The post The $40 Million ‘Free Money’ Glitch in Crypto Prediction Markets appeared on BitcoinEthereumNews.com. In brief Researchers found $40 million in “risk-free” profits from mispriced markets on Polymarket in one year. Prices on some markets didn’t add up to 100%, letting traders lock in guaranteed gains. The same inefficiencies likely exist on other platforms like Myriad and Kalshi, though arbitrageurs help correct them. A new academic paper suggests there’s been a steady stream of “free money” lying around on Polymarket—and smart traders have been scooping it up. The paper, Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets, is the most detailed look yet at how mispricing creeps into crypto’s most popular prediction platform. The researchers combed through a year of data, from April 2024 to April 2025, and found thousands of instances where market prices simply didn’t add up. In some cases, the prices of “Yes” and “No” shares in a single market didn’t sum to one dollar as they theoretically should, creating a risk-free profit for anyone quick enough to pounce.  In other cases, the mispricing was more subtle, involving logically related markets. For example, a market on “Trump wins the presidency” might trade at very different odds than “Republican wins the presidency,” even though those outcomes are tightly linked. By buying and selling combinations of these contracts, a savvy trader could lock in a profit no matter what happens. The researchers estimate more than $40 million in profits have already been pulled from the system by arbitrageurs, traders who specialize in sniffing out and exploiting these kinds of inconsistencies. Far from being a theoretical curiosity, this is a live and lucrative business model. Is this pattern true across all prediction markets? What’s striking is how common these opportunities are. The study found more than 7,000 markets with measurable mispricing, many in highly liquid, closely watched contracts. “Prediction markets are often treated… The post The $40 Million ‘Free Money’ Glitch in Crypto Prediction Markets appeared on BitcoinEthereumNews.com. In brief Researchers found $40 million in “risk-free” profits from mispriced markets on Polymarket in one year. Prices on some markets didn’t add up to 100%, letting traders lock in guaranteed gains. The same inefficiencies likely exist on other platforms like Myriad and Kalshi, though arbitrageurs help correct them. A new academic paper suggests there’s been a steady stream of “free money” lying around on Polymarket—and smart traders have been scooping it up. The paper, Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets, is the most detailed look yet at how mispricing creeps into crypto’s most popular prediction platform. The researchers combed through a year of data, from April 2024 to April 2025, and found thousands of instances where market prices simply didn’t add up. In some cases, the prices of “Yes” and “No” shares in a single market didn’t sum to one dollar as they theoretically should, creating a risk-free profit for anyone quick enough to pounce.  In other cases, the mispricing was more subtle, involving logically related markets. For example, a market on “Trump wins the presidency” might trade at very different odds than “Republican wins the presidency,” even though those outcomes are tightly linked. By buying and selling combinations of these contracts, a savvy trader could lock in a profit no matter what happens. The researchers estimate more than $40 million in profits have already been pulled from the system by arbitrageurs, traders who specialize in sniffing out and exploiting these kinds of inconsistencies. Far from being a theoretical curiosity, this is a live and lucrative business model. Is this pattern true across all prediction markets? What’s striking is how common these opportunities are. The study found more than 7,000 markets with measurable mispricing, many in highly liquid, closely watched contracts. “Prediction markets are often treated…