Polymarket prices an event at 47%. Kalshi prices the same event at 55%. Eight percentage points separate two platforms pricing the same real-world outcome. This kind of discrepancy — known as arbitrage — is one of the most sought-after signals in prediction market trading. When prices diverge across platforms, there is a mathematical opportunity to lock in a near-risk-free profit. Here’s how it works and how to find it.
What Is Prediction Market Arbitrage?
Arbitrage is the practice of exploiting price differences for the same asset across different markets. In traditional finance, arbitrage opportunities close almost instantly because professional traders and algorithms react within milliseconds.
Prediction markets are different. They are less efficient than financial markets, platforms have different user bases with different information, and liquidity constraints prevent rapid price equalization. This inefficiency creates real, exploitable gaps — sometimes for hours or even days.
A pure arbitrage occurs when you can buy YES on one platform and NO on another such that the total cost is below 100%. Any outcome means you profit. More commonly, you’ll find soft arbitrage — where one platform’s odds seem clearly mispriced relative to another, offering a probabilistic edge rather than a guaranteed profit.
Why Price Discrepancies Exist
Several forces drive price differences across prediction platforms. Different user bases bring different information and biases — Polymarket tends to attract crypto-native, globally distributed traders, while Kalshi draws more US-based, regulation-aware participants. These communities can value the same event very differently.
Liquidity differences also contribute. A thin market on one platform can sustain mispriced odds for longer because there aren’t enough traders to correct it. Fee structures vary across platforms, creating small but meaningful spread differences. And sometimes, one platform simply hasn’t fully processed breaking news that has already moved prices on another.
These friction points are where arbitrage opportunities live.
How to Identify Arbitrage on Prediction Terminal
Prediction Terminal is purpose-built for this kind of analysis. By displaying odds from Polymarket and Kalshi side by side for the same event, it surfaces price discrepancies instantly — without the need to manually check each platform separately.
Look for markets where the spread between platforms is 5 percentage points or more. Below that threshold, fees and spread costs typically eat up any theoretical profit. Above 5 points, the gap becomes worth analyzing seriously.
Pay attention to whether the discrepancy has persisted over time — visible in the chart view — or appeared suddenly. Persistent discrepancies often reflect structural differences between platforms. Sudden gaps are more likely to be genuine mispricings waiting to be corrected.
The Risks of Prediction Market Arbitrage
Arbitrage in prediction markets is rarely risk-free. The main risks are platform risk (one platform could restrict withdrawals or face regulatory action), liquidity risk (you may not be able to exit positions cleanly), and timing risk (markets can stay mispriced longer than your capital can stay tied up).
There’s also basis risk — the two markets may not resolve in exactly the same way. Different platforms sometimes phrase outcomes slightly differently, which can result in one platform paying YES while the other pays NO for the same real-world event.
Always read the resolution criteria carefully on both platforms before attempting an arbitrage trade. Small differences in wording can mean large differences in outcome.
Start Scanning for Discrepancies
The most efficient way to find prediction market arbitrage is systematic scanning — regularly checking the same events across multiple platforms. Prediction Terminal automates this, giving you a live side-by-side view of odds from major platforms so you can spot meaningful gaps immediately.
Focus on markets with high notional value, where your position size won’t move the price. And remember that the goal of arbitrage analysis isn’t just to find guaranteed trades — it’s to identify which platform’s price is more likely to be correct, and to position accordingly before the market converges.
Start comparing odds across Polymarket and Kalshi on Prediction Terminal.
Frequently Asked Questions
What is arbitrage in prediction markets?
Arbitrage is exploiting a price difference for the same event across two platforms. In prediction markets, a pure arbitrage occurs when buying YES on one platform and NO on another costs less than 100% combined — guaranteeing a profit regardless of outcome.
What spread between platforms is worth trading?
A divergence of 5 percentage points or more is generally the minimum worth analyzing. Below that, platform fees and bid-ask spreads typically absorb any theoretical profit.
What is basis risk in prediction market arbitrage?
Basis risk is the possibility that two platforms resolve the same real-world event differently due to slight variations in their resolution criteria wording. Always read both platforms’ criteria before executing an arbitrage trade.