Columbia Study Flags High Rate of Wash Trading on Polymarket

Quick Breakdown 

• Columbia University researchers found nearly one in four Polymarket trades were wash trades.
• Polymarket is not accused of misconduct, but the platform’s structure may have enabled artificial volume.
• The findings come as prediction markets see record user growth and trading activity across the sector.

 

A new academic study has raised concerns over trading patterns on popular prediction market platform Polymarket, suggesting that a notable portion of its reported activity may have been artificially inflated through wash trading.

Researchers identify inflated trading volumes

The research , conducted by Columbia Business School professor Yash Kanoria and his team, found that approximately 25% of Polymarket transactions over the past three years were attributed to wash trading—a tactic in which traders buy and sell the same position repeatedly to inflate trading volume numbers.

🚨 NEW PAPER 🚨

Excited to announce this working paper (co-authored with @hongyaoma , @ykanoria , @rajivatbarnard ) looking at the extent of wash trading on @Polymarket

We used all historical trade data from @Polygon blockchain (~70 million trades) and developed a graph-based…

— Allen Sirolly (@allensirolly) November 6, 2025

The analysis revealed varying levels of wash trading, depending on market category: sports markets accounted for 45% of total historical volume, election markets for 17%, politics for 12%, and crypto-related markets for 3%.

While the findings point to widespread artificial activity, the researchers emphasized that Polymarket itself was not directly responsible. Instead, the platform’s market structure may have unintentionally enabled such behaviour.

A Polymarket spokesperson said the company is currently reviewing the research and offered no further public comment.

Growth surges despite manipulation concerns

The study surfaces at a time when Polymarket is experiencing record platform activity and user engagement. In October alone, the platform recorded over 477,000 active traders, representing a nearly 50% increase from September. Total monthly trading volume more than doubled, surpassing $3 billion.

Much of this momentum has been linked to the platform’s upcoming POLY token launch and airdrop campaign, as well as renewed efforts to expand access in the United States following previous regulatory hurdles.

Industry-wide boom in prediction markets

The broader prediction market sector is seeing similar acceleration. Rival platform Kalshi posted $4.4 billion in trading volume in October, underlining a surge in users seeking to speculate on outcomes tied to sports, elections, policy, and cultural events.

The Columbia study now raises an important question for the industry: How much of this growth reflects genuine market participation, and how much is artificially inflated volume?

 

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