Arbitrage Opportunities

Prediction markets are inefficient compared to traditional finance. This creates opportunities for Arbitrage—profit without risk.

Type 1: Cross-Platform Arbitrage

Comparing odds between Polymarket, Kalshi, PredictIt, or Sportsbooks.

• Scenario:
  • Polymarket has "Trump Wins" at 55¢ (55%).
  • PredictIt has "Trump Wins" at 60¢ (60%).
• The Play: You can buy "Yes" on Polymarket and bet "No" (or sell "Yes") on the other platform to lock in the spread.

Type 2: Negative Risk (Sum > 100%)

Sometimes, in a market with multiple outcomes (e.g., "Who will be the VP nominee?"), the prices of all candidates might sum up to $1.05 (105%).

• This means the market is overpriced.
• The Play: You sell "NO" on every single candidate. Since only one can win, you pocket the extra $0.05 risk-free.

Type 3: Poll Arbitrage

Using real-world data to front-run the market.

• Scenario: A market resolves based on "FiveThirtyEight Polling Average".
• The Play: You monitor the individual polls that feed into the average. When a new poll drops, you calculate the new average before the website updates. You trade on Polymarket before the crowd reacts.

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