10 min readPolymarket vs Kalshi Arbitrage: Cross-Platform Strategies
Arbitrage on Polymarket offers the holy grail of trading: guaranteed profits when executed correctly. By exploiting price inefficiencies across outcomes or platforms, traders can lock in returns regardless of which outcome occurs. This comprehensive guide covers multi-outcome arbitrage, cross-platform opportunities, bot-based execution, and the critical risks that can turn a "sure thing" into a loss.
Key Takeaways
- Arbitrage = Guaranteed profit when all outcomes can be bought for less than $1.00
- Two main types: Multi-outcome (same market) and cross-platform (Polymarket vs Kalshi/PredictIt)
- Minimum edge: 2%+ after fees to cover gas costs and slippage risk
- Execution speed matters: Bots capture most opportunities within seconds
- Capital efficiency: Short-duration markets offer better annualized returns
- Risk factors: Slippage, resolution disputes, and capital lock-up can destroy profits
- 2026 landscape: Pure arb is rare; hybrid strategies combining arb with whale following are more viable
Polymarket Arbitrage Landscape (2026)
| Metric | Current State |
|---|---|
| Pure Arb Opportunities per Day | 5-15 (lasting seconds) |
| Average Arb Spread | 0.5-2% (before fees) |
| Competition Level | Extreme (100+ active bots) |
| Best Arb Window | New market creation (first 5 min) |
| Minimum Capital for Meaningful Profit | $10,000+ |
| Cross-Platform Arb Frequency | 3-5 per week (larger spreads) |
Table of Contents
- 1. What is Polymarket Arbitrage?
- 2. Types of Arbitrage Opportunities
- 3. How to Calculate Arbitrage Profits
- 4. Execution Methods: Manual vs Bots
- 5. Finding Arbitrage Opportunities
- 6. Cross-Platform Arbitrage Guide
- 7. Critical Risks and How to Manage Them
- 8. Real-World Arbitrage Examples
- 9. Best Arbitrage Tools and Software
- 10. Is Arbitrage Still Profitable in 2026?
- 11. Frequently Asked Questions
What is Polymarket Arbitrage?
Arbitrage exploits price differences to guarantee profit regardless of outcome. On Polymarket, if you can buy all possible outcomes for less than $1.00 total, you profit when the market resolves—no matter which outcome wins. Before diving into arbitrage, make sure you understand how Polymarket works and how odds are calculated.
Simple Two-Outcome Example
Market: "Will Bitcoin hit $100K by March 2026?"
Current Prices:
YES: $0.48
NO: $0.49
Total: $0.97
Your Trade:
Buy $100 of each
Cost: $97
Guaranteed: $3 profit (3.1% ROI)
Why Does Arbitrage Exist?
In an efficient market, all outcomes should sum to exactly $1.00 (100%). Arbitrage opportunities appear due to:
| Cause | How It Creates Arb | Duration |
|---|---|---|
| New Market Creation | Initial pricing inefficiency before market makers arrive | Seconds to minutes |
| Breaking News | Some traders react faster than others | Minutes |
| Low Liquidity | Large orders move prices disproportionately | Hours to days |
| Multi-Outcome Markets | Complex math means more pricing errors | Persistent |
| Cross-Platform Gaps | Different platforms have different user bases | Hours to days |
Types of Arbitrage Opportunities
1. Two-Outcome Arbitrage (YES/NO Markets)
The simplest form: buy both YES and NO when they sum to less than $1.00.
Example - Bitcoin $100K Market:
YES: $0.46 | NO: $0.52 | Total: $0.98
Guaranteed 2.04% profit on resolution
Two-Outcome Arb Checklist:
- YES + NO < $0.98 (after 2% buffer for fees/slippage)
- Both sides have sufficient liquidity ($500+ available at posted price)
- Market resolves within 30 days (for capital efficiency)
- No obvious resolution risks or ambiguous criteria
2. Multi-Outcome Arbitrage
Multi-outcome markets (3+ options) are more complex but often have larger inefficiencies. Common in election markets and sporting events.
