Polymarket arbitrage: how to find mispriced markets

Polymarket is the deepest prediction market, which makes it the anchor of most real arbitrage: its prices are the benchmark other venues drift away from. The edges live in those drifts.

The two kinds of Polymarket arbitrage

1 · Internal (multi-outcome) arbitrage. In an N-way market (e.g. "Who wins the nomination?"), the YES prices of all outcomes should sum to ≈$1.00. When they sum above it, shorting the overpriced set locks a spread. These windows are small, competitive and increasingly bot-arbitraged away.

2 · Cross-venue arbitrage. The same question trades on Kalshi, PredictIt or Smarkets at a different price. Buy YES on the cheaper venue and NO on the other for a combined cost under $1.00. This is where the durable, human-findable edges are — fragmentation regenerates them every news cycle.

A worked example

Suppose "Will candidate X be the next prime minister?" asks YES at $0.07 on Polymarket, while PredictIt's market on the same succession prices X's NO at $0.85. The pair costs $0.92 and pays $1.00 — an 8% gross gap. After PredictIt's 10% fee on winning profit and depth limits, the net modeled edge is nearer 7% — and it only holds if both markets define "next prime minister" identically (caretaker PMs have burned people before).

What real edges look like

Across a live board, most Polymarket cross-venue spreads run 0.5–3% gross; a handful reach 5–8% on thin books. Displayed prices are top-of-book — always check how many contracts the price actually holds before sizing a position.

The traps

• Same words, different market — "win the nomination" ≠ "win the election"; "announce a run" ≠ "run". Read both resolution rules end-to-end.
• Different resolution sources — a BTC price market settling on Binance at noon is not the same market as one settling on a CF benchmark at 5pm.
• Stale quotes — Polymarket moves fast; a gap on a 10-minute-old snapshot may be gone. Verify against the live CLOB.
• US-person restriction — pairing Polymarket with Kalshi or PredictIt requires access to both, which one US-based person generally doesn't have.

Keep reading: Prediction market arbitrage: the complete guide · Polymarket vs Kalshi: fees, access & price gaps