Structural arbitrage extracted $40M from Polymarket — most institutional desks cannot replicate it.

Saguillo et al. (IMDEA / Oxford, AFT 2025) analyzed 86 million bets across 17,218 Polymarket conditions over one year. The two mechanisms: rebalancing arb (when outcome prices sum below $1.00) and combinatorial arb (logically dependent markets priced inconsistently).

Both require custom bot infrastructure and mempool management on Polygon. A desk without that build competes against automated wallets dominating the leaderboard — 14 of the 20 most profitable Polymarket wallets are estimated to be bots.

The worked rebalancing example with net profit formula, gas cost constraints, and the capacity ceiling that caps institutional extraction are in the full article.