Here’s a puzzle that catches almost everyone. You buy a share at 30¢. Later you sell it, and the price on screen still reads 30¢. You’d expect to break even. Instead you’re down. Nothing moved, and you still lost money.
That gap is the whole subject of this note: prediction market fees, and the two hidden costs that travel with them. Before you place a single trade, it helps to know exactly where the money goes, because these costs are real, they’re mostly invisible, and they decide whether a “good call” actually pays.
The price you see is really two prices
The single number on a market, that “30¢”, is a summary. Underneath it sit two different prices at every moment:
- the ask, what you pay to buy right now
- the bid, what you receive to sell right now
The ask is always a little higher than the bid. The distance between them is the spread. So if a market shows 30¢, you might actually buy at 31¢ and, a second later, only be able to sell at 29¢. The 30¢ you see is usually the midpoint between bid and ask, or the last trade that went through, not the price you’ll actually get. You didn’t lose because the market moved. You lost because you crossed the spread twice, once going in and once coming out.
On busy markets with lots of traders, the spread is thin, sometimes a cent or less. On quiet markets (a small event, an obscure question, the middle of the night) it can be wide. A wide spread means you start every trade already behind, and you need the price to move meaningfully in your favor just to get back to zero.
How wide does wide get? Here’s one I opened on Polymarket while writing this. The headline said 25% chance. Buying actually cost 42¢.
Those two numbers describe the same market. The 25 was the last trade that happened; the 42 was what somebody would sell me. Between them sat a spread of 33 cents, and the entire buy side of that market, every order at every price, added up to $6.38.
On a market like that, being right about the outcome barely matters. You’d pay 42¢ for something the screen advertises at 25¢, and when you wanted out, there’d be six dollars of demand waiting for you. Compare it with a busy market on the same platform, where the same two prices sit a single cent apart, and you can see why the question “how wide is the spread” comes before the question “am I right”.
There’s a partial escape hatch, placing a limit order inside the spread instead of buying at the ask.
Slippage: when your own order moves the price
The spread assumes you’re trading a small amount. Put in a large order and a second cost appears.
A market only has so many shares available at the best price. Once your order eats through those, it starts filling at the next price, then the next. By the time it’s done, your average price is worse than the one you saw when you clicked. That difference is slippage.
Slippage is mostly a problem in two situations: when you’re trading a big size relative to how much is on offer, or when the market is thin to begin with. A beginner putting down small amounts on popular markets will barely notice it. It’s worth knowing anyway, because it grows quietly as your size grows.
Prediction market fees: the cost that’s actually printed
Spreads and slippage are hidden inside the price. Prediction market fees are the one cost platforms state outright, and they still surprise people, because they come in more than one form:
- Trading fees: a cut taken when you buy, sell, or when a market settles.
- Withdrawal fees: a charge to move your money back out.
- Network (gas) fees: on crypto-based platforms, a cost to process the transaction on the blockchain, separate from anything the platform charges.
Fee structures differ from one platform to the next and they change over time, so it’s worth reading the current fee page of whichever platform you use rather than assuming. For Polymarket specifically, I worked out what a trade actually costs from my own balance.
| Polymarket | Kalshi | |
|---|---|---|
| Taking a price buying at the ask |
Up to $1.00 per 100 shares on politics, finance and tech, $1.25 on sports and weather, $1.75 on crypto. Geopolitics is free. | Up to $1.75 per 100 contracts. 0.07 × contracts × price × (1 − price) |
| Posting a price a limit order that fills later |
None. | None by default. A few listed series carry a maker multiplier. |
| Settlement | None. | None. |
| Getting money in | Free on-chain. Card and other fiat routes run roughly 1% to 4.5% through third parties. | ACH free. Debit card up to 2%. Wire free from Kalshi, your bank may charge. |
| Getting money out | No platform fee. Polygon gas is under a cent; bridging to Ethereum costs more. | ACH free. Instant debit withdrawal around 1.5%. |
Both platforms charge the most at 50¢ and less as the price moves toward either extreme, because the fee is calculated on price × (1 − price). A trade at 50¢ costs the most to make; one at 5¢ or 95¢ costs a fraction of it. Sources: Kalshi fee schedule and Polymarket’s published rates. Both change without much notice, so check before you size a trade.
Add it up: the round-trip cost
The mistake is looking at each cost alone. What matters is the round trip, everything it takes to get in and back out:
spread (in) + slippage (if any) + fees (in) + spread (out) + fees (out)
That total is the amount the price has to move in your favor before you make a single cent. On a tight, busy market it’s small. On a wide, quiet one it can be larger than you’d guess. Either way, it’s the real starting line for the trade, not the price on the screen.
What to do with this
You don’t need to calculate every cost to the decimal. You need one habit: before you trade, glance at the spread and ask what it would cost you to get in and out, not just to get in. If a market is thin and the spread is wide, the bar for a worthwhile trade is higher, and sometimes the honest answer is to skip it.
That’s the mindset the next note builds on. Once you can see the full cost of a trade, you’re ready to actually place one carefully, which is where Getting Started Safely picks up.
Nothing here is financial advice. Prediction markets involve real risk, so never trade money you can’t afford to lose.