⚡ Arbitrage

What is Prediction Market Arbitrage?

The art of guaranteed profit through price differences

The Basic Concept

Arbitrage is a trading strategy that exploits price differences between markets. In prediction markets, it means buying complementary positions across different platforms that guarantee profit regardless of the outcome.

📊 Simple Example

Imagine two platforms have a market: "Will the Seahawks win Super Bowl 2026?"

  • Polymarket: YES = 35¢, NO = 65¢
  • Kalshi: YES = 40¢, NO = 58¢

Notice that Polymarket's YES (35¢) + Kalshi's NO (58¢) = 93¢ — less than $1.00!

If you buy $100 of YES on Polymarket and $100 of NO on Kalshi, you spend $93 total but are guaranteed to receive $100 when the market resolves. That's a $7 risk-free profit.

How It Works Step by Step

  1. Identify the opportunity — ArbAlert scans thousands of markets across Polymarket, Kalshi, and PredictIt every 30 seconds looking for price discrepancies.
  2. Receive an alert — When we find a spread (combined prices less than $1), you get an instant notification with exact instructions.
  3. Execute both trades — Use the deep links in the alert to buy the specified positions on each platform quickly.
  4. Wait for resolution — When the event happens, one of your positions wins. Your combined payout exceeds what you spent.

Why Do Arbitrage Opportunities Exist?

Price differences occur because:

  • Different user bases — Polymarket (crypto traders) vs Kalshi (US retail) have different biases
  • Liquidity differences — Smaller platforms may have less efficient pricing
  • News lag — Information travels at different speeds across platforms
  • Market structure — Fee differences and withdrawal limitations affect pricing

Important Considerations

⚠️ Things to Know

  • Speed matters — Opportunities can close in seconds. The faster you act, the better.
  • Fees exist — Account for platform fees when calculating profit.
  • Capital requirements — You need accounts funded on multiple platforms.
  • Resolution risk — Markets can resolve ambiguously or be voided in rare cases.
  • Withdrawal times — Your capital may be locked until the market resolves.

Calculating Your Profit

The formula for arbitrage profit is:

Profit = $1.00 - (Price A + Price B) - Fees

We also calculate Annualized ROI which shows the return if you could repeat this trade continuously for a year. A 7% profit over 3 days = ~850% annualized ROI!

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