A prediction market price looks like a probability. Sixty cents reads as a 60% chance. That reading is useful, but it is not the full cost of the trade. Fees sit on top of the price. On most venues they also change with the price itself.
The result is a gap between what you see and what you pay. That gap moves your break-even. It is small on one trade and large over a hundred. If you want to read prediction market prices properly, you need to read the fee schedule too.
The Yes/No/Maybe mechanic, briefly
Oddup markets have three outcomes: Yes, No and Maybe. Yes and No split 90% of the pool reserve. Maybe wins 10% of the pool reserve. Maybe is a hedge, not a guaranteed win on every pool. Our Maybe outcome explainer covers the full mechanic. Keep it in mind: we return to fees in three-outcome markets near the end.
How Kalshi charges a trade
Kalshi publishes its formula in its fee schedule. The schedule describes the fee as a percentage of the expected earnings on a contract. In practice, the general fee is:
fee = round up(M × 0.07 × C × P × (1 − P))
Here P is the price in dollars, C is the number of contracts and M is a multiplier. The multiplier defaults to 1 unless the schedule says otherwise. The schedule rounds the result up to a centicent, which is one hundredth of a cent.
The key term is P × (1 − P). It is largest at 50 cents and shrinks towards both ends. Kalshi's own table shows the shape. One hundred contracts at $0.50 carry a $1.75 fee. One hundred contracts at $0.10 carry $0.63. At $0.99, the fee on 100 contracts is $0.07.
Kalshi's fee schedule page adds two details. Most markets charge the standard taker fee, with a range of $0.07 to $1.75 per 100 contracts. Some series also carry maker fees, listed at $0.02 to $0.44 per 100 contracts. Check the series before you assume a resting order is free.
How Polymarket charges a trade
Polymarket uses the same shape with different rates. Its trading fees help page gives the formula as:
fee = C × feeRate × p × (1 − p)
The fee rate depends on the market category. Crypto markets carry a taker rate of 0.07. Sports, economics, culture and weather carry 0.05. Finance, politics, tech and mentions carry 0.04. Geopolitical and world events markets are fee-free.
Two rules stand out. First, makers are never charged; only takers pay. Second, the fee is symmetric around 50%. A trade at 30 cents costs the same dollar fee as a trade at 70 cents. Fees round to five decimal places, so very small trades near the extremes may pay nothing.
Polymarket also uses the fees to fund rebates. The same page says taker fees fund a Maker Rebates Program, paid daily to market makers. Takers can earn some fees back through a tiered Taker Rebate Program.
Why both formulas peak at 50 cents
The P × (1 − P) term is not an accident. It tracks uncertainty. A contract at 50 cents is a coin flip, and the term equals 0.25. A contract at 95 cents is close to settled, and the term falls to 0.0475.
That design has a clear effect on traders. The most contested markets cost the most to trade. Long shots and near-certainties cost less in dollars.
But dollars are not the whole story. Fee as a share of the cash you put up behaves differently. On Kalshi's table, $1.75 on a $50 outlay is 3.5%. The $0.63 fee on a $10 outlay at 10 cents is 6.3%. Cheap contracts carry a smaller fee but a larger fee rate on your stake.
Worked example: the real break-even
The fee figures below come from the published formulas. The prices are illustrative, not live quotes.
Suppose a contract trades at 60 cents and you buy 100 contracts as a taker.
- On Kalshi, with multiplier 1: 0.07 × 100 × 0.60 × 0.40 = $1.68. You pay $60.00 for the contracts plus $1.68 in fees.
- On Polymarket, in a sports market at a 0.05 rate: 100 × 0.05 × 0.60 × 0.40 = $1.20. You pay $60.00 plus $1.20.
Each winning contract pays $1. So your 100 contracts return $100 if you are right.
Now work out the break-even. On Kalshi, you need to win often enough to recover $61.68 per $100 of potential payout. That is a 61.68% break-even, not 60%. On the Polymarket sports example, the break-even is 61.20%.
That gap is the whole lesson. A trader who thinks the true chance is 61% sees a one-point edge at 60 cents. After Kalshi's taker fee, that edge is gone. After Polymarket's sports fee, it is gone too.
The same trader using a resting order may see a different result. A Polymarket maker pays no fee. A Kalshi maker pays nothing on most series, but some series charge a maker fee. The order type can decide whether an edge survives.
Small fees compound over many trades
One fee rarely decides a trader's year. Repetition does. The arithmetic is simple, and it uses only the published formula.
Take a trader who places 50 taker orders of 100 contracts each, all at 50 cents on Kalshi. Each order carries the schedule's $1.75 fee. Across 50 orders, that is $87.50 in fees on $2,500 of contracts.
Nothing about the trader's views changed between the first order and the fiftieth. The fee did not care whether each trade won or lost. It was paid either way, at the moment of the match.
That is why active traders track fees as a line item, not an afterthought. A strategy that wins slightly more often than the price implies can still lose money after costs. The test is not "am I right more often than the market?" It is "am I right by more than the fee?"
The spread is a second cost
Fees are written down. The spread is not, but it costs you all the same.
Every order book has a best bid and a best ask. If the best ask is 61 cents and the best bid is 59 cents, the mid-price is 60. Buy at the ask as a taker and you pay one cent above mid. Sell straight back and you receive one cent below it. That two-cent round trip comes before any fee.
Thin books make it worse. A large order can walk up several price levels, paying more on each. Our piece on how to read the book first covers that in detail. The short version: check depth at your size, not just the top price.
Put the two together and the true cost of a taker trade has three parts. There is the price you see, the spread you cross and the fee you pay. Only the first is on the headline.
Three checks before you trade
- Find the fee rate for this market. Both venues vary rates by series or category. A crypto market and a politics market may not cost the same.
- Decide whether you are a maker or a taker. Resting orders can avoid or reduce fees, but they may not fill. Crossing the spread fills now and pays for it.
- Compute your break-even. Add the fee per contract to the price, then compare it with your own estimate. If your edge is smaller than the fee, there is no trade.
Fees in a three-outcome market
Fees matter more when a question has three outcomes. A trader who hedges spreads money across legs. Each leg may carry its own cost.
Take a trader who backs Yes and adds a smaller Maybe position as a hedge. On a binary venue, the closest equivalent would be two separate markets, each with its own fee and spread. The hedge pays twice.
That is why the structure of a market matters as much as the fee rate. A single market with a defined middle outcome lets a trader express "probably Yes, possibly in between" in one place. Whatever a venue charges, a cleaner structure means fewer legs and fewer crossings.
The same discipline applies on any venue, ours included. Read how the market charges before you trade. Then read the question's three precise parts. A cheap trade on a vague question is still a bad trade.
Why this matters for prediction traders
The headline price is a probability estimate. The real cost is that price plus spread plus fee. On both major venues, the fee peaks exactly where markets are most contested.
Small edges live in that zone. A one-point view at 60 cents can disappear after a single taker fee. Over many trades, that adds up to the difference between a sound process and a slow leak.
So treat the fee schedule as part of the market. Read it before the price. Choose your order type on purpose. And price your break-even, not just your view.
This article is for educational and informational purposes only. It is not financial, investment, legal or tax advice, and it does not recommend any trade. Fee formulas and rates are quoted from each venue's published schedule at the time of writing and can change; always check the current schedule. Example prices are illustrative, not live quotes. Prediction markets involve risk, including loss of funds. Availability and eligibility vary by jurisdiction. Oddup does not make price predictions or guarantee outcomes.
