Academic researchers in Europe and the United States are finding that prices on Polymarket, a fast-growing online prediction market, can track real-world outcomes with surprising accuracy. The findings suggest such platforms could become a useful tool for professional investors.
Polymarket currently assigns roughly the same probability to the Netherlands winning the 2026 World Cup as to the return of Jesus Christ before 2027: 3 percent. Those are just two of thousands of bets available on Polymarket.com, where users wager on anything that comes to mind.
Despite the large number of eccentric bets, a growing body of academic research suggests that prices on platforms like Polymarket often behave like serious probability forecasts. Prediction markets could therefore have “practical value for investors,” said Felix Reichenbach, a researcher at the Technical University of Berlin.
On Polymarket, traders buy and sell contracts that pay out 1 dollar if a specific real-world event occurs and nothing if it does not, with prices reflecting the market’s implied probability. There is no bookmaker setting odds or taking the opposite side of a bet. Every trade is matched between users, meaning gains and losses are transferred peer to peer. Polymarket earns revenue by charging transaction fees on trades.
Together with Martin Walther, professor of finance at the International University of Berlin, Reisenbach analyzed more than 124 million of such trades with a total volume of 48 billion dollars. Although certain biases exist, such as a tendency to overtrade the default and ‘Yes’ option, market predictions are “accurate most of the time”, the researchers find. “Prices on Polymarket are good estimates of the probabilities of future events.”
The predictive power was highlighted this month during the Golden Globe Awards, where viewers were shown live betting odds for each category through a partnership with the platform. After the ceremony, Polymarket chief executive officer Shayne Coplan said the market correctly predicted 26 of the 28 winners, touting the result in a post on X.
“In practice, these markets may be particularly valuable for event risks that are hard to price using traditional instruments and that move asset prices, such as macroeconomic developments, monetary policy decisions and geopolitical events,” Reichenbach said. Skilled traders, he added, may be able to profit by exploiting the biases of less sophisticated participants.
Institutions eye opportunities
Goldman Sachs chief executive officer David Solomon agrees. Speaking on Goldman’s fourth-quarter earnings call, Solomon said he had recently met with the leaders of two major prediction-market platforms and that a dedicated team at Goldman Sachs is spending “a lot of time” assessing the space.
Quantitative trading firms including Flow Traders, DRW, Susquehanna International Group and Jump Trading have already been hiring traders and building dedicated desks to arbitrage price differences, according to reporting by the Financial Times. If Polymarket prices an outcome such as higher inflation more cheaply than futures markets do, hedge funds can buy exposure on Polymarket and hedge it by taking the opposite position in futures.
The Polymarket odds themselves, however, are of limited value for investors focused on individual stocks or equity indexes, said Roderick van Zuylen, chief investment officer at Night Watch Investments. Futures markets already represent the best real-money forecast of where an index or macro variable will trade at a given point in time, he said, leaving little room for prediction markets to add new information.
“There are arbitrage opportunities,” van Zuylen said, “but the signals are not especially informative for equity investing”. He said he uses prediction markets mainly to assess discrete political or legal risks, such as the likelihood that the Supreme Court of the United States will strike down Donald Trump’s tariffs, rather than to judge the direction of stocks or indexes.
Academic critics warn that limited oversight and retail losses could restrict how far prediction markets move into the financial mainstream. In a recent study, researchers at Columbia University examined trading patterns on Polymarket and found evidence consistent with wash trading, a practice in which traders buy and sell without taking a net position in order to inflate reported volume.
The authors estimated that transactions indicative of wash trading at times accounted for a significant share of activity on the platform. This peaked in late 2024 before declining and later rose again in 2025. The study cautioned that such behavior could distort measures of liquidity and participation, particularly in crypto-based venues where trader identities are harder to verify.
Nonetheless, Polymarket has continued to gain momentum in 2026. This month, Dow Jones signed a deal to distribute real-time prediction-market data from Polymarket across consumer platforms including The Wall Street Journal, Barron’s, MarketWatch and Investor’s Business Daily. “We’re making prediction-market data accessible to our users because it’s a rapidly growing source of real-time insight into collective beliefs about future events,” Dow Jones chief executive officer Almar Latour said in a press release.
As of late 2025, Polymarket had processed more than 18 billion dollars in cumulative trading volume and seen daily active users climb from roughly 20.000 to nearly 58.000 over the course of the year. Over 1 million trading addresses have participated on the platform that is valued at around 8 billion dollars.