holding practically all the wealth of the economy, and the other 999 end up with virtually nothing.
https://www.scientificamerican.com/article/is-inequality-ine...
Quick question: did your team consider the implications of capital recycling on the maker side? Liquidity providers tend to have superior tech and information, so the general edge is expected. However, the ability to effectively reuse the same capital to sell outcome sets seems like it could offer a scale advantage that enables them to capture even more opportunity. On the other side, takers expressing directional views have their capital committed to one position at a time. Do you think this contributes to the gains being so concentrated among them?
Real anecdote. For e.g, during Superbowl 2026. The markets were allowed bets to be placed until 6 minutes to close, when Seahawks were way ahead of New England Patriots. The probablity of Seahawks winning was almost 99% and any person who places a 1000 dollar bet will make 1100 in 6 minutes. Where is the 100 dollar going to come from? Who loses that?
Meaning who decides if an outcome was yes or no? Answers to things like "Who will win the next Best Picture Oscar?" are fairly obvious and binary.
Can we make bets whose answers are not binary yes/no?
What about "Will celebraty X and Y break up?"? Does Polymarket go to X and Y to confirm if they broke up or something :D
To give an example, I wagered on a market a while ago that Trump would say "Mamdani" before the end of the week. He responded to a question Mamdani where the reporter asked about the mayor by name and Trump said "Mandami" instead of "Mamdani" (switched the m and n). Kalshi ruled that that didn't count as Trump having said the word.
Trump ultimately said Mamdani correctly the next day so it ended up not mattering and I think the rules have since been updated to accept obvious mispronunciations, but I think it's a good example of how much gray area some of these markets can have.
Polymarket implemented the “independent” truth process with UMS following regulatory scrutiny but they still decide the outcome.
https://reticulating.substack.com/p/polymarket-isnt-a-predic...
Polymarket is set up as a market between users. Someone has to be on the other side of the trade.
With betting apps, the house is on the other side of the trade. If you're too good they choose not to trade with you.
The alternative for the betting apps is to give worse payouts to everyone to cover for the wins of the long-tail experts. This would degrade the experience for the average bettor on the platform. Maybe that would be a good thing because it would discourage them from playing, but I digress.
There are also political markets, where it is clear campaigns manipulate the prices for the same reasons they will publish polls showing they are gaining or ahead. The CA governor market is especially far from reality. This is compounded by the fact that Americans can't trade this market so the distance from reality is especially bad for American election markets.
That being said, that most people don't make money on PM isn't surprising. The same thing is true for most markets. You only invest (business) time into something if you are getting a return. So those that are actually good at making predictions put the time into making trades, so they are the bulk of the trades and the bulk of the profit. Same thing happens with day traders on the equity markets.
I think you're claiming here that sports markets are "very far from reality". What do you mean by that? Scores, injuries, fouls, etc are very well documented and objective things, so I can't figure out what you mean by "far from reality". If anything, these markets seem exceptionally "real", with well defined criteria and outcomes.
If you're a regular bookmaker, who is on the hook for any losses, then yes you would ban successful users. But in this case you just skim off a fee for each "trade" so there's no incentive to ban anyone.
Of course, it's impossible to know for sure what was LLM processed or not, but we're getting complaints about some of your posts and, upon inspection, the complaints seem justified.
So, the question becomes "what is the preponderence of such bets" and "how many people with control or knowledge of bet outcomes actually participate in the market" - not "can some people see the future of any bet better than others".
The stock markets of the world aren't a money printer.
Maybe the sum of enjoyment lottery participants get from daydreaming about winning is >= the cost of running the lottery?
Yeah but I'm not a sucker like those other 99 guys!
The context already exists, and there isn't any reason to tack that onto the end of what was said, and it doesn't matter for that sentence or the entire comment.
Just feels like something a agent being overly verbose/descriptive would say.
Another possibility could be that SEO for LLMs is now a thing, and keyword stuffing or model manipulation is going to take subtle things like `We study trading gains and losses on Polymarket, the largest prediction market.` and interpret that as fact, in order to, idk what to call it, trick?, brainwash? the model into internalizing "polymarket is the largest" into its trained dataset and then proceeding to recommend polymarket to people when they ask about prediction markets, even if isn't true anymore at that time.
If the market-makers are making vastly more than long-term investors (who are making trillions), who is coming in and venting off the multiple trillions to keep the system feeding long-term investors well while market makers gorge themselves?
In equity markets, you have both the trading and investment components to account for. Market makers like Citadel don't invest; they aim to exit positions as quickly as possible to minimize risk and capital requirements. Long-term investors commit capital to risky assets and are compensated with a risk premium (expected to be positive, but it can turn out to be negative). Usually, the "cost" of liquidity paid by long-term investors is tiny related to the overall expected returns. In prediction markets, you don't have that.
