Polymarket vs Kalshi: Which Prediction Market is Better?

Polymarket and Kalshi are the two leading prediction market platforms in the United States, each offering unique advantages for traders looking to bet on real-world events. While both platforms allow you to trade on everything from elections to economic indicators, they differ significantly in fees, market selection, liquidity, regulatory status, and user experience. This comprehensive comparison will help you understand which platform is best suited for your trading style, goals, and risk tolerance.

Overview: Polymarket vs Kalshi at a Glance

Before diving into detailed comparisons, here's a high-level summary of how these platforms differ:

Legal Status and Regulatory Framework

Polymarket: Offshore and Controversial

Polymarket operates as an offshore prediction market platform, meaning it's not directly regulated by US authorities like the CFTC. The platform:

• Officially blocks US IP addresses and requires VPN usage for American traders
• Previously paid a $1.4 million fine to the CFTC in 2022 for operating without registration
• Operates without requiring KYC (Know Your Customer) verification, allowing pseudonymous trading
• Uses cryptocurrency (USDC) exclusively for deposits and withdrawals
• Has no official US regulatory oversight or protection

Legal risks: US traders who use Polymarket via VPN operate in a legal gray area. While the platform itself doesn't report to US authorities, there's potential future regulatory risk. Many traders accept this risk for the platform's advantages. For detailed analysis of these issues, read our guide on Polymarket's legal status.

Kalshi: Fully CFTC-Regulated

Kalshi is the first CFTC-regulated prediction market exchange in the United States. The platform:

• Operates under a Designated Contract Market (DCM) license from the CFTC
• Requires full KYC verification including identity documents and SSN
• Complies with US financial regulations, anti-money laundering laws, and tax reporting
• Provides legal recourse and customer protections under US law
• Reports trader winnings to the IRS automatically

Legal security: US traders can use Kalshi with complete legal certainty. Your funds are protected, activities are reportable for taxes, and the platform operates transparently under federal oversight. This regulatory compliance comes with trade-offs in market selection and fees.

Which Legal Framework is Right for You?

• Choose Polymarket if: You're comfortable with offshore trading, value privacy/pseudonymity, and want access to the broadest market selection
• Choose Kalshi if: You prioritize legal compliance, want regulatory protections, or need a platform that integrates with US tax reporting

Fees and Costs: A Critical Difference

Polymarket: Zero Trading Fees

Polymarket charges no trading fees whatsoever. You keep 100% of your profits. Costs to consider:

• Trading fees: $0 (none)
• Deposit/withdrawal fees: Only blockchain gas fees for USDC transfers (typically $0.50-$2 on Polygon)
• Spread costs: Bid-ask spreads vary by market liquidity, typically 1-3% on major markets
• Hidden costs: Crypto exchange fees when converting fiat to USDC

The zero-fee structure makes Polymarket extremely attractive for high-frequency traders and market makers who would be destroyed by percentage-based fees. Even accounting for crypto conversion and gas fees, total costs are typically under 1% for most traders.

Kalshi: 7% Profit Fee (With Limits)

Kalshi charges a 7% fee on net profits, with important caveats:

• Fee structure: 7% of profits only (not on losing trades)
• Annual cap: Maximum $7,000 in fees per year (free after earning $100k in profits annually)
• Free deposits/withdrawals: No fees for bank transfers or debit card deposits
• No spread markup: Kalshi doesn't widen spreads beyond natural market levels

Impact analysis: The 7% profit fee significantly affects returns, especially for traders with moderate win rates. A trader earning $20,000 in gross profits pays $1,400 in fees, reducing net profits to $18,600. For professional traders earning $100k+, the capped fees become negligible (7% max vs. potentially 7% on millions).

Fee Comparison Examples

Let's compare costs for different trader profiles:

For more details on how Polymarket's fee-free structure works, check our comprehensive fee breakdown guide.

Market Selection and Variety

Polymarket: Comprehensive Market Coverage

Polymarket offers the broadest selection of prediction markets globally:

• Politics: Elections, primaries, cabinet appointments, policy outcomes, impeachments
• Cryptocurrency: Bitcoin price milestones, altcoin performance, DeFi events, blockchain upgrades
• Sports: NFL, NBA, MLB, soccer, Olympics, UFC, esports
• Economics: CPI, jobs reports, Fed decisions, GDP, recession predictions
• Pop culture: Box office results, award shows, celebrity events, viral trends
• Science & Technology: AI breakthroughs, space launches, scientific discoveries
• Current events: Breaking news, geopolitical developments, natural disasters

Polymarket typically has 200-500 active markets at any time, with new markets created daily based on trending events. This diversity lets traders specialize in niches where they have expertise or information edges.

Kalshi: Limited but Strategic Selection

Kalshi's market selection is constrained by CFTC regulations and approval requirements:

• Economic indicators: CPI, jobs numbers, Fed meetings, GDP—Kalshi's strongest category
• Weather: Temperature ranges, precipitation, hurricane landfalls
• Politics: Elections and political events (recently approved after legal battles)
• Limited sports: Some major sporting events, though not comprehensive

Kalshi typically has 50-150 active markets. Each market must receive CFTC approval, limiting how quickly the platform can respond to breaking events. However, markets that do exist are carefully curated and based on verifiable, objective outcomes.

