What Does KALSHI Do? a Quick Definition
What does Kalshi do? Kalshi operates as a federally regulated prediction-market designed for US residents. It offers binary YES or NO contracts on a wide range of real-world outcomes, from economics to weather and current events. Each contract settles to $1.00 if your side wins and $0.00 if it loses. The exchange is built on a centralized order book and a dedicated clearinghouse, with USD as the settlement asset. The goal for traders is to navigate pricing that reflects the probability of the outcome while managing risk and fees.
What Kalshi markets cover
Kalshi hosts a broad set of event contracts across politics, economics, weather, sports, and other real-world topics. Each market follows a written resolution rule that specifies how the outcome is determined, along with a designated data source. The contracts trade in YES or NO, and the price range is expressed in cents from 0.01 to 0.99, reflecting the probability embedded in the market. Traders interact with a mutual-exclusivity structure where related markets under the same event ticker must align to a fair total of $1.00 for YES and NO sides.
Because Kalshi is a CFTC-regulated market, it operates with formal compliance rules, KYC requirements, and a verified USD settlement process. This creates a regulated environment for retail traders who want to participate in binary event markets without on-chain settlement or crypto rails.
How settlements work on Kalshi
Settlement on Kalshi is tied to a predefined resolution rule and an authoritative source, such as official tallies or government data releases. When a market resolves, YES contracts pay out $1.00 if the event is true and NO contracts pay out $1.00 if the event is false, with the opposite side worth $0.00. The per-contract payoff is capped at $1.00, and the price you pay for either side ranges from $0.01 to $0.99. The design ensures that the sum of YES and NO prices aligns with the settlement dollar, though fees apply to trades and can influence net results.
Arbitrage opportunities on Kalshi
Intra-market arbitrage on Kalshi relies on price inefficiencies where the best YES and NO offers do not sum to $1.00. If best YES ask plus best NO ask is less than $1.00, a trader can buy both sides to lock in a near-risk-free edge after accounting for fees. KalshiArb focuses on identifying these spreads and executing them in a non-custodial way, using your own Kalshi API key. Understanding the edge mechanics requires awareness of fee curves, slippage, and the timing of resolution rules.
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FAQ
- What is Kalshi in simple terms?
- Kalshi is a CFTC-regulated U.S. prediction-market where you trade binary YES or NO contracts on real-world outcomes. Each contract settles to $1.00 if the chosen side is correct.
- What do YES and NO contracts pay out?
- Each contract pays out $1.00 to the winning side and $0.00 to the losing side, with a price set in cents prior to settlement.
- How does KalshiArb relate to Kalshi?
- KalshiArb is an independent scanner and autonomous AI agent designed to identify intra-market arbitrage opportunities on Kalshi. It is not custodial and uses your Kalshi API key to operate within Kalshi’s rules.