Example - 2028 GOP Nominee Market:
DeSantis: $0.28
Vance: $0.24
Trump Jr: $0.12
Haley: $0.08
Ramaswamy: $0.07
Rubio: $0.05
Other: $0.11
Total: $0.95
5.26% guaranteed profit if you buy all outcomes
| Outcomes | Typical Arb Size | Execution Difficulty | Competition |
|---|---|---|---|
| 2 (YES/NO) | 1-2% | Easy | Extreme |
| 3-5 | 2-4% | Medium | High |
| 6-10 | 3-6% | Hard | Medium |
| 10+ | 5-10%+ | Very Hard | Lower |
3. Cross-Platform Arbitrage
Price differences between Polymarket and other platforms create opportunities. Learn about Polymarket vs Kalshi and other Polymarket alternatives to identify cross-platform opportunities.
Example - Fed Rate Cut Market:
Polymarket
YES (25bps cut): $0.35
NO: $0.63
Kalshi
YES (25bps cut): $0.42
NO: $0.58
Strategy: Buy YES on Polymarket ($0.35), buy NO on Kalshi ($0.58) = $0.93 total for guaranteed $1.00
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How to Calculate Arbitrage Profits
Basic Arbitrage ROI Formula
Arbitrage ROI = ((1.00 / Total Cost) - 1) × 100%Example: If YES + NO = $0.97
ROI = (1.00 / 0.97 - 1) × 100 = 3.09%
Multi-Outcome ROI Formula
Arbitrage ROI = ((1.00 / Sum of All Outcomes) - 1) × 100%Example: 5 outcomes totaling $0.92
ROI = (1.00 / 0.92 - 1) × 100 = 8.70%
Calculating After Fees
Always factor in Polymarket's fee structure before executing. Here's a realistic calculation:
| Cost Component | Amount | Notes |
|---|---|---|
| YES Position | $0.48 × 100 = $48.00 | 100 shares |
| NO Position | $0.49 × 100 = $49.00 | 100 shares |
| Gas Fees (2 txns) | ~$0.10 | Polygon L2 |
| Total Cost | $97.10 | - |
| Guaranteed Payout | $100.00 | One side wins |
| Net Profit | $2.90 (2.99% ROI) | - |
Annualized Return Calculation
A 3% profit on a 30-day market is very different from 3% on a 1-year market:
Annualized ROI = ROI × (365 / Days Until Resolution)| Raw ROI | 7 Days | 30 Days | 90 Days | 365 Days |
|---|---|---|---|---|
| 2% | 104% | 24% | 8.1% | 2% |
| 3% | 156% | 36% | 12.2% | 3% |
| 5% | 261% | 61% | 20.3% | 5% |
| 10% | 521% | 122% | 40.6% | 10% |
💡 Key Insight: Time Value of Capital
A 2% arb on a 7-day market is far more valuable than 5% on a 6-month market. Always prioritize shorter resolution windows when capital is limited.
Execution Methods: Manual vs Bots
Manual Execution
Executing arbitrage manually is possible but challenging. Here's a step-by-step process:
Manual Arb Execution Steps:
- Identify opportunity: Find market where outcomes sum to <$0.98
- Check liquidity: Verify enough depth at current prices
- Open multiple browser tabs: One for each outcome
- Pre-fill order amounts: Calculate position sizes in advance
- Execute simultaneously: Click buy on all tabs as fast as possible
- Verify fills: Confirm all orders executed at expected prices
- Calculate actual ROI: Account for any slippage that occurred
Bot-Based Execution
Most successful arbitrageurs use automated systems. See our trading bot guide and arbitrage bot tutorial for implementation details.
| Factor | Manual Trading | Bot Trading |
|---|---|---|
| Execution Speed | 5-30 seconds | <100 milliseconds |
| Slippage Risk | High | Low (atomic execution) |
| Opportunities Captured | 1-2 per day (if lucky) | 10-50+ per day |
| Minimum Arb Size | 3-5% (to cover slippage) | 0.5-1% |
| Setup Cost | $0 | $1,000-10,000+ (dev time) |
| 24/7 Monitoring | No (sleep required) | Yes |
| Cross-Platform Capable | Limited | Yes |
Bot Architecture Overview
A typical arbitrage bot has these components. For API details, see our API guide and CLOB API reference.
