Polymarket vs Kalshi Arbitrage: How to Detect and Trade Price Discrepancies

What Is Prediction Market Arbitrage?

Prediction markets like Polymarket and Kalshi let you buy and sell shares in the outcome of future events. Each share resolves to $1 if the event occurs, $0 if it doesn't. When both platforms price the same event differently, you can trade both sides simultaneously for a near-guaranteed profit.

How Price Discrepancies Form

Polymarket and Kalshi have separate liquidity pools. When new information appears — a tweet, a news article, a data release — one platform typically reprices faster than the other. This creates a window, often lasting seconds to minutes, where both platforms have diverged on the same event.

Regulatory differences also play a role. US-only restrictions prevent some arbitrageurs from trading on Polymarket (which does not serve US users), reducing the pressure that would otherwise close spreads quickly.

Live Arbitrage Data from Musashi

Musashi's /api/markets/arbitrage endpoint polls both platforms every 15–20 seconds and surfaces cross-platform spreads. Each entry includes:

Automating Arbitrage Detection

const res = await fetch(
  'https://musashi-api.vercel.app/api/markets/arbitrage?minSpread=0.05'
)
const { data } = await res.json()
const { opportunities } = data

for (const arb of opportunities) {
  console.log(`
    Market: ${arb.polymarketMarket.title}
    Spread: ${(arb.spread * 100).toFixed(1)}%
    Direction: ${arb.direction}
    Buy Polymarket YES at: ${arb.polymarketMarket.yesPrice}
    Sell Kalshi YES at: ${arb.kalshiMarket.yesPrice}
  `)
  // Execute both legs via Polymarket + Kalshi APIs
}

Risk and Slippage Considerations

Arbitrage in prediction markets is not risk-free in practice. Key risks:

• Leg execution risk

  The spread may close before both legs fill. Execute the larger leg first (worse liquidity) to reduce exposure.

• Liquidity limits

  Many spreads are only available at small sizes. The posted price may not fill at scale.

• Withdrawal delays

  Kalshi withdrawals can take 1–3 business days. Capital is locked during resolution.

• Market resolution risk

  Very rare, but markets can resolve differently than expected (e.g., a disputed outcome).