Why Two Markets Can Price the Same Event Differently

If arbitrage were free and instant, prices for the same event would never differ. In practice they do, for structural reasons:

• Fragmented liquidity. Each platform has its own order book. Money on one platform cannot instantly push prices on another.
• Different trader bases. Kalshi's US-regulated exchange audience, Polymarket's crypto-native traders, PredictIt's political-hobbyist users and Robinhood's retail flow read news and react at different speeds.
• Access and jurisdiction. Some participants are barred from one platform or another, so capital cannot freely close the gap.
• Position limits. PredictIt caps position sizes, preventing large traders from flattening prices.
• Withdrawal friction. Moving capital between platforms takes time; capital sitting in one account can't easily respond on the other.

What this means for you

Gaps exist because closing them is costly and constrained. That cuts both ways: gaps persist long enough to be found, but they can also close (or blow out) before you finish executing. That is why GapWatch reports liquidity caps, execution risk and settlement-rule differences alongside every spread.