A recently published study via open-access archive for 2.4 million scholarly articles arXiv has revealed how a handful of highly active bettors earned close to $40 million by running arbitrage strategies on the blockchain-based predictions platform Polymarket.
Over 10,000 Bets Generated $4.2M Profits
The research, courtesy of IMDEA Networks Institute’s Oriol Saguillo, Vahid Ghafouri, Lucianna Kiffer, and Guillermo Suarez, shows the way markets with a political focus, with emphasis on wagers connected to the 2024 U.S. elections, proved to be highly lucrative for traders, outpacing profits generated by sports betting.
The analysis, yet to be peer-reviewed, looked at the 86 million bets placed across Polymarket between April 2024 and April 2025, offering one of the most transparent looks yet at the scale of arbitrage that is taking place on decentralized prediction markets.
According to the four experts, “the top three wallets that participated in the trade placed more than 10,200 bets throughout the year”, netting roughly $4.2 million in profits.
Bots Exploited Mismatches
Apparently, many of the accounts used automated programs to identify and execute arbitrage opportunities, which made it possible for them to generate consistent, risk-free gains.
As opposed to traditional sportsbooks, where professional oddsmakers must set prices and balance them to eliminate arbitrage, Polymarket uses traders to establish probabilities, with users buying and selling outcome shares between $0.01 and $1.
The price is a reflection of the market’s implied probability of an event occurring. In theory, the total across all possible outcomes should equal 100%. But as the study notes, “occasionally the total odds for an event go above the 100% mark due to short-term fluctuations.” Those particular moments enabled these traders to cover both sides of the event and lock in profits.
The researchers concluded traders exploited mismatches within a single market and used more complex strategies that connected related markets, with political markets standing out as the most profitable.
During last year’s elections, Dune Analytics’s Polymarket trading volume reached over $2.6 billion per month. The surge set the stage for arbitrage strategies, with gains ranging from 1% to 5%.
On rare occasions, extreme mispricings occurred, with one user turning $0.02 worth of opposing shares into nearly $59,000.
The authors conclude that blockchain prediction markets will remain exposed to these kinds of strategies, much like decentralized finance platforms where arbitrage is already commonplace.