Polymarket makes a big profit of $85 million from the French election, but 86% of the bettors lose money

The online prediction market Polymarket stood out in the recent US election, accurately and ahead of time predicting the outcome with a trading volume exceeding 3.6 billion US dollars. However, the final data showed that while a French whale made tens of millions of dollars, the majority of bettors actually lost money on the platform, with "dumb money" bearing most of the losses.

Polymarket's victory on election night: How the online prediction market surpassed mainstream media, being faster and more accurate

French Trader Makes $85 Million on Trump Bet

Previously reported, a French trader made a massive bet on Polymarket that Trump would win the U.S. presidential election. According to the latest research by blockchain analysis platform Chainalysis, the same trader was able to operate up to 11 accounts. The trader, most famously known as Fredi9999, is projected to make over $85 million in total profits.

"Dumb Money" Bears Most of the Losses

According to blockchain data collected from various Dune dashboards, 86% of accounts are in the red, meaning the vast majority of users' bets are incorrect and losing. Fortunately, the average bet size is not large, with the most common range being $100-500, accounting for nearly 28%, followed by $10-50, at 26%, and lastly $0-10, at 18%.

As reported by Decrypt, expert Thomas Reitz from the University of Iowa stated that prediction markets need both high-information users, possibly including insiders, and low-information users to create enough liquidity and potential profits to operate effectively. In the case of Polymarket, it appears that "dumb money" bears most of the losses so that "smart money" can accumulate substantial profits.

U.S. and French Regulatory Agencies Keep Close Eye on Prediction Markets

With the latest bonus estimate release, the French gambling regulatory authority has stated that they are investigating the operations of Polymarket, based in New York, to determine if it complies with their regulations.

As traders continue to bet on the U.S. presidential election, Polymarket's betting volume has surged to over $3.6 billion. After settling with the U.S. Commodity Futures Trading Commission (CFTC) in 2022, Polymarket no longer serves U.S. users, as the platform was accused of providing illegal gambling services. However, certain large bettors are still finding ways to circumvent the restrictions. Facing pressure from U.S. regulators, Polymarket has stated that they will enhance scrutiny on U.S. users.

As Trump's odds rise, the CFTC keeps a close watch on prediction markets, and Polymarket is reportedly stepping up scrutiny on U.S. users.