How Fees Affect Arbitrage Opportunities

Prediction-market fees come in several shapes:

• Trading fees — a percentage or flat fee per contract or per dollar (Kalshi charges a tiered flat fee; PredictIt takes 5% of net profits).
• Deposit/withdrawal fees — moving capital between platforms.
• Crypto rails — USDC transfers and gas on web-based markets.
• Currency conversion — when platforms settle in different units.

The math

Fees apply to capital you deploy, so they subtract directly from the spread:

Net Spread = Gross Spread − Blended Fee %

A 2% gross spread on platforms charging 1% blended fees is a 1% net spread — and slippage may take most of that. Small spreads die by fees; big spreads die by settlement risk. Both are why GapWatch shows an estimated net number on every opportunity instead of just the gross headline.