Empirical Evaluation of Deadline-Resolved Information Leakage on Documented Polymarket Insider Cases
Detecting insider trading in prediction markets through timing patterns
A new method called the deadline-Information Leakage Score can detect when traders profit from leaked information on Polymarket, a real-money prediction platform. Testing it on a $269 million contract about U.S.-Iran military action showed the method could distinguish genuine insider signals from misleading trading patterns, producing a score swing of 0.444 depending on whether the analysis was anchored to leaked information or market resolution.
Polymarket handles billions in prediction contracts with documented insider trading cases. A working detection method could help regulators identify and prevent profitable information leaks before they compromise market integrity. The approach also offers a template for monitoring other real-money platforms where hidden information creates unfair trading advantages.