Prediction Market Arbitrage Checklist: Do the Contracts Match?

This worksheet helps you test a prediction-market arbitrage candidate before calling it hedged. Start with the arbitrage explanation and payout math if you are new to the mechanism. Here, the task is to document whether two actual contracts match and whether both positions can be acquired within your cost budget.

Build a contract pair record

Save the complete rule text and access time. A screenshot of a headline omits precisely the exceptions most likely to break the assumed equivalence.

Calculate the minimum combined payout

List every materially different settlement scenario the two rule sets permit. For each scenario, add the payout of your chosen sides. The smallest combined payout is the amount against which to compare total acquisition costs.

candidate margin = minimum combined scenario payout
                 − filled acquisition costs
                 − all other applicable costs

Use the same currency and quantity throughout. A spreadsheet with one missing scenario can produce a confident but false answer.

A threshold mismatch changes the result

Imagine buying Yes on “temperature above 80°F” and No on “temperature at least 80°F.” Assume both use the same measurement. Below 80°F, No wins. Above 80°F, Yes wins. At exactly 80°F, both positions lose. The minimum combined payout is therefore $0 per pair, not $1.

This hypothetical case demonstrates why a boundary word matters. It does not describe an existing Kalshi or Polymarket listing.

Budget depth and costs for the intended size

Quote each leg for the quantity you want to fill. Use weighted prices when the order walks through multiple levels. Account for venue fees, currency conversion and any applicable funding or transfer costs. Keep uncertain costs as assumptions rather than silently setting them to zero.

Polymarket US's spread guide distinguishes bids from asks and emphasizes available size. Use the depth calculator for an illustrative fill calculation, then inspect actual venue quotes separately.

Stress-test an unmatched leg

1. Assume the first leg fills and the second does not.
2. Record the maximum directional loss on the acquired position.
3. Estimate the cost of cancelling remaining orders and unwinding at current bids.
4. Recalculate if the second leg becomes more expensive.
5. Define a maximum acceptable exposure before any execution.

A limit price controls a price boundary, not completion of the pair. Kalshi documents the possibility of unfilled limit orders. This worksheet does not execute or coordinate orders.

Decide whether the candidate survives

Reject a candidate when contract equivalence is unresolved, executable size is insufficient, net margin is nonpositive or unmatched exposure exceeds your limit. If it survives, retain the evidence and assumptions so another person can reproduce the calculation.

Read the settlement timing guide before assuming capital becomes available immediately after the event. Compare positions and cash using the balance guide. Source links checked October 6, 2026; examples are independent arithmetic illustrations.