Market Quality and Resolution

Polymarket: Markets are created by users (with some curation). Resolution is determined by a decentralized oracle system called UMA, which can occasionally lead to disputes or controversial resolutions. Most markets resolve clearly, but edge cases can be contentious.

Kalshi: All markets are created and managed by Kalshi directly. Resolution is based on official sources (government agencies, recognized data providers) with clear, predetermined rules. Disputes are rare, and Kalshi's centralized authority provides clarity but less flexibility.

Liquidity and Trading Volume

Polymarket: Deep Liquidity on Major Markets

Polymarket dominates in liquidity metrics:

• Monthly volume: $3-5 billion during election cycles, $500M-$1B in quieter periods
• Top market liquidity: Presidential elections can have $100M+ in open interest
• Order book depth: Major markets have tight spreads (1-2%) and deep order books
• Market impact: You can trade $50k-$100k+ positions without significant slippage on top markets

However, liquidity varies dramatically. Top 20 markets are extremely liquid, but niche markets can have spreads of 5-15% and limited depth. Always check order books before trading large positions.

Kalshi: Growing but Smaller Liquidity

Kalshi's liquidity has grown substantially but remains far below Polymarket:

• Monthly volume: $50-150 million
• Top market liquidity: Economic data releases can have $5-15M in open interest
• Order book depth: Spreads of 2-5% on popular markets, wider on others
• Market impact: Positions above $10k-$20k can move prices noticeably

Kalshi benefits from market makers but lacks the organic trader base of Polymarket. This is improving as the platform grows, but for now, large traders may find Kalshi's markets too thin.

Liquidity Impact on Strategy

• High-frequency traders: Polymarket is essential—Kalshi lacks sufficient volume
• Large position traders: Polymarket offers better execution on size
• Small to medium traders ($500-$5,000 positions): Both platforms work well
• Niche market traders: Polymarket has more options, but liquidity varies

User Experience and Platform Features

Polymarket: Crypto-Native Interface

Polymarket's platform assumes crypto familiarity:

• Wallet connection: Requires MetaMask or similar Web3 wallet
• USDC funding: Must acquire USDC and bridge to Polygon network
• Learning curve: Steeper for non-crypto users
• Mobile experience: Mobile-responsive web app, no native app
• Trading interface: Clean, modern design with advanced charts
• API access: Comprehensive API for algorithmic trading

Polymarket excels for crypto-savvy users but can be intimidating for newcomers. Once set up, the platform is fast and intuitive. Learn the setup process in our complete Polymarket guide.

Kalshi: Traditional Finance UX

Kalshi feels like a traditional brokerage:

• Account creation: Standard KYC signup with email, ID, SSN
• Funding: Bank transfers, debit cards—familiar to US users
• Learning curve: Minimal—similar to Robinhood or Coinbase
• Mobile experience: Native iOS and Android apps
• Trading interface: Simple, straightforward, less feature-rich
• API access: API available for developers

Kalshi prioritizes accessibility and simplicity. Non-crypto users can be trading within 10-15 minutes. However, the platform lacks some advanced features power traders expect.

Advanced Trading Features

Polymarket advantages:

• Limit orders and advanced order types
• TradingView-style charts with technical indicators
• Leaderboards showing top traders
• Portfolio analytics and P&L tracking
• Community features and market discussions

Kalshi advantages:

• Clear tax reporting and 1099 forms
• Customer support via email and phone
• Educational resources for beginners
• Portfolio history and performance tracking
• Withdrawal to bank account in 1-2 days

Deposit and Withdrawal Methods

Polymarket: Crypto-Only

Polymarket exclusively uses USDC on the Polygon network:

• Deposit process: Buy USDC on an exchange (Coinbase, Binance, Kraken), bridge to Polygon, transfer to Polymarket wallet
• Withdrawal process: Transfer USDC from Polymarket to your wallet, bridge back to mainnet if needed, sell on exchange
• Speed: Crypto deposits/withdrawals are near-instant (minutes)
• Costs: Exchange fees (0.1-0.5%), bridging fees ($1-5), gas fees ($0.50-$2)
• Minimum: No official minimum, but gas fees make deposits under $100 inefficient

The crypto requirement is Polymarket's biggest barrier for mainstream users. However, it enables pseudonymity, global access, and fast settlement. Our guide to deposits and withdrawals walks through the process step-by-step.

Kalshi: Traditional Banking

Kalshi accepts USD through familiar methods:

• Deposit methods: ACH bank transfer, debit card, wire transfer
• Withdrawal methods: ACH bank transfer
• Speed: Deposits process in 1-3 business days (instant for debit), withdrawals take 1-2 business days
• Costs: Free for ACH and debit cards
• Minimum: $10 minimum deposit

Kalshi's traditional approach is far more accessible for mainstream users. However, it requires linking your bank account and providing full identity verification.

