When the same outcome trades at two different prices on Polymarket and Kalshi, you can sometimes lock in risk-free profit. This guide covers exactly how, what catches you, and how to size positions correctly.

The setup in 30 seconds

Both platforms run binary markets that pay $1 per share if YES occurs and $0 if NO. Prices represent the implied probability. If “Fed cuts in September” trades at $0.68 on Polymarket but $0.72 on Kalshi, you can:

• Buy YES on Polymarket at $0.68
• Sell YES on Kalshi at $0.72
• Lock in 4¢ of profit per share regardless of outcome

The four catches

Most apparent arbitrage isn’t actually arbitrage. Watch for:

1. Contract mismatch. The two markets must resolve identically. “Will Trump win” on Polymarket and “Trump 2024 winner” on Kalshi may look the same but have different cutoff times, recount rules, or jurisdiction language.
2. Liquidity. A 5¢ edge on a $200 orderbook depth is meaningless. Always check the book. PolySharks shows the available size in dollars per row.
3. Fees. Kalshi charges trading fees that scale with price. A 4¢ gross edge often turns into 1–2¢ net.
4. Funding cost. Both legs lock up capital until resolution. A 2¢ edge held for 90 days is a ~12% APR — great. Held for 18 months is a worse return than T-bills.

Sizing rule of thumb

Maximum sizing per leg = 25% of the orderbook depth on the thinner venue. Going deeper moves the price against you and erases edge. PolySharks’ Available Size column already accounts for this.

Three statuses we surface

• Locked-arb — net edge ≥ 1% after fees, both legs deeply liquid. Highest-confidence opportunities.
• Likely-mispricing — visible edge but contract wording or liquidity should be verified before trading.
• Thin-liquidity — priced edge exists but the orderbook is too shallow to execute meaningfully. Watch but don’t trade.

Practical workflow

1. Open the PolySharks arbitrage monitor.
2. Filter by Locked Arb only + Min Net Edge ≥ 1%.
3. Click into both markets, verify resolution language matches.
4. Place both legs simultaneously using the size each platform actually has on offer.
5. Hold until resolution — your profit is the locked spread minus fees.

Final word

Cross-venue arbitrage is one of the few legal, low-risk return streams in crypto/prediction markets. But it’s also extremely competitive — the obvious 5%+ edges close in seconds. Your real edge is execution speed and contract analysis, not just spotting the price gap.