How Betters Use Arbitrage to Make Free Money on Kalshi and Polymarket - The New York Times
Betting is fundamentally about risk: You might win or you might lose. But what if you could always win?
Enter prediction markets, sites that let users bet on pretty much anything. Most of those users lose. But a savvy few have made a fortune using basic math.
Will Gavin Newsom win the 2028 Democratic presidential nomination?<br>Other
25¢Yes<br>75¢No
Kalshi
25¢Yes<br>75¢No
Polymarket
25¢Yes<br>75¢No
Other2
25¢Yes<br>75¢No
Will the Fed raise interest rates in 2026?<br>Other
25¢Yes<br>75¢No
Kalshi
25¢Yes<br>75¢No
Polymarket
25¢Yes<br>75¢No
Other2
25¢Yes<br>75¢No
Will Jannik Sinner win Wimbledon?<br>Other
25¢Yes<br>75¢No
Kalshi
25¢Yes<br>75¢No
Polymarket
25¢Yes<br>75¢No
Other2
25¢Yes<br>75¢No
Here, you can bet “Yes” for 60 cents, implying a 60 percent probability; or you can bet “No” for 40 cents, implying a 40 percent probability. If either bet hits, you win $1.
Prediction sites like Polymarket and Kalshi offer many of the same markets. And usually, they post the same odds.
But sometimes the odds diverge — like in these markets about the 2028 Democratic presidential primary race.
In March, Kalshi had Gavin Newsom’s odds of winning at 29 percent, but Polymarket had them at 24 percent. These disparities are good news, if you’re gambling.<br>Taking both sides of the same bet is usually a wash. But not when there’s a price disparity.
In the example with Mr. Newsom, imagine you bought “Yes” on Polymarket, for 24 cents, and also “No” on Kalshi, for 71 cents.
If Mr. Newsom wins, then Polymarket owes you a dollar.
If he loses, then Kalshi owes you a dollar.
One of these bets must be a winner — so you’re guaranteed to make a dollar. But because of the disparity, you’ll only have spent 95 cents on the bets.
If this sounds like printing money, that’s because it basically is. It’s called “arbitrage,” long a favorite strategy of quantitative traders trying to juice profits from the stock market with minimal risk. You buy something at a cheap price, and simultaneously sell it at a more expensive price. It’s a win-win.<br>Some bettors are now using the same strategy to rake in thousands of dollars from online prediction sites. Moving quickly, they can take advantage of price gaps between exchanges like Polymarket and Kalshi, or even between the prediction sites and sports-betting sites like DraftKings and FanDuel. The wider the spread, the bigger the potential profit.<br>Ryan Noel, 25, has built a career arbitrage-betting (or “arbing,” as he calls it) during sports games. He regularly makes more than 1,000 arbitrage bets per week on prediction sites like Polymarket, Kalshi, Novig and ProphetX, in addition to online sportsbooks, he said.<br>“Software shows me the price of every sort of market at the same time,” said Mr. Noel, who started arbing in late 2023, while working as an actuary, before quitting his job last year. So far, the strategy has netted him more than $1 million, he said. “I don’t care about sports at all. I think watching sports is the most boring thing you can do with your time. I’m a mathematician.”
Ryan Noel in his apartment in Des Moines, where he makes a sport out of math. KC McGinnis for The New York Times
Math skills are essential — but so are the right tools, said Aidan Gawlowski, a Chicago-based college student who started arbing last year before coding his own software to hunt down prediction-market price discrepancies. Mr. Noel buys software from OddsJam, Pick the Odds and Bookie Beats that tracks price changes across thousands of markets, flagging the possible arbitrage.<br>“I figured out that there was this opportunity,” said Mr. Gawlowski, 21, who said he started betting when he was 14. “You’re mathematically guaranteed to make money.”<br>Some moneymaking opportunities last longer than others. The arbitrage with Mr. Newsom? It existed, unexploited, for weeks. During that period, you could’ve bought “Yes” on Polymarket and “No” on Kalshi, for a roughly 3 percent profit. (The probability spread of around five percentage points, minus Kalshi’s transaction fee.)<br>But there are a couple of reasons that opportunity was an anomaly. For one, the market doesn’t resolve for two years. That’s a long time to tie up money you could invest elsewhere, said Abraham Wyner, a professor of statistics and data science at the Wharton School at Penn. There’s also additional risk that some bets carry more than others: What if the election gets weird, and the sites don’t agree on what defines a Newsom nomination? Then, you might lose both sides of your bet.<br>That was enough to deter Mr. Noel and Mr. Gawlowski, who spend most of their time arbing on sports. There are loads of sites that let users bet on sports, meaning more chances for price discrepancies. And during games, odds must constantly update to keep up with live developments. That process takes time, which can translate into arbitrage opportunities.<br>“You can make a significant amount of money on a...