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Nearly one in four transactions on Polymarket involved wash trading over the past three years, with sports betting markets showing manipulation rates as high as 45%, according to a new study by Columbia Business School researchers.
The findings raise questions about the accuracy of trading volumes on the decentralized prediction platform, which has surged to over $3 billion in monthly activity.
According to Bloomberg’s initial coverage, the Columbia research team found that nearly one in four transactions on Polymarket over the past three years were linked to artificial wash trading; a manipulative tactic where traders buy and sell the same assets repeatedly to create a false appearance of high market activity.
The study, led by Columbia Business School professor Yash Kanoria, examined transaction data across Polymarket’s diverse categories, including sports, politics, and crypto. The findings were startling:
45% of all-time volume in sports markets involved artificial wash trading.
17% in election markets.
12% in political markets.
3% in crypto-related markets.
“Wash trading is an old tactic reborn in the age of decentralized prediction markets,” said Professor Yash Kanoria, the lead researcher behind the study. “Our data indicates a systemic pattern of artificial trading behavior that significantly skews true market participation metrics.”
While the Columbia team emphasized that Polymarket itself was not directly responsible for orchestrating the manipulative activity, they acknowledged that the platform’s design might have enabled such behavior unintentionally.
A Polymarket spokesperson told Bloomberg that the company is currently reviewing the report and declined to comment further on the specifics.
The timing of these revelations adds a complex layer to Polymarket’s recent success story. Despite the exposure of artificial wash trading, the platform has experienced explosive growth.
In October, Polymarket attracted 477,000 active traders, marking a 48% month-over-month increase, while total trading volume surged past $3 billion — more than doubling September’s numbers.
This surge coincided with the announcement of the POLY token and an accompanying airdrop, coupled with Polymarket’s intention to re-enter the U.S. market following earlier CFTC regulatory restrictions.
“Artificial wash trading may distort some metrics, but there’s no denying the genuine demand we’re seeing in the prediction market space,” said Jake Chervinsky, Chief Legal Officer at Variant Fund, in a post on X (formerly Twitter). “The challenge now is building transparency and trust while maintaining innovation.”
The revelation of artificial wash trading doesn’t stop with Polymarket. Its main rival, Kalshi, reported over $4.4 billion in trades during the same period — signaling a wider industry boom that could face credibility tests if manipulation persists.
Analysts argue that artificial wash trading could erode investor confidence in prediction markets, particularly as institutional interest begins to rise.
“If trading volume isn’t organic, it undermines the market’s reliability as a predictive tool,” said Matt Hougan, CIO at Bitwise Asset Management. “Platforms must prioritize transparency and enforce mechanisms to detect artificial activity.”
The Columbia report could push regulators to reexamine how prediction markets operate, especially as they blend speculative behavior with real-world forecasting.
The Commodity Futures Trading Commission (CFTC) has already shown increased interest in ensuring such platforms comply with anti-manipulation frameworks.
As decentralized markets mature, the Columbia findings on artificial wash trading act as a stark reminder of the risks embedded in unchecked trading activity.
Experts say this could accelerate the industry’s shift toward on-chain transparency tools and third-party audits. Prediction platforms may also begin implementing anti-wash-trading algorithms, similar to those used in centralized exchanges.
Ultimately, the exposure of artificial wash trading on Polymarket marks a defining moment for decentralized prediction markets — a call to reinforce credibility before mass adoption takes hold.
“Artificial volume doesn’t build trust,” said Laura Shin, host of the Unchained podcast. “Transparency and authenticity are what will separate sustainable projects from speculative bubbles.”
The Columbia University report on artificial wash trading has jolted the fast-growing prediction market industry, forcing platforms like Polymarket to confront uncomfortable truths.
While growth remains strong, sustainability now depends on whether the sector can evolve beyond inflated numbers toward genuine, verifiable participation.