┌─────────────────────────────────────────────────────────────┐ │ ARBITRAGE BOT │ ├─────────────────────────────────────────────────────────────┤ │ ┌──────────────┐ ┌──────────────┐ ┌──────────────────┐ │ │ │ Price Feed │ │ Arb Finder │ │ Order Executor │ │ │ │ (WebSocket) │──│ (Calculate) │──│ (Place Orders) │ │ │ └──────────────┘ └──────────────┘ └──────────────────┘ │ │ │ │ │ │ │ ▼ ▼ ▼ │ │ ┌──────────────┐ ┌──────────────┐ ┌──────────────────┐ │ │ │ Polymarket │ │ Threshold │ │ Risk Manager │ │ │ │ Kalshi │ │ Check (2%+) │ │ (Max Position) │ │ │ │ PredictIt │ └──────────────┘ └──────────────────┘ │ │ └──────────────┘ │ └─────────────────────────────────────────────────────────────┘
Finding Arbitrage Opportunities
Where to Look
| Source | Opportunity Type | Frequency | Competition |
|---|---|---|---|
| New Markets | Mispriced outcomes | 5-10/day | Extreme |
| Breaking News | Slow adjustment | 2-5/day | High |
| Low Volume Markets | Persistent mispricing | Constant | Low |
| Multi-Outcome Markets | Complex pricing errors | Moderate | Medium |
| Cross-Platform | Platform disagreement | 3-5/week | Low |
Timing Your Search
Arbitrage opportunities cluster around specific events. Use alerts and notifications to catch them early.
| Event Type | Best Window | Expected Arb Size |
|---|---|---|
| New Market Creation | First 5 minutes | 2-10% |
| Major News (Fed, Elections) | First 2-5 minutes | 1-5% |
| Weekend Trading | Saturday 10pm - Sunday 2am UTC | 0.5-2% |
| Holiday Periods | Major US holidays | 1-3% |
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Cross-Platform Arbitrage Guide
Cross-platform arbitrage exploits price differences between prediction markets. This is harder to automate but offers larger, more persistent opportunities.
Platform Comparison for Arbitrage
| Platform | Fees | Liquidity | Settlement | API Access |
|---|---|---|---|---|
| Polymarket | ~0% | High | UMA Oracle | Full |
| Kalshi | ~1% | Medium | CFTC Regulated | Full |
| PredictIt | 5% profit + 5% withdrawal | Low | Manual | Limited |
| Manifold | ~0% | Medium | Community | Full |
For detailed comparisons, see: Polymarket vs Kalshi, Polymarket vs PredictIt, Polymarket vs Manifold, and Polymarket vs Betfair.
Cross-Platform Execution Challenges
| Challenge | Description | Mitigation |
|---|---|---|
| Different Market Criteria | Same event, different resolution rules | Read rules carefully before trading |
| Settlement Timing | One platform resolves before the other | Factor in time difference |
| Capital Requirements | Need funds on multiple platforms | Pre-fund all platforms |
| Withdrawal Delays | Profits locked until settlement | Account for capital lock-up |
Critical Risks and How to Manage Them
1. Execution Slippage
The #1 risk: Prices can move between your trades. You buy YES, but before buying NO, the price changes. Your "guaranteed" profit becomes a loss.
⚠️ Slippage Example
You spot YES: $0.48, NO: $0.49 (total $0.97, 3.1% arb).
You buy YES at $0.48...
Before you can buy NO, price moves to $0.54.
Total cost: $0.48 + $0.54 = $1.02
Result: 2% LOSS instead of 3% profit
Slippage Mitigation:
- Use limit orders (not market orders)
- Execute both legs simultaneously (requires bots)
- Target larger spreads (3%+ minimum for manual trading)
- Monitor orderbook depth before executing
- Avoid thin markets during high volatility
2. Resolution Disputes
Markets occasionally resolve unexpectedly due to ambiguous criteria or disputes. Your capital could be locked for weeks. Understanding how UMA handles resolution disputes is critical.
Resolution Risk Mitigation:
- Read market criteria carefully before entering
- Avoid markets with vague or subjective criteria
- Check if similar markets had dispute history
- Prefer markets with clear, verifiable outcomes
- Factor in dispute risk when sizing positions
3. Capital Lock-up
Arbitrage profits aren't realized until resolution. A 2% profit locked for 6 months = 4% annualized. Short-duration markets are more capital-efficient.
| Lock-up Period | Minimum Arb Target | Reasoning |
|---|---|---|
| <7 days | 1-2% | High annualized return |
| 7-30 days | 2-3% | Reasonable efficiency |
| 30-90 days | 4-5% | Must beat alternatives |
| >90 days | 7%+ | Consider opportunity cost |
4. Smart Contract Risk
While rare, smart contract bugs or exploits could affect market resolution. Polymarket uses audited contracts, but risk exists.
