Galaxy Research: 69% of retail accounts on Polymarket lose money

Galaxy Research analysed 2.9 million wallets of Polymarket and concluded that 69% of retail accounts ended up below break-even. The onchain study, published on October 2, 2026, estimates an aggregated loss of $339 million and finds that sports betting specialists were the category of traders with the worst results.

Polymarket: retail losses and key profitability figures

The research by Galaxy Research found that two-thirds of retail wallets closed with losses after trading on the crypto-native platform Polymarket. The analysis quantifies the damage: $339 million lost in total by the examined cohort. The sample includes 2.9 million wallets, allowing the authors to estimate both the frequency of losses and their magnitude in aggregated terms.

The results detail that traders who self-identify as sports specialists were the most adversely affected within the behaviour-segmented categories. The study does not attribute daily volume figures or average odds, but emphasises that retail participation has not translated into widespread profitability for users.

What it means for Polymarket's narrative and other prediction markets

The total of $339 million in losses compromises the consumer-friendly narrative that platforms like Polymarket use to attract users. If 69% of wallets end in negative territory, the economic dynamic implies that most new entrants are subsidising a small portion of winners. This generates churn and reduces the long-term value proposition for retail players.

Marketing departments face a clear tension: user expansion relies on promises of accessibility and simplicity, yet data shows that such accessibility facilitates losses. The platform that publishes credible data on retention and outcomes for losing cohorts will have influence over whether regulators classify these services as skill-based trading or potentially harmful products for consumers.

Regulatory impact: ammunition for prosecutors and ongoing legal defences

The report arrives at a critical moment for Polymarket. The company is facing a lawsuit in the state of New York and is defending its status as a regulated entity by the Commodity Futures Trading Commission (CFTC). State prosecutors are already framing prediction markets as products adjacent to gambling that can harm consumers; the proportion of losses documented by Galaxy Research offers new material to support those arguments.

The CFTC emerges in the report's legal context: Polymarket maintains that its markets are regulated by the CFTC, a position the firm defends against allegations of operating a product of a recreational nature. The results of retail profitability complicate that defence in front of judges and attorneys general.

Commercial and product repercussions for operators and providers

From the perspective of operators and B2B providers, the findings have several practical implications. A high rate of losing accounts, alongside a large aggregated loss, pushes a rethink: cohort diagnostics, commission models that do not incentivise concentrated losses, and retention metrics that show whether growth is sustainable.

Product teams should prioritise the controlled publication of retention metrics and outcomes by cohort. This transparency can shift the public and regulatory narrative. At the same time, the evidence of substantial losses will compel compliance and payment providers to evaluate reputational and compliance risks when working with prediction markets.

What to ask when assessing risks in prediction markets regulation

1. How many active wallets contribute to the majority of net profits?

2. What percentage of volume corresponds to retail versus institutional accounts?

3. Are there products or categories, such as sports betting, with worse outcomes for users?

Answering these questions requires data signed by the platform or reproducible onchain research. Galaxy Research publishes its analysis on October 2, 2026, which adds a public reference point for future comparisons.

What operators and regulators should do now

Operators must audit customer cohorts and design experiments that show which behaviours lead to sustained loss. Infrastructure and compliance providers must assess how their services amplify or mitigate risk to retail users.

Regulators and state prosecutors, who were already looking warily at prediction markets, now have a specific calculation —$339 million in aggregated losses— that they can use in investigations or lawsuits. For Polymarket, the public evidence complicates its legal defence in New York and its discussions regarding its status with the CFTC.

Conclusion for industry professionals

The study by Galaxy Research provides a concrete measurement of the profitability bias on Polymarket: many retail accounts lose money, and the aggregated loss is material. This changes the conversation about business models, product health metrics, and the regulatory treatment that prediction markets will receive in the United States and other jurisdictions.

Renata Quiroga, Betting Markets Correspondent, reports from the intersection of product and regulation, where onchain figures are already feeding into legal and business debates.