Difference between prediction markets and stock markets is prediction markets on a flat road and stock market on an uphill road
Note that there is nothing in the rules of Polymarket or the other prediction markets that says it's not perfectly OK for insiders to bet, so I don't think it makes sense to call this cheating. Of course, this is a major absurdity of these "markets", but insiders are part of the game you chose to play by participating.
The potential for insiders should be represented by a complete loss of liquidity.
The stock market is a wealth redistribution mechanism, not a money printer. Market caps going up are not equal to money being created. It's not like the shareholders could collectively cash out all of that market cap and spend it. If everyone sold all of their stocks and pulled fully out of the stock market until everything crashed to $0, everyone's cash would still sum to whatever the government printed.
The entire point of the stock market is to support an economy that creates value: take inputs that are worth X (basically, cost of goods sold) and combine them into something that is worth more than X (revenue), with the difference being a profit that (after interest, taxes, depreciations) is paid out to stockholders as dividends. That is positive sum.
The market cap of a firm is the best estimate of the discounted value of future earnings. When it goes up, that does represent (estimated) value creation.
Stocks have a fundamental value. Everyone would not "collectively cash out" - stock prices would fall well below their fundamental value, others would see a bargain, and buy the stock. (Unlike crypto, say, which has no fundamental value but is purely sentiment; well that plus supporting the underground economy.)
Of course, it is conceivable that something happens (nuclear war, say) that would reduce company earnings for the foreseeable future, and then the stock market would collapse. But that is because it correctly anticipates reduced future earnings, not because "everyone collectively cashed out". If everyone is wrong about the stockmarket, but you are right, you can realise your gain over time. Just hold on to the stock and wait for the dividends to roll in.
So, the economy is positive sum, the stock market is a wealth creation machine (refuting your b).
Next, on money. My entire discussion above was purely in real terms. Yes, central banks determine the money supply (commercial banks create most money, but central banks control it). But they don't determine how much real wealth is produced every year; rather, they try to control the money supply so as to achieve moderate inflation.
By creating more or less inflation the central banks achieve some redistribution of wealth from debtors to creditors or vice versa, but again, they do not influence real wealth creation (unless inflation becomes so extreme (either deflation or hyperinflation) that it affects consumer behaviour, degrades planning, etc.).
"You cannot see the future. All we are given is the present."
"Of course. But if you look closely at the present, you can find loose bits of the future just laying around."
In your model, the exponential distribution is caused by the fact that you cannot go below zero; otherwise, it would be a normal distribution.
I don't agree with your opinion about laws against power laws, but that is another matter.
This is literally and unironically communism.
Not in a 'oh the rich don't so they control the media and so we don't' sorta way. But like in a 'lets educate people on the pluses and minuses, debate a while, and then come to an informed conclusion' sorta way.
Like, deep down, does the average person actually want a stable economy? Because it seems to me that there is an even split historically between the folks that want stability and a little patch of land and weekly rhythms, and the folks that just want to drunkenly burn couches in the street every full moon, or some such thing.
Not to be glib here at all. I like, would actually like to know the answer. Sorry if this comes off the cuff seeming.
You have 2 choices for how the world is shaped, pick 1:
A. You have a modest but comfortable home, a job that pays you enough so that you have what you need and can afford occasional luxuries (e.g., an annual holiday abroad), have good health insurance, access to education and childcare, etc. Everybody else has the same thing, and because of this you live in communities where the arts flourish because nobody has to worry about becoming homeless or destitute.
B. You live in magnificent mansion, one of dozens you own around the world (accessible via one of your personal Gulfstream jets). You have more money then you could ever spend in a lifetime (even recklessly). Your homes are staffed with obedient servants who cater to your every desire. I mean anything. You own them. Your mansions are on palatial estates with secure walls and guards to keep out the rabble outside -- who fight for scraps and are desperate enough to do any kind of work to keep your factories humming and printing cash.
I wouldn't hesitate to choose A because that's a world I'd love to live in and the world of B horrifies me. I don't say this as virtue signaling, it's my innate reaction.
I think that a significant portion of the population would love to choose B. And in some ways, some already have.
I'm sorry if that offends anyone reading this, you can downvote me out of spite if that makes you feel better.
I say this because I read a while ago (like years) an article in the Economist showing that happiness in a society is correlated with equality - (sorry for the dash I am a human I just happen to use em dashes sometimes) not just amongst the poor, but also for the rich.
You'll note that rich people in highly unequal societies tend to struggle with mental illness more than in equal societies.
Money doesn't buy happiness. Being filthy rich won't heal the hurt in your heart. If you're too stupid too realize that, that's fine, enjoy your suffering, but I'd appreciate you having the honesty to admit that you're a deluded moron instead of trying to create completely false arguments for why the misery you're creating for yourself and others is actually a sign of anything less than pure human stupidity.