5. Counterparty Risk (Cross-Platform)
For cross-platform arb, you're exposed to both platforms. If one becomes insolvent or pauses withdrawals, you could lose half your position.
Real-World Arbitrage Examples
Example 1: Multi-Outcome Election Arb (2024)
Market: 2024 GOP Nominee
| Candidate | Price | Position ($1000 total) |
|---|---|---|
| Trump | $0.72 | $720 |
| DeSantis | $0.08 | $80 |
| Haley | $0.06 | $60 |
| Other | $0.09 | $90 |
| Total | $0.95 | $950 |
| Guaranteed Profit | $50 (5.26%) | |
Example 2: Cross-Platform Fed Arb (January 2026)
Market: Fed 25bps Rate Cut in January 2026
Polymarket
YES: $0.12
NO: $0.87
Kalshi
YES: $0.18
NO: $0.83
Arbitrage Strategy:
Buy YES on Polymarket ($0.12) + Buy NO on Kalshi ($0.83) = $0.95 total
Guaranteed 5.26% profit on resolution
Example 3: New Market Arb (Speed Required)
New Market: Breaking News Event
T+0 (Market Created): YES: $0.40, NO: $0.45 → Total: $0.85 (17.6% arb!)
T+30 seconds: Bots arrive → YES: $0.45, NO: $0.52 → Total: $0.97
T+60 seconds: More bots → YES: $0.49, NO: $0.51 → Total: $1.00
Window: <30 seconds. Manual traders can't compete.
Best Arbitrage Tools and Software
Monitoring Tools
Use analytics tools to track arbitrage opportunities:
| Tool | Purpose | Cost | Best For |
|---|---|---|---|
| PolyTrack | Real-time price monitoring, whale alerts | Free / Pro | All traders |
| Custom Bots | Automated execution | Dev time | Serious arbers |
| Spreadsheet Monitors | Manual tracking | Free | Beginners |
| TradingView | Technical analysis | Free / Paid | Cross-market |
Building Your Own Arbitrage Bot
For developers, see our technical guides:
- Polymarket API Guide - Core API documentation
- CLOB API Reference - Order book endpoints
- WebSocket Tutorial - Real-time price feeds
- Python Tutorial - Building in Python
- Arbitrage Bot Guide - Complete bot walkthrough
Is Arbitrage Still Profitable in 2026?
As Polymarket has grown, pure arbitrage has become increasingly competitive. Here's the honest assessment:
| Strategy | Viability (2026) | Required Edge |
|---|---|---|
| Pure Two-Outcome Arb | Very Difficult | <50ms execution |
| Multi-Outcome Arb | Challenging | Sophisticated bots |
| Cross-Platform Arb | Still Viable | Multi-platform capital |
| Low-Liquidity Markets | Viable | Patience, research |
| Arb + Whale Following | Most Profitable | Whale tracking tools |
The Future: Hybrid Strategies
The most successful traders in 2026 combine arbitrage principles with other edges:
- Arb + Whale Tracking: Use whale monitoring to anticipate price movements
- Arb + News Edge: React faster to breaking news using specialized feeds
- Arb + Market Making: Provide liquidity while capturing spread
- Arb + Information Edge: Deep domain expertise in specific market categories
For more on advanced strategies, see our whale trading strategies and market making guide.
Frequently Asked Questions
What is the minimum capital needed for arbitrage?
Realistically, $1,000-5,000 minimum for meaningful returns. With 2% arb spreads and $1,000 capital, you'd make $20 per trade. Gas fees (~$0.10) and execution time make smaller amounts impractical. Serious arbitrageurs typically work with $10,000-100,000+.
Can I do arbitrage without coding skills?
Yes, but it's much harder. Manual execution limits you to larger, slower-moving opportunities (3%+ spreads, low-liquidity markets). For competitive arbitrage, you'll need to either code your own bot or use third-party tools. Check our trading bot guide for options.
How do arbitrage bots work?
Arb bots continuously monitor market prices via WebSocket feeds, calculate if total outcome prices are below $1.00, check liquidity depth, and execute simultaneous buy orders across all outcomes when profitable opportunities appear. The best bots execute in under 100 milliseconds. See our complete arbitrage bot guide.
What happens if one side of my arbitrage trade gets filled but not the other?
