Bots and Fees Squeeze Prediction-Market Arbitrage to 4%-5% on Kalshi and Polymarket
Updated
Updated · The New York Times · Jun 12
Bots and Fees Squeeze Prediction-Market Arbitrage to 4%-5% on Kalshi and Polymarket
2 articles · Updated · The New York Times · Jun 12
Summary
Arbitrage gaps on Kalshi and Polymarket are getting smaller and disappearing faster, leaving many retail traders with little of the near-risk-free profit that once drew them in.
4%-5% spreads are now typical, down from about 8% in 2022, as automated bots from quant firms scan and execute trades in seconds across prediction and sports-betting markets.
Polymarket's late-March fee changes further eroded those thin edges; one high-volume bettor said the added costs would have cut more than $30,000 a month from his trading.
A March Newsom 2028 market mismatch still offered roughly 3% profit for weeks, but long settlement times, fees and contract-definition risks made that kind of trade unusual.
Wall Street money is pushing prediction markets toward the structure of broader financial markets, where speed and technology concentrate profits among a small elite of accounts.
As Wall Street bots conquer prediction markets, is the dream of easy money for individuals now dead?
With the first insider trading lawsuit, will prediction markets be forced to abandon their 'Wild West' ethos?
When algorithms trade in milliseconds, what is the ultimate purpose of a human-driven prediction market?
Prediction Market Arbitrage in 2026: How Bots, Institutions, and Regulation Squeezed Retail Profits
Overview
By June 2026, prediction market arbitrage has changed dramatically. The days when ordinary traders could easily find and profit from simple arbitrage are over. Now, the environment is dominated by sophisticated strategies, automated bots, and institutional players, making it much harder for individuals to compete. Arbitrage spreads on major platforms like Polymarket and Kalshi have tightened, and fleeting opportunities require fast, systematic, and risk-managed approaches. These changes mean that only those with advanced tools and strategies can consistently profit, while most retail traders face a shrinking pool of accessible gains in an increasingly complex market.