How do Polymarket and Kalshi make money?
Both Polymarket and Kalshi make money primarily through spreads and trading fees. Polymarket revenue model: Bid-ask spread - The main revenue source is the spread between buy and sell prices.
Trading volume - Higher volume generates more spread revenue. Liquidity provision - Market makers earn fees from providing liquidity. Kalshi revenue model: Similar spread-based model - Fees built into market prices.
Trading fees - Additional fees per trade. Contract fees - Charges for certain prediction contracts. Comparison: Both platforms use variations of the spread model.
Volume is critical for both - more trading = more revenue. High-liquidity markets generate more consistent fees. The revenue is essentially the same mechanism: capturing a small percentage of each trade through the spread.