This is called "leg risk" and is the primary danger of manual arbitrage. You're left with a directional position instead of a riskless trade. To mitigate: use limit orders, check liquidity before trading, and target larger spreads (3%+) so partial execution still profitable. Bots can use atomic transactions to prevent this.
Are arbitrage profits taxable?
Yes, in most jurisdictions arbitrage profits are taxable as short-term capital gains (same as regular trading). The "guaranteed" nature doesn't exempt them from taxes. Consult our tax guide for details on reporting prediction market income.
Why do arbitrage opportunities exist if they're risk-free?
Several reasons: (1) Market inefficiencies during rapid price changes, (2) New market creation before bots arrive, (3) Low-liquidity markets where bots don't participate, (4) Cross-platform discrepancies due to different user bases, (5) Complex multi-outcome markets with harder math. Opportunities exist but are fleeting—most last seconds.
Can I lose money on arbitrage?
Yes, despite being called "risk-free." Losses can occur from: (1) Execution slippage, (2) Market resolution disputes, (3) Smart contract bugs, (4) Platform insolvency (cross-platform arb), (5) Different resolution criteria on different platforms. True risk-free arbitrage requires perfect execution—which is hard to achieve.
What's the best time to find arbitrage opportunities?
New market creation (first 5 minutes), breaking news events (first 2-5 minutes), weekend nights (lower competition), and major US holidays. Also during high-volatility periods like election nights when prices move rapidly. Use alerts to catch new market creations.
Is Polymarket arbitrage legal?
Arbitrage itself is legal—it's simply exploiting price inefficiencies. However, Polymarket's legality varies by jurisdiction. Check our legality guide and local regulations. If you can legally trade on Polymarket, you can legally arbitrage.
How do professional arbitrageurs make money with tiny spreads?
Volume and automation. A 0.5% arb on $10,000 is only $50—but if executed 50 times per day, that's $2,500/day or ~$900K/year. Professional arbers use: (1) Large capital base, (2) Sub-100ms execution, (3) 24/7 automated monitoring, (4) Multiple market coverage, (5) Low or zero fees through maker rebates.
What's the difference between arbitrage and market making?
Arbitrage exploits temporary price inefficiencies for risk-free profit. Market making provides continuous liquidity by posting bids and asks, profiting from the spread while taking inventory risk. Market makers might hold positions; arbitrageurs aim for zero net exposure. Both can be profitable—see our market making guide.
Should I start with arbitrage as a beginner?
Not recommended. Arbitrage requires: fast execution, understanding of fees/slippage, capital efficiency math, and often technical skills. Better starting points are: (1) Paper trading to learn market dynamics, (2) Small directional bets to understand resolution, (3) Whale following for proven strategies. Graduate to arb after mastering basics.
Related Articles
Step-by-step arbitrage walkthrough
Building an Arbitrage BotComplete bot development tutorial
Market Making StrategiesProfit from providing liquidity
Whale Trading StrategiesFollow the smart money
Polymarket API GuideTechnical documentation
Polymarket vs KalshiCross-platform comparison
Summary: Arbitrage in 2026
Pure arbitrage on Polymarket has become highly competitive, with professional bots capturing most opportunities within seconds. However, profitable paths still exist:
- Cross-platform arbitrage between Polymarket, Kalshi, and other platforms offers larger, more persistent spreads
- Low-liquidity markets remain underserved by bots due to capital efficiency concerns
- Multi-outcome markets with 6+ options have more pricing errors
- Hybrid strategies combining arb principles with whale following or news edge are most viable
- Technical skills and automation are increasingly necessary for competitive arbitrage
Monitor Arbitrage Opportunities with PolyTrack
PolyTrack monitors markets for price inefficiencies and cross-platform spreads. Get real-time alerts when arbitrage opportunities appear, track whale movements that precede price changes, and identify underpriced markets before the crowd.
Start Finding Opportunities →Disclaimer: This article is for educational purposes only. Arbitrage involves risks including execution slippage, resolution disputes, and capital lock-up. Past performance does not guarantee future results. Always understand the risks before trading and never risk more than you can afford to lose. Prediction market trading may not be legal in all jurisdictions—verify local regulations before participating.
Frequently Asked Questions
Yes, when the same event has different odds on both platforms, you can potentially profit by taking opposite positions. However, execution timing and fees make this challenging.
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