Arbitrage across prediction markets
When the same event trades at materially different prices on two platforms at the same time, it is possible to lock in a near-certain profit by buying the underpriced side and selling (or shorting) the overpriced side. This is prediction market arbitrage, and while the opportunities are real, they are smaller and harder to capture than they first appear.
Arbitrage across prediction markets
How arbitrage works
Suppose Kalshi prices YES on a political event at $0.45 and Polymarket prices the same event's YES at $0.55. You can buy YES on Kalshi for $0.45 and sell YES on Polymarket for $0.55. If the event happens, your Kalshi YES pays $1.00 and your Polymarket short costs $1.00, netting zero. If it does not happen, your Kalshi YES pays $0.00 and your Polymarket short earns $1.00, netting $1.00 on the $0.55 sale price. In either case you locked in a profit of roughly $0.10 per contract (before fees), regardless of the actual outcome. That is risk-free profit in the idealized case.
Finding opportunities
Price discrepancies between Kalshi and Polymarket on political and macroeconomic events occur most often when: one platform has lower liquidity and its price has drifted; a new piece of information hit one platform's traders first; or a large order moved a thin market. Dedicated arb traders monitor both platforms continuously, often using APIs. Publicly available price aggregators that display the same event across platforms can surface discrepancies, but by the time a human sees and acts on a gap, it may have already closed.
Practical limits
Fees often consume most of the apparent spread. A 3-cent gap with a 2% fee on Polymarket and a 5% fee on Kalshi may leave little or no actual profit after costs. Withdrawal times create capital risk: if the event resolves before you have successfully withdrawn from both platforms, one leg of your position may be at risk. KYC requirements mean many arbitrage-capable traders cannot hold accounts on both platforms simultaneously. And position limits on regulated venues can cap how much you can trade even when you find a genuine gap.
Crypto complications on Polymarket
Polymarket settles in USDC on the Polygon blockchain. Moving capital in and out requires converting USD to USDC (and back), paying Polygon gas fees, and potentially bridging from another chain if that is where your USDC sits. During periods of high network congestion, bridge and gas fees can add meaningful cost to each arbitrage round trip. Slow bridge times (sometimes hours) also extend the window during which one leg of your arbitrage is exposed to price risk before the other leg is in place.
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