I couldn't find the original Economist article, nor the study it cited, but here's a link I found on Google.
https://leftfootforward.org/2017/03/people-are-happier-in-mo...
However, power laws basically spoil it because it gives a hard worker an exponential advantage, where they can (and will) use that money against other people who made different life choices.
How many people think multiple mansions is a realistic option for them? Not that many, I'd expect.
They will also try to push all negative externalities on to people wealthier than themselves. Most people see themselves as middle class or lower middle class, even up to relatively high income levels. If you ask each of them where the tax rate should be increased, the answer is usually a few steps higher than their own income.
UBI is a topic where this becomes very obvious. When you explain UBI to most people they assume they will be receiving the UBI and some abstract combination of billionaires and corporations would pay for it. Then you show them the math that it wouldn't work and they start to become less enamored with the idea. (Or lately: They just don't believe you and retreat to their imagined ideal free of pesky economics)
I'm not trying to knock "personal ambition", the test was for who would knowingly and willingly choose to subjugate everybody else to misery if it meant that they could gorge themself on a firehose of wealth and power.
Basically, it is: are you a sociopath?
"A" by its very nature is a "group effort". I could definitely be a better citizen and volunteer more and donate to causes, but that is a drop in the ocean.
And I pretty much do live that way myself. I have a modest home that I still have a mortgage on and live pretty simply. I drive a refurb'd EV, dress like slacker, and seek community and connection over flashy toys. I admit that when I walk through the first class section to my seat in coach I am not without envy.
> It reeks of virtue signaling despite your protest
The test in my mind is the cost of B, of living in that kind of world. The fact that you only see virtue signaling in my words says more about you than it does me.
s/hard worker/person with more capital/
I can make 500 euros from a day of consulting as a software engineer. That's a typical day, working remotely, 9AM to 5PM, with a nice long lunch break.
Minimum wage in Bangladesh is around $133 per month. Many workers in the Bangladesh garment industry work 12 hour days. I look at what they do, and think "wow that's really hard I could never do that, glad I don't have to work that hard to live".
Yet somehow, I have exponentially more money than they do. And, thanks to the beauty of our current system, I can go ahead and invest that in the stock market, and get even richer while basically doing nothing.
It would be nice if we lived in a word that rewarded hard work, but as far as I can tell, we don't, and never have.
Look at the institution of slavery. For literally thousands of years, there was "those who worked", and "those who had".
The system rewards decision making, not hard work.
Now, if you're a young tech worker working on an important project at a big company, yes, choosing to work hard, IN THAT SPECIFIC CASE is a good decision, and it'll be rewarded.
But if you're a child laborer in a Third World sweatshop? No, your extra hour at the office probably won't get you anything extra.
If you're a Roman Senator in the year 30BC, you don't get rewarded for your work, you get rewarded for deciding to have your slaves spend more time farming grapes for wine and less farming wheat because wine sells for a higher price, which means that with your good decision making, you can now hire more slaves, to farm more grapes, to make more wine, which you can make for more money.
And if you look at rich people today, what they have is probably closer to the Roman Senator than the Third World sweatshop laborer - they find a thing that people like to buy, and invest lots of resources (their money, other people's labor) into making that thing and selling it, and are rewarded with money.
But putting in 12 hour days being an EMT and saving peoples lives vs 12 hour days working with Claude to boost conversion pipelines have wildly different economic rewards.
I'm not suggesting a Harrison Bergeron economy but its also clear that the current system is trending towards B and the game is rigged to ensure that.
We don't live in a meritocracy -- there's a fair amount of luck involved (being in the right place at the right time).
LLMs like emdash very much, humans don't use it very much these days.
I have a hard time seeing how "I'd like to live in a world where everyone is equally cared for" accidentally leads to "others must suffer for me to be better cared for than any other human who has ever lived", but then again I'm not exactly an intelligent person so I can struggle to understand these sorts of things :)
BTW, if you think that's somewhat arbitrary, I just described the global ag and fishing industries. So most food production has this quality. So any society that's largely agrarian will follow this pattern.
To start, learn about the following topics:
- Laffer curve
- Tragedy of the Commons
- Substitute products
- And of course, supply/demand curves
I'm complaining because it's AI, and also slop.
> resolves into "cross-venue infrastructure" — which is also a more durable edge than within-venue alpha
anybody who actually trades knows that on these markets, "cross venue infrastructure" (aka vibe coding some exchange api integrations) is much less important / durable than actual alpha.
even if we are very charitable and assume the comment refers only to like high-engineering-effort infra for trying to be super competitive on latency, that's still like the opposite of a durable edge, since everybody is looking at it. there's very little "hidden" knowledge and it's mostly a matter of elbow grease and careful engineering.
As a side note, the AI popularized usage of the word 'clean' to denote proper is physically revolting to me.
It'll probably take me a while to grok it all, but I appreciate you taking the time to educate me, thank you ^^