Arbitrage is the closest thing to a free lunch in trading: locking in a profit regardless of the outcome by exploiting a pricing discrepancy. It exists in prediction markets because the same event is often listed on multiple exchanges, and those exchanges do not always agree on the price. The opportunities are real but small, short-lived and fiddly — this guide explains how they work and why they are harder to capture than they first appear.
What arbitrage is
A true arbitrage guarantees a profit with no exposure to the outcome. In prediction markets this usually means buying both sides of the same event — Yes and No — at a combined price below $1. Because exactly one of them will settle at $1, paying less than $1 for the pair locks in the difference. The skill is in finding pairs where the combined cost is low enough to clear fees.
Cross-platform arbitrage
The same market — say, a particular election or game outcome — may trade at different prices on different venues. If Yes is cheap on one platform and No is cheap on another, you can buy each where it is cheapest. Suppose Yes trades at 48¢ on one exchange and No trades at 49¢ on another. Buying one of each costs 97¢, and one side is guaranteed to pay $1 — a locked 3¢ profit per pair before fees and funding costs. This is one practical reason serious traders keep accounts on more than one platform; see Kalshi vs Polymarket and the full platform reviews.
Complementary contracts on one venue
Occasionally the Yes and No prices on a single platform briefly sum to less than $1 — for example, Yes at 47¢ and No at 50¢, totalling 97¢. The same logic applies: buy both for a guaranteed payout of $1. These windows are rarer and shorter on liquid markets, where market-makers close them quickly, but they appear on thinner markets.
No-vig exchanges
A related idea is structural rather than opportunistic. Traditional sportsbooks build a margin (the “vig”) into their odds, so the two sides sum to more than 100% and the house keeps the difference. No-vig exchanges like Novig and ProphetX match you against other traders with no built-in margin, so pricing on liquid markets can be meaningfully better. You are not arbitraging here, but you are systematically getting a fairer price — which compounds like an edge over time.
The frictions that eat arbitrage
- Fees. Trading and withdrawal costs can swallow a 2–3¢ edge entirely. Always net them out first — the profit calculator helps.
- Liquidity. You may not be able to fill both sides at the prices you see, especially in size.
- Timing. Prices move while you execute; a gap can vanish between your first and second order.
- Capital and lockup. Your money is tied up until the market resolves, sometimes for weeks.
- Resolution differences. Two venues can word a market slightly differently and settle differently — the deadliest risk, because it turns a “riskless” arb into a real bet. Read both sets of resolution criteria.
Done carefully, watching for these gaps is a genuine edge for multi-account traders. Done carelessly, the frictions turn it into a slow leak. Pair it with disciplined bankroll management.
Related strategies
Build on this approach with the adjacent playbooks:
Frequently asked questions
Can you really arbitrage prediction markets?
Yes, in principle — when the same event is priced differently across venues, or when Yes and No on one venue sum to less than $1, you can buy both sides for a guaranteed payout above your cost. In practice the gaps are small, short-lived, and easily eaten by fees, liquidity limits and timing.
What is a no-vig exchange?
A platform that matches traders against each other with no bookmaker margin built into the odds, unlike a traditional sportsbook. No-vig exchanges such as Novig and ProphetX can offer meaningfully better pricing on liquid markets.
What is the biggest risk in prediction-market arbitrage?
Resolution differences. If two venues word the same market slightly differently, they can settle differently — turning what looked like a riskless arbitrage into a genuine bet. Always read both sets of resolution criteria before committing.