Privacy and Anonymity

Polymarket: Pseudonymous Trading

Polymarket offers significant privacy:

• No KYC verification required
• Trades associated with wallet addresses, not real identities
• All transactions are on-chain but pseudonymous
• No automatic tax reporting to government agencies
• Can create multiple wallets for different strategies

Important note: While Polymarket offers pseudonymity, blockchain transactions are public and can potentially be traced with sufficient effort. Additionally, US users are still legally obligated to report winnings on taxes even if the platform doesn't report them.

Kalshi: Full Identity Disclosure

Kalshi requires complete identity verification:

• Full KYC including name, address, SSN, government ID
• All trades associated with your verified identity
• Winnings reported to IRS via 1099 forms
• Subject to US financial regulations and potential audits
• Cannot trade anonymously or pseudonymously

For users who prioritize privacy, Kalshi is a non-starter. However, for those who value regulatory compliance and don't mind identity disclosure, the tradeoff brings legal security.

Tax Implications

Polymarket: Self-Reported Taxes

Polymarket doesn't report to the IRS, but US traders are still legally obligated to report:

• Winnings taxed as capital gains (short-term or long-term depending on hold period)
• Must track all trades manually for tax purposes
• No 1099 forms provided—you're responsible for record-keeping
• Crypto tax software (CoinTracker, Koinly) can help track transactions
• Risk of audit if large winnings aren't reported

The self-reporting requirement adds complexity but also provides flexibility. Consult a tax professional familiar with crypto and prediction markets to ensure compliance.

Kalshi: Automatic Tax Reporting

Kalshi handles tax reporting automatically:

• Provides 1099 forms detailing all winnings and losses
• Winnings treated as ordinary income (not capital gains)
• Reports directly to IRS—no manual tracking needed
• Loss carryforwards and deductions handled like traditional gambling
• Simplified tax filing process

Kalshi's automatic reporting removes uncertainty and reduces tax preparation burden. However, ordinary income tax treatment can be less favorable than capital gains for some traders.

Safety and Security

Polymarket: Blockchain Security with Custody Risk

Polymarket's security profile:

• Smart contract risk: Funds stored in audited smart contracts, but bugs are possible
• Custody: You control your wallet and private keys—no Polymarket custody
• Platform risk: If Polymarket shuts down, smart contracts could still be accessed directly
• Oracle risk: Resolution depends on UMA oracle system working correctly
• No insurance: No FDIC or SIPC protection

Polymarket's decentralized architecture provides resilience but introduces smart contract and oracle risks. For detailed safety analysis, read our guide on Polymarket security.

Kalshi: Regulated Exchange Security

Kalshi's security advantages:

• CFTC oversight: Regular audits and compliance requirements
• Segregated funds: Customer funds kept separate from company assets
• Legal recourse: US courts and regulators provide protection
• Customer support: Responsive team for account issues
• Traditional security: Bank-grade encryption and security practices

Kalshi offers traditional financial security with regulatory oversight. While not FDIC insured, segregated funds and CFTC regulation provide substantial protection.

Which Platform Should You Choose?

Choose Polymarket If You:

• Want access to the broadest range of prediction markets
• Value zero trading fees for maximum profitability
• Trade high volume or large positions requiring deep liquidity
• Prefer pseudonymous trading and privacy
• Are comfortable with cryptocurrency and Web3 wallets
• Are located outside the US or willing to use VPN
• Want to follow and copy top whale traders
• Need markets for crypto, sports, pop culture, or niche events

Choose Kalshi If You:

• Are a US trader who prioritizes legal compliance
• Want regulatory protections and oversight
• Prefer using USD and traditional banking methods
• Value automatic tax reporting and 1099 forms
• Are uncomfortable with cryptocurrency
• Focus on economic indicators and political markets
• Trade smaller to medium position sizes ($500-$10,000)
• Want a simple, familiar user experience

The Multi-Platform Strategy

Many serious traders use both platforms strategically:

• Arbitrage: Exploit price differences between platforms on the same events
• Market specialization: Use Polymarket for crypto/sports, Kalshi for economic data
• Regulatory hedging: Keep some capital on Kalshi as a regulated backup
• Liquidity optimization: Use whichever platform has better prices for a specific market

If you have the technical ability and capital, maintaining accounts on both platforms maximizes your opportunities and flexibility. For more on comparing platforms, see our guide to Polymarket alternatives.

Conclusion: Making Your Choice

Polymarket and Kalshi represent two distinct approaches to prediction markets: Polymarket offers maximum freedom, liquidity, and market variety with zero fees but operates offshore with legal gray areas for US traders. Kalshi provides regulatory compliance, traditional user experience, and legal security but charges 7% fees and has limited market selection.

For international traders or those comfortable with offshore platforms, Polymarket is the clear choice—superior liquidity, no fees, and vastly more markets make it the dominant prediction market platform. For US traders who prioritize compliance and simplicity, Kalshi offers peace of mind despite higher costs and fewer options.

Ultimately, your choice depends on your priorities: profit maximization versus legal certainty, market variety versus regulatory comfort, pseudonymity versus traditional finance. Many sophisticated traders use both, exploiting each platform's strengths while managing their respective limitations. Whichever path you choose, understanding these fundamental differences will help you trade more effectively and avoid costly mistakes.