What's the difference between Polymarket and Kalshi?
Polymarket and Kalshi are both prediction market platforms, but they differ fundamentally in regulation, user access, and market structure. Polymarket operates globally using crypto infrastructure, while Kalshi is a U.S.-regulated exchange designed to operate within traditional regulatory frameworks.
| Feature | Polymarket | Kalshi |
|---|---|---|
| Regulation | Unregulated (crypto-based) | CFTC-regulated exchange |
| Currency | USDC stablecoin | USD (bank transfer) |
| U.S. Access | Restricted for U.S. residents | Open to eligible U.S. users |
| Global Access | Available worldwide | U.S. only |
| Settlement | Oracle-based / platform-defined | Regulator-approved data sources |
| Market Types | Politics, crypto, culture, global events | U.S. economic data, policy, elections |
| KYC Required | Minimal (wallet-based) | Full KYC verification |
Detailed Explanation
The core difference lies in regulatory design and market philosophy. Polymarket is built on blockchain infrastructure and primarily uses stablecoins for trading. This allows it to operate globally with fewer jurisdictional constraints, but also places it outside traditional U.S. financial regulation.
Kalshi, in contrast, is a CFTC-regulated exchange in the United States. It operates under formal regulatory oversight, which means stricter compliance requirements but also legal clarity for U.S. participants. This structural difference affects who can trade, how markets are listed, and how contracts are settled.
Common Scenarios
- Using one platform for trading and another for informational insight
- Assessing signal quality under different regulatory constraints
- Evaluating which market better reflects global vs U.S.-specific sentiment
- Comparing election or policy probabilities across platforms
Exceptions & Edge Cases
- If regulatory constraints limit participation, then prices may embed structural bias rather than belief.
- If liquidity is very low on one venue, then price differences may reflect noise, not disagreement.
- If a market exists on only one platform, then cross-platform comparison is impossible.
Practical Examples
A U.S. economic indicator market trades at 60% on Kalshi and 68% on Polymarket. Analysts track both to understand who is expressing risk and why. The divergence could reflect:
- Different participant bases with varying information access
- Regulatory constraints affecting U.S. trader positioning
- Liquidity differences that create temporary price gaps
Actionable Takeaways
- ✅ Use divergence to prompt deeper research, not quick judgment
- ✅ Check liquidity and depth before drawing conclusions
- ✅ Compare prices as signals, not absolute truth
- ✅ Understand each platform's regulatory and participation constraints
