Polymarket volume inflated by wash Trading, Columbia study finds

A Columbia University study has found that a significant portion Polymarket’s trading activity was inflated by artificial wash trading, though the platform itself was not directly responsible.

A new study by Columbia University researchers has revealed that Polymarket’s trading activity has been significantly inflated by “artificial” wash trading, as initially reported by Bloomberg.

According to the study, nearly one in four transactions on Polymarket over the past three years were attributed to wash trading — a practice where the same trader repeatedly buys and sells assets to inflame volume metrics.

The analysis, conducted by Columbia Business School professor Yash Kanoria and his team, broke down the extent of wash trading across market categories: 45% of all-time volume in sports markets, 17% in election markets, 12% in politics, and 3% in crypto-related markets.

However, the researchers noted that the prediction market platform was not directly responsible for the manipulation, although it could’ve enabled it.

A Polymarket spokesperson said the company is reviewing the findings and declined to comment further.

Prediction market sector booms as Polymarket and Kalshi hit new highs

These findings come as Polymarket is experiencing its strongest growth phase to date, marked by record user active traders and trading volumes. In October, the platform attracted over 477,000 active traders — a 48% jump from the previous month — while total trading volume surged past $3 billion, more than doubling September’s figure.

The spike followed the announcement of the POLY token and an accompanying airdrop, alongside plans to re-enter the U.S. market after earlier regulatory restrictions by the Commodity Futures Trading Commission.

Polymarket’s momentum also reflects a broader boom in the prediction market sector. Rival platform Kalshi recorded over $4.4 billion in trades during the same period, marking an industry-wide surge in speculative market participation.