Kalshi vs Polymarket Arbitrage Strategy: How to Arbitrage Between Polymarket and Kalshi
Our guide is here to tell you everything you need to know about trading arbitrage at Polymarket vs Kalshi. Perfect for seeing whether it’s worth trying this risky trading strategy at these sites.
We’ll give you a quick walkthrough of what arbitrage trading means at prediction markets sites like this, and give you a solid example of how it works. From here we will examine the key features of both Polymarket and Kalshi and see how they could positively and negatively impact your arb trading experience.
Comparing Kalshi and Polymarkets Arbitrage Trades
- What arb trading means at prediction markets sites
- An example of trading arbitrage between Polymarket and Kalshi
- Understanding the risks of trading arbitrage at Kalshi and Polymarket
- Pros and cons of arbitrage trading with prediction markets
- Comparing Polymarket and Kalshi for arbitrage trading
- How to arbitrage between Polymarket and Kalshi – A step by step guide
- Conclusion – Be careful when you cross-platform arbitrage with Kalshi and Polymarket
- Read more
- Kalshi vs Polymarket arbitrage FAQ
What arb trading means at prediction markets sites
Arbitrage trading is simply where you aim to benefit from the price differences between two different items. In the world of prediction markets brands like Kalsh and Polymarket, this means that you would hope to benefit from the price differences of the event contracts between the two brands.
The theory is that if you buy two event contracts for the same event that say different things and the combined value of the contracts adds up to less than $1.00, you will lock in a profit regardless of what happens in the real-world event.
An example of trading arbitrage between Polymarket and Kalshi
It’s probably best that we give you a solid example of how you might trade arbitrage at Kalshi and Polymarket. So for this you had already signed up to both sites, and then browsed the available markets looking for two opposing event contracts that had a combined buying price of less than $1.00. You found the following contracts:
| Prediction markets site | Event contract | Contract price | Probability of it happening |
|---|---|---|---|
| Polymarket | San Francisco 49ers to beat the Denver Broncos | $0.58 | 58% |
| Kalshi | San Francisco 49ers to lose against the Denver Broncos | $0.38 | 38% |
From this, you would be spending a total of $0.96 for the two opposing contracts, and as each winning contract pays out at $1.00, you would be locking in a profit of $0.04, regardless of what happened in the game.
This would represent a 4.17% return on your investment which sounds like a fairly attractive proposition. But as we’ll shortly discover, things are rarely so straightforward.
Understanding the risks of trading arbitrage at Kalshi and Polymarket
So if arbitrage trading was so good, why isn’t everyone doing it? Well, here the key risks to consider when it comes to trying this kind of trading at prediction markets sites like Polymarket and Kalshi:
Fees
All prediction markets sites will incorporate a fee on your trades, and this could potentially wipe out whatever slender profit you might have locked in. What makes this all the more tricky is the fact that these brands’ fees change according to the contract you are trading, and this makes it even harder to calculate.
Slippage
The prices of these event contacts will be moving extremely fast, and this is especially true for those volatile markets like cryptos and live sports. So while you could have locked in the arbitrage one second, it might have suddenly evaporated the next.
Liquidity issues
Don’t forget that you will be trading against other customers at prediction markets sites, rather than the brand itself. This means that there might not always be enough liquidity available for you to pull off the arb trade.
Terms and conditions
It’s always good to check through the terms and conditions of the prediction markets site in question to ensure that you are actually allowed to try arbitrage trading there. Plus you should check through the rules of each event contract, as there might be subtle differences in things like settlement criteria that could spell disaster for your arb trade.
Pros and cons of arbitrage trading with prediction markets
So let’s have a quick recap of the main pros and cons of arb trading at these prediction markets sites, so that we can see whether it’s worth your time:
- Lock in a return
- Applicable for many event contracts
- Hard to calculate fees
- Always an element of slippage
Comparing Polymarket and Kalshi for arbitrage trading
Most of our comparisons like our Kalshi vs FanDuel article concentrate on how these brands work for regular prediction markets trading. But here, we’re going to look at how certain features at Polymarket and Kalshi could affect your arbitrage trades. Here’s what we discovered:
How to arbitrage between Polymarket and Kalshi – A step by step guide
By now you should be ready to make a calculated decision about whether you are ready to handle the inbuilt risk of arb trading at Polymarket and Kalshi. If you are ready to give it a try, just take the following steps:
-
Click on any of the links for Kalshi and Polymarket in the banners of this page to launch their sites from your web browser
-
Register your account with both brands which usually requires you to fill in the registration form with some standard personal details
-
Log into your account and verify your identity by submitting some form of government-issued photo ID and any other required documentation
-
Make an opening deposit with one of the accepted payment methods
-
Browse the available event contracts at the two sites and find two contracts that have a combined price of less than $1.00
-
Factor in any commission fees, and if confident, purchase the relevant event contracts
-
Monitor the price movements and either wait for the contracts to settle or aim to trade them both in early for a profit
Conclusion – Be careful when you cross-platform arbitrage with Kalshi and Polymarket
We have shown you that both Kalshi and Polymarket are perfectly capable of letting you enjoy a form of arb trading on their prediction markets sites. After all, they both feature a huge range of event contracts, plenty of liquidity and that all-important variance that could cause some significant differential in the contract values.
Just remember that arb trading is hugely risky at the best of times, so exercise caution and double-check each brand’s terms and conditions to ensure that what you are doing is actually permitted. But as long as you’re OK with the risk, then consider signing up to both Kalshi and Polymarket by tapping on the links for the two brands in the banners of this guide.
Read more
Kalshi vs Polymarket arbitrage FAQ
- 🤑 Can I try arbitrage trading with other prediction markets sites?
Sure thing, and we’ll help you find the best sites for carrying out this risky kind of trade. You might want to look at our Kalshi vs DraftKings comparison to see how some interesting differences in fees could affect your arb trade.
- 🎂 How old do you have to be to trade arbitrage at Polymarket and Kalshi?
You will have to be at least 18 years old to trade at both of these sites. This means that you will be expected to verify your identity before you can make deposits and start trading.
- 🏞️ Can I try arb trading at Kalshi and Polymarket in my state?
It’s highly likely as prediction markets sites like this are regulated on a federal level and are generally available in most states. Just note that there may be some self-imposed restrictions on what markets are available in certain states, so be sure to check the terms and conditions.
- 🔒 How can I trust Polymarket and Kalshi for arb trading?
Because both brands are fully regulated by the Commodity Futures Trading Commission. This means that they can operate all over the US, and that you will get protection against things like price manipulation, insider trading and fraud.