Resolution Criteria: The Hidden Details That Make or Break Cross-Venue Arbitrage

When an event contract on Kalshi or Polymarket shows a different price than the equivalent bet at a sportsbook, that pricing gap can be the seed of an arbitrage opportunity. But before you run the numbers or even think about sizing a trade, there's a quietly critical detail that can make or break the whole idea: resolution criteria.

Resolution criteria are the fine-print rules that determine exactly how and when a market pays out. For arbitrage—especially between different venues—these tiny differences can create real risks or even invalidate a trade. In this article, we’ll break down what resolution criteria are, how they differ between prediction markets and sportsbooks, and why understanding them is essential for anyone scanning for opportunities (manually or with a tool like ArbMonster).

What Are Resolution Criteria?

Every market, whether it’s a sportsbook line or a prediction market contract, needs a precise definition for what counts as a win, loss, or push. These details are the resolution criteria. They answer questions like:

• What data source determines the outcome?
• What exactly counts as an event happening (or not)?
• What happens if the event is canceled, postponed, or ambiguous?
• When is the market officially settled?

These details aren’t always obvious from a market’s headline. For example:

• "Will Team X win on Sunday?" — What if the game is postponed to Monday?
• "Will CPI inflation be above 3.0% in June?" — Which CPI measure? What if BLS revises the number?

Why Resolution Criteria Matter for Arbitrage

Let’s say you find a pricing gap: Kalshi shows