Prediction market arbitrage: how it really works

Q: Can you actually arbitrage Kalshi and Polymarket?

In theory yes; in practice it's hard. The same event listed on both venues will often show a 2–5¢ spread, but you need an account on both, capital pre-funded on both, and willingness to take execution and resolution-difference risk. Real arb profits require size and infrastructure.

Q: What is a no-vig arbitrage?

When the bid + ask on YES and NO on a single market sum to less than $1 (a free dollar) or more than $1 (a free dollar on the other side). These are rare and usually disappear in seconds.

Q: Are there bots doing arb on prediction markets?

Yes. Both Kalshi and Polymarket have professional market-makers running cross-venue and intra-venue arb. Retail arb opportunities are usually leftovers the bots can't capture due to fee structure or capital limits.

Q: Can you arb correlated political markets?

Sometimes. 'Republican wins Senate' and 'Republican wins majority of Senate seats up' should price almost identically; when they don't, the spread is tradable. Resolution criteria differences create the apparent edge — read them carefully before assuming arb.

Q: What does the price actually mean?

A contract settles at $1 if the event happens and $0 if it doesn't, so the price is the market's probability. A contract at 23¢ means roughly a 23% chance, and $1 buys about 4.3 shares.

Q: How much money do I need to start?

You can place a real trade with $10–$20. Contracts are priced in cents, so a $20 balance buys dozens of shares on a cheap market. Start small until you have seen a position settle.

Published 2026-05-22 · Last reviewed 2026-08-06

Catie Di StefanoFounder & Editor-in-Chief

Reviewed by Catie Di Stefano

TL;DR

Cross-venue arbitrage (Kalshi vs Polymarket) is real but constrained by KYC, ACH, and gas friction.
Same-venue arbitrage on logically related contracts (sum > $1 or < $1) is the cleanest opportunity.
Most apparent edges disappear once fees and execution slippage are accounted for.

New to this? Read this first

Prediction markets price events in cents, not odds. Here is the vocabulary used on this page, in plain English.

Price = probability: A contract that pays $1 trading at 12¢ means the market thinks there's a 12% chance.
YES / NO share: YES pays $1 if it happens. NO pays $1 if it doesn't. You can never lose more than you paid.
+609 (American odds): Sportsbook shorthand. Bet $100, win $609 profit. That's about a 14% implied chance.
Vig: The book's built-in margin. Sportsbook percentages add up to more than 100%; market prices don't.
Liquidity: How much money is in the market. More money means you can get in and out at the price you see.

Free money? Not quite. But when Kalshi and Polymarket disagree on the same event, the spread can be real — and yes, traders have absolutely paid rent off it.

The three flavors of arbitrage

Cross-venue. Same event, different prices on different exchanges.
Same-venue logical. Related contracts on one venue whose prices imply impossible joint probabilities.
No-vig. YES + NO bid/ask spread crossing the $1 line.

Cross-venue: Kalshi vs Polymarket

The classic example. Both venues list the same event (e.g. a presidential election). YES trades at 58¢ on Kalshi and 55¢ on Polymarket — a 3¢ spread. Theoretical edge: buy on Polymarket, sell on Kalshi, lock in 3¢ minus fees on every share.

Practical reality: you need pre-funded accounts on both venues. Polymarket users outside the US have to bridge USDC. Kalshi users pay 1–7% trading fees. By the time you execute, the spread often collapses. Cross-venue arb is mostly a market-maker game.

Same-venue logical

Cleanest retail opportunity. Two contracts on Kalshi: "Will Harvard admit rate be below 3.5%?" and "Will Harvard admit rate be below 4.0%?". The second must be priced higher than the first (it's strictly more likely). When the prices invert or compress implausibly, you can trade the spread.

Same applies to categorical markets: the prices of all outcomes must sum to ~$1. If they sum to $1.05, you can short every outcome and pocket the difference. If they sum to $0.95, you can buy every outcome and pocket the difference. These do appear on thin markets.

No-vig opportunities

On a single market, the bid on YES + bid on NO occasionally exceeds $1, meaning you can simultaneously short both and pocket the difference. These are rare and live for seconds because market-maker bots sweep them. Retail almost never catches them.

Costs that kill apparent edge

Trading fees. Kalshi 1–7% per side; Polymarket 0% trading but gas on funding.
Slippage. Hitting the bid at size moves it.
Capital cost. Capital tied up on both venues earns nothing.
Resolution divergence. Same event, different resolution sources — they occasionally diverge. That's arb risk, not arb profit.

Who should bother

Traders with serious size, automation, and willingness to manage two venues. Retail arb at small size is rarely worth the effort versus directional trading. The biggest arb you can do as a retail trader is on same-venue logical inconsistencies in thin markets you understand better than other participants.

Odds → probability → payout

Sportsbook odds (e.g. +609 or -150)Your stake ($)

Implied chance: 14.1%
Fair market price: 14¢
Pays back: $141.80
Profit if right: $121.80

Sportsbook odds include the book's margin, so the implied chance shown here is slightly higher than the true probability. A prediction-market contract priced below this number is the better deal. Reverse check: 14.1% ≈ +609.

Your first trade, step by step

Fund a small balanceOpen an account, verify your ID, and deposit $10–$20 by debit or ACH. You must be 18+ and in an eligible state.
Find the marketSearch the event by team, player or headline. Check the price and the volume — thin markets move a lot on small orders.
Read the price as a probabilityA 23¢ YES contract means the market gives it about a 23% chance. If you think it is higher than that, YES is the value side.
Place a limit orderEnter the price you want rather than taking the market. You buy shares, not a bet slip — the most you can lose is what you paid.
Decide your exitYou can sell any time before the event resolves, or hold to settlement where each winning share pays $1.

Ready to try it: open Polymarket. 18+, eligible states only. Trade what you can afford to lose.

Sources & further reading

Prediction Markets (Wolfers & Zitzewitz, JEP 2004)American Economic Association
Event Contracts — CFTC overviewU.S. Commodity Futures Trading Commission (CFTC)

Frequently asked questions

Can you actually arbitrage Kalshi and Polymarket?