Kalshi vs Polymarket: market structure compared

Why compare them at all

Kalshi and Polymarket are, by volume, the two largest prediction market venues in the world. They frequently list contracts on the same underlying questions: central-bank decisions, elections, economic releases, sport. To a casual observer they look like two shops selling the same thing.

To a professional liquidity provider they are different markets with different participants, rules, costs and risks. Prices for "the same" event regularly differ between them, and most of that difference is explained by structure rather than by mispricing. This note sets out the structural differences we consider most important. Venue rules evolve quickly; treat this as a framework and always confirm against each venue's current rulebook and documentation.

Regulatory model

Kalshi operates as a US exchange regulated by the Commodity Futures Trading Commission (CFTC) as a designated contract market. Its event contracts are listed under that framework, participants go through account onboarding and identity checks, and the exchange operates surveillance and rule enforcement in the manner of a regulated futures venue.

Polymarket began as a crypto-native, internationally accessible market with on-chain settlement. It has since moved to also offer a US-regulated access route through an acquired CFTC-licensed entity, while continuing to operate its international platform. In practice, the participant base, access requirements and available contracts can differ by route and jurisdiction.

For a trading firm, the regulatory model shapes who can trade (and therefore whose information is in the price), what market-integrity protections exist, and which contracts may be listed at all.

Matching, settlement and collateral

Two practical consequences follow. First, moving capital between the venues is neither instant nor free. Fiat and stablecoin rails have different speeds and costs, which limits how quickly price differences can be closed. Second, on-chain settlement makes positions and trades publicly observable, which changes the information environment: large positions can be seen, analysed and reacted to.

Fees

Kalshi has published a fee schedule in which taker fees scale with P(1−P), so trades near 50¢ carry the highest fee and trades near the tails the lowest, rounded per order, with separate treatment for maker orders on some markets. Polymarket has historically charged no trading fees on most markets, introducing fees on specific market types, and has run liquidity reward programmes paying makers who rest orders near the midpoint.

The effect on prices is direct. A fee that scales with P(1−P) creates a no-trade band around fair value that is widest in the middle of the range. Zero-fee markets with maker rewards tend to show tighter displayed spreads but can have thinner depth beyond the top of book. When comparing prices across the two venues, always compare all-in costs, not quotes. Fee schedules change; check current documentation.

Resolution process

This is where the venues differ most, and where most cross-venue "arbitrage" turns out not to be.

Kalshi contracts resolve according to rules written into each contract's terms, based on named sources, with the exchange determining the outcome under its rulebook.

Polymarket markets resolve according to written market rules through an optimistic oracle process: a proposed outcome can be disputed within a window and, if disputed, escalated to a token-holder vote. Most resolutions are uneventful, but the dispute mechanism introduces its own (small, real) risk distribution.

Two contracts on "the same" question can therefore differ in source, timing, edge-case handling and dispute process. We price each pair with an explicit basis model. See Cross-venue arbitrage: what is real and what is not.

Participants and flow

Different access models attract different participants. A regulated, fiat-funded venue with brokerage integrations tends to draw retail traders from traditional finance apps and, increasingly, institutional and professional firms. A crypto-native venue draws participants comfortable with wallets and stablecoins, and its public ledger enables a visible ecosystem of analytics and copy-trading.

For a market maker, flow composition is everything. The proportion of informed versus uninformed flow determines the spread required to break even, and that proportion differs by venue, by category and by time of day. We measure it continuously via post-trade markouts: how far the price moves against us in the seconds and minutes after each fill.

APIs, data and automation

Both venues offer programmatic access, and both are used heavily by automated participants. The details differ in ways that matter to anyone building a trading system.

A regulated exchange typically offers REST endpoints for orders and account state, streaming market data over WebSockets, and, for professional members, lower-latency connectivity options. Authentication is tied to an onboarded account, rate limits are documented, and order types and self-trade-prevention behaviour are defined in the rulebook.

A hybrid on-chain venue adds a second layer. Orders are signed messages matched off-chain, and fills settle through smart contracts. Trading systems need to manage wallet keys securely, track on-chain settlement as well as off-chain order state, and account for the fact that every fill becomes public data. That last point cuts both ways: it enables rich public analytics on positions and flow, and it means a large trader's activity can be observed and anticipated.

For historical research, the on-chain record provides a complete, independently verifiable trade history. Regulated venues provide market data through their own APIs and data products. Either way, building a point-in-time dataset with accurate timestamps (when a contract was listed, when rules changed, when each trade happened) is a prerequisite for any serious backtest.

Where liquidity sits

Headline contracts (major elections, central-bank decisions, the biggest sporting events) attract deep books on both venues, often with spreads of a cent or two and substantial size near the top of the book. Liquidity thins quickly beyond them. Long-dated contracts, niche categories, and the far strikes of contract ladders often show wide spreads and little depth, and that is where professional market makers add the most value and earn the most spread.

Liquidity also varies by time. Event markets are global, but their participants are not evenly spread across time zones. Quotes on many contracts thin out overnight in the US and during weekends, exactly when news (a foreign election result, an injury report, a storm track update) can still arrive. A venue's real liquidity is its liquidity at its worst hour, not its best.

What it means for traders and venues

• Price differences are often structural. Fees, collateral, carry, resolution wording and participant mix all justify gaps. Persistent, unexplained gaps are rarer than they look.
• Capital mobility is the binding constraint. The cost and speed of moving collateral between fiat and on-chain rails limits how tightly the venues can be kept in line.
• Resolution is a risk factor, not a footnote. Model it explicitly.
• Both venues benefit from professional liquidity. Deeper books make both more useful as forecasts and more attractive to new participants.

We expect the structural differences to narrow as both venues mature, add access routes and expand their participant bases. The questions will remain the same: who is trading, what does it cost, and exactly how does the contract resolve?

Frequently asked questions

Related: Cross-venue arbitrage · Market making · Venue programme