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Let’s start with the disclosure: I enjoy betting – though I’m too frugal to ever risk more than maybe $20. Recently I’ve wagered on World Cup soccer games, and I’ve admitted in previous columns to betting on political races. To me, calculating the odds and analyzing predictions is a game, an inexpensive form of entertainment.
You might think, then, that I would be a fan of online betting venues like the prediction platform Polymarket. I am not.
Polymarket users can wager on almost anything, from obscure sports or entertainment records, to what one politician might say to another, to whether extraterrestrial beings exist. Some of the bets may be ridiculous, but the money is real – someone bet $200 million on whether Ukrainian President Volodymyr Zelensky would wear a suit to his next meeting.
The Reality of Betting Markets
In a May 28, 2026, article, “Polymarket’s Losers Are Discovering an Age-Old Truth,” Bloomberg columnist Aaron Brown examined who actually wins and loses on the platform. The findings are not encouraging to would-be gamblers. The top 1% of Polymarket accounts have captured roughly three-quarters of all gains, while most traders since 2022 are underwater. Over 100,000 accounts have lost at least $1,000 since the beginning of 2025, nearly twice the number that made as much. Everyone else, in aggregate, lost $131 million.
According to Brown, that pattern holds across speculative markets broadly. In daily fantasy sports, 91% of total profits went to 1.3% of bettors. 97% of Brazilian retail futures traders lose money. U.S. retail equity options traders lose 5% to 9% per earnings-announcement trade. Indications of insider trading on Polymarket are also concerning, to the point of provoking a federal indictment and a Congressional probe.
The Psychology Behind the Bets
Numbers like these are not enough to discourage bettors. The story active traders and speculators tell themselves is a well-documented cognitive bias called overconfidence: The belief that they are different, that they can outsmart the market where others have failed. There is a lot of ego in that belief. Underneath it is a lot of fear and vulnerability.
For many people, the fear is not about the risk of losing money. It is a fear of being ordinary, of discovering that they are not actually smarter than the market. For some, that possibility carries a deeper weight still: If the market is smarter than I am, does that make me a failure? The bet, in other words, is more about identity than money.
Another cognitive bias that affects speculative betting is herding, the tendency to abandon your own judgment and mindlessly follow the crowd. This is different from the idea of the “wisdom of the crowd,” which carries some truth. It works precisely because participants in large group actions are independent, have their own information, and have real money on the line. When those conditions hold, aggregated judgments tend to price outcomes more accurately than any single confident mind. This is one reason why index funds, which harness the crowd’s collective judgment rather than trying to outsmart it, tend to outperform the cumulative bets of active traders in the stock market.
Overconfident traders think they are beating the crowd. Herders join it without thinking. Neither approach is likely to be a consistent winner.
The Future of Speculation
Trading volumes on prediction markets are expected to hit $1 trillion by 2030. This means more people will be drawn in either by overconfidence or by fear of being left out of opportunities.
Many will likely discover what others have learned before them. Penny-ante betting on sports, politics, or absurdities might be entertaining. But there’s nothing fun about speculative market trading that puts your financial future at risk.
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Rick Kahler, MS, CFP®, CFT™, CeFT®, is the founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
