A study from researchers at IMDEA Networks Institute reveals that bot-like bettors on Polymarket exploited mispriced bets, extracting nearly $40 million through arbitrage trades. Top three wallets profited $4.2 million from 10,200 bets, with blockchain prediction markets like Polymarket gaining popularity during the 2024 US presidential election.

Arbitrageurs realized most profits from political market inefficiencies, particularly in the 2024 US presidential election, while sports bets presented smaller arbitrage opportunities. Most trades generated 1-5% profits, but extreme inefficiencies led to outsized gains, like a user profiting almost $59,000 from a single market discrepancy.

The study focused on guaranteed-profit arbitrage opportunities in prediction markets, noting potential for more specialized strategies to emerge. As platforms like Polymarket grow in popularity, researchers anticipate an increase in dependent markets and new arbitrage opportunities.

Read more at Yahoo Finance: Polymarket users lost millions of dollars to ‘bot-like’ bettors over the past year, study finds