Prediction market arbitrage appears when two or more markets price the same or closely related outcome differently. Instead of forecasting which outcome will happen, the trader focuses on logical or mathematical inconsistencies. By placing offsetting positions, they can lock in profit regardless of the final result.
These opportunities arise because markets update at different speeds, attract different participants, or use different structures. On platforms like Polymarket, Kalshi, Myriad, and Manifold, arbitrage can occur between overlapping markets, conditional outcomes, or equivalent event definitions. In prediction markets data, arbitrage shows up as probabilities that cannot all be correct at the same time.
Arbitrage plays a corrective role. When traders exploit inconsistencies, they push prices back into alignment, improving overall market efficiency.
Prediction market arbitrage helps eliminate pricing errors and strengthens forecast quality. It improves prediction markets data by enforcing internal consistency across markets.
Arbitrage exists because markets are fragmented and update asynchronously. Different trader bases, liquidity levels, and market designs can cause temporary mismatches in probabilities. These gaps appear naturally in prediction markets data, especially during fast-moving events or complex scenarios.
When arbitrageurs trade against inconsistent prices, they force probabilities to converge. This reduces mispricing, tightens spreads, and improves calibration. As a result, prediction markets data becomes more accurate and internally consistent across related events.
Analysts can identify which markets lag in information absorption, where structural weaknesses exist, and how quickly inconsistencies resolve. Studying arbitrage patterns also reveals how information flows between markets. These insights improve interpretation and modeling of prediction markets data.
A trader notices that a Polymarket market implies a higher probability for an event than a related conditional market on Manifold would allow. By taking offsetting positions in both markets, the trader profits as prices converge, regardless of the final outcome.
Detecting arbitrage requires comparing probabilities across related markets in real time. FinFeed's Prediction Markets API provides structured prediction markets data—live probabilities, historical paths, and event metadata—that developers can use to spot inconsistencies, monitor convergence, and analyze arbitrage dynamics.
