Arbitrage here means buying Yes on one exchange and No on another for the same event when the two prices add up to less than $1. One side pays $1 at settlement, so if you paid 97¢ total you lock in 3¢ per contract, in theory. In practice the fees on two taker orders usually eat 2–3¢, your cash sits locked on both platforms until the event resolves, and the two exchanges don't always resolve "the same" market the same way. It exists; it is not free money.
The basic trade
Kalshi has "Will the Fed cut in December?" at Yes 62¢. Polymarket has the same question at No 35¢. Buy both: 62 + 35 = 97¢. Whatever happens, one of your contracts pays $1 and the other pays $0, so you receive $1 for 97¢. Gross profit 3¢ per contract, 3.1% on capital, before fees.
The fee math
Assume market (taker) orders on both:
| Leg | Price | Fee formula | Fee |
|---|---|---|---|
| Kalshi Yes | 62¢ | 7% × 0.62 × 0.38 | 1.65¢ |
| Polymarket No (economics) | 35¢ | 5% × 0.35 × 0.65 | 1.14¢ |
| Total fees | 2.79¢ |
Net: 3¢ − 2.79¢ = 0.21¢ per contract. On 1,000 contracts, $2.10, with $970 locked up until December. That's the honest shape of most "arb" screenshots you'll see: the gross gap is real, the net is a rounding error.
Two ways to improve it:
- Be the maker. Resting limit orders are free on Kalshi (most markets) and on Polymarket. Post Yes at 61¢ on Kalshi, wait, and only buy the Polymarket No once you've filled. Your fee drops to one leg or zero. The price of that: you might never fill, or the other side might move while you wait.
- Pick the free categories. Polymarket charges nothing on geopolitics; Novig charges nothing pre-game on sports. A pair with one free leg has half the cost.
Why the gap exists
Different crowds. Polymarket's global users price politics and world events; Kalshi's US users price sports and economics; neither book is watching the other every second. Gaps open on news, when one venue reprices before the other, and on thin markets where a single order moves the price. They close as soon as someone like you trades them, which is why the durable ones are small.
The three ways it goes wrong
1. The markets aren't the same
This is the one that hurts. Two exchanges list "Will X happen by December 31?" and settle it under different rulebooks: different sources, different time zones, different definitions of "happen", different treatment of postponements and ties. If the event lands in the gap between those definitions, you can lose both legs. Before any cross-venue trade, read both market rules side by side and confirm the settlement source and deadline match exactly. If they don't, it isn't arbitrage; it's two bets.
2. Capital lockup
Your 97¢ is gone until settlement on both venues. A 0.2¢ net on a contract that settles in two months is a terrible annualised return on cash you could have used elsewhere, and it's cash you can't pull if the platform geofences your state or freezes a market (it has happened; see Kalshi's frozen market).
3. Legging risk
You fill the Kalshi leg; the Polymarket price moves before you fill the second. Now you have an outright position you didn't want. Thin markets make this common. Size to the smaller book, not the larger.
What actually works in 2026
- Volume, not hobby. The people who make money at this run resting orders on both venues continuously, capture the maker rebates Polymarket pays, and treat the occasional net cent as the business. It needs software, capital and tolerance for lockup.
- Event-driven, briefly. Right after news, gaps of several cents can appear on liquid markets for seconds to minutes. If you're watching both books and have cash ready on both, that's the window.
- Within one platform. Kalshi and Polymarket both list related markets (ranges, thresholds) that occasionally price inconsistently with each other; same rulebook, no cross-venue settlement risk, one fee schedule. Less glamorous, less dangerous.
Compliance
One account per platform, in your own name, from a state where the platform operates. No VPNs. No inside information; Kalshi and Polymarket have both sanctioned users for it in 2026. And keep records: every leg is a taxable transaction (see Kalshi taxes).
Fee rates from Kalshi's July 2026 schedule and Polymarket's published fee parameters. Worked example illustrative; prices move.