Cross-Market Arbitrage on Polymarket

What is Arbitrage?

Arbitrage is the practice of profiting from price differences for the same asset across two markets. In prediction markets, arbitrage occurs when the same event is listed on two different markets with inconsistent prices — creating an opportunity to buy both sides at a combined cost below $1.00, guaranteeing profit when the event resolves.

How It Works: A Simple Example

Why Do Price Divergences Exist?

Prediction markets are driven by crowd sentiment. Different market participants, liquidity levels, and timing can cause the same event to be priced differently across markets. These inefficiencies are usually short-lived — arbitrageurs close the gap — but they do occur, especially:

• Immediately after major news breaks
• In low-liquidity markets where fewer traders are active
• When one market has a wider bid-ask spread
• Around resolution disputes or delayed settlements

The Fee Hurdle

Polymarket charges approximately 2% taker fees per trade. Since arbitrage requires two trades (buying both sides), fees apply twice. A price divergence must exceed roughly 4% to be profitable after fees.

This is why many apparent arbitrage opportunities disappear once fees are counted. Our calculator computes net profit after fees automatically so you never miscalculate.

Execution Risk

Arbitrage is only risk-free if both legs are executed simultaneously. In practice:

• Slippage — large orders can move the price before filling.
• Latency — prices may shift between the time you calculate and execute.
• Liquidity — the market may not have enough depth to fill your order at the listed price.

For small to medium position sizes, these risks are minimal. For large trades, always check market depth before committing.

Step-by-Step: Finding and Executing Arb

1. Identify the same underlying event listed across two markets.
2. Note the YES price on both markets.
3. Enter both prices into our Arbitrage Calculator.
4. If net profit after fees is positive, the opportunity is real.
5. Execute the buy-YES leg on the cheaper market first, then immediately buy NO on the other.
6. Hold both positions to resolution — guaranteed profit regardless of outcome.