Can You Arbitrage Kalshi and Polymarket? Why Cross-Venue Spreads Disappear
A quantitative dissection of aggregator spread claims, exposing taker fees, slippage, and resolution oracle divergence.
- Claimed gross spreads between Kalshi and Polymarket rarely exceed 3.0¢ to 4.0¢ on liquid 15-minute contracts.
- Combined execution friction (Kalshi taker fee + Polymarket gas + 0.5¢ slippage) averages $24.00 per 1,000 contracts.
- A 3.0¢ nominal spread yields only $6.00 in real net return (80% fee drag); a 2.0¢ spread yields a net loss of -$4.00.
- Oracle divergence risk is non-zero: CME CF BRTI 60-second TWAP does not always settle at the same strike as UMA's decentralized resolution.
Net_Return = (100¢ - (Price_Kalshi + Price_Poly)) × N - (Fee_Kalshi + Gas_Poly + Slippage_Poly) If Net_Return ≤ 0, theoretical spread is completely illusory.
1. The Anatomy of an Illusory Spread
Aggregators advertise cross-venue trades by comparing top-of-book prices without verifying order depth or executing fees. When a trader attempts to hit both sides simultaneously, several microstructural realities immediately manifest:
First, execution is asynchronous. Kalshi REST API latency (80ms) and Polygon blockchain mempool confirmation (2 to 5 seconds) mean one leg often executes while the other moves away or suffers slippage.
Frequently Asked Questions
Q1: Does anyone successfully arbitrage prediction markets?
Automated institutional market makers with co-located exchange access and zero maker fees can capture fractional basis spreads, but retail traders crossing the spread on both venues systematically lose money.
Related Guides & Teardowns
• Kalshi vs. Polymarket: Complete Real-World Fee, Gas, and Drag Comparison (2026) → • UMA Dispute Oracle vs CME CF BRTI: Resolution Hazards in Prediction Markets → • How Kalshi 15-Minute Bitcoin Contracts Settle: CME CF BRTI 60-Second TWAP Demystified →- QuanterraOS Cross-Venue Spread Teardown Engine (src/competitive-benchmark.ts)
- Findings.md Section 11: Cross-Venue Basis and Discrepancy Evidence
- Kalshi & Polymarket Mainnet Latency Telemetry