How can I make $100,000 through arbitrage in prediction markets?

Author: Pix

Compiled by: Luffy, Foresight News

Most people gamble on prediction markets, while I arbitrage in prediction markets. Here are the specific strategies I used to earn $100,000 from decentralized, inefficient prediction markets.

Step 1: Understand the Rules of the Game

Prediction markets allow you to bet on the outcomes of real-world events, such as:

"Will Ethereum reach $5000 by the end of the year?"
"Will MrBeast run for president?"
"Will Kanye West issue a token?"

Each market has a different user base, and each group has its own biases. This means that the pricing of the same event can vary across different platforms, which is where the opportunity lies.

Case in point: If platform A quotes "yes" at $0.40 and platform B quotes "no" at $0.55, you can lock in a profit of $0.05 regardless of the outcome, which is arbitrage.

Step 2: Find Your Edge

The strategy that works best for me is multi-outcome markets, where pricing errors are most likely to occur.

Examples:

Who will win the F1 this weekend?
Which party will win the UK election?
Who will be the next contestant eliminated from "Love Island"?

In theory, the sum of the probabilities of all outcomes should equal 100%, but in reality, it often sums to 110%.

Reason: Platforms often charge hidden fees ("excess premiums"), and odds are determined by users, leading to a lot of inefficient pricing.

Step 3: How to Determine if an Arbitrage Opportunity Exists

Core rules:

Find the same event on different platforms;
Choose the lowest price for each outcome;
If the total price is below $1, arbitrage is possible.

Real case: Who will be the next pope?

The quotes from two platforms are as follows:

How I made $100,000 through prediction market arbitrage?

The strategy is to buy all outcomes, as one of them will definitely occur, ensuring a total of $1. Each trade yields a profit of $0.021 (2.1% risk-free return), which is arbitrage. You are not betting on who will become the pope, but rather on the fact that the two platforms cannot agree on who will become the pope. When they disagree, you can profit.

Myriad has much poorer liquidity, but there are two other sites with closer spreads. If you monitor more markets, you will find greater advantages.

I usually only engage in arbitrage when the APY is above 60% (APY = (profit margin / days to resolution) × 365).

In this case, the event ends in 29 days:

(0.021 / 29) × 365 ≈ 26.4% APY (below my threshold of 60%, so I pass).

If the event ends in 7 days:

(0.021 / 7) × 365 ≈ 109.5% APY (I jump in decisively).

Step 4: Race Against Time

Prediction market arbitrage is a game of delay:

After a price discrepancy occurs, there is usually only a few minutes' time window, not hours; rumors spreading, platform updates lagging, etc., can cause price differences, and your advantage only exists during this time.

If possible, automate this part, using price alerts on Discord, Telegram, and Twitter. Sometimes I can spot price discrepancies just from muscle memory. The faster you act, the more you earn. Hesitate for 5 minutes, and the price difference disappears. My best spread achieved was 18%, which was quite profitable.

It is important to ensure that there are available funds on each platform and to be clear about the fees.

Step 5: Exit Early

Most people wait for the results to be announced, while I take profits before the outcome is clear.

Assuming I buy all outcomes at $0.94, I have a $0.06 spread. I don’t need to wait for the results; if the market tightens, I can sell at $0.98 or $0.99, and I will exit.

This significantly boosts the APY, allowing for a quick switch to the next market.

Additional Tips

Look for overlapping events: For example, "Trump wins the 2024 election" and "Republicans win" may have hidden arbitrage;
Target small markets: More pricing errors, less competition;
Utilize niche platforms: Larger spreads, potential airdrop rewards;
Read settlement rules carefully: One word can change the outcome;
Double-check: Confirm order books, transaction prices, and calculate including all fees.

Conclusion

I made $100,000 in just over two months, with periods of calm and busyness. The greater the volatility, the more price differences there are, but even in a calm market, there is always the next inefficient market waiting to be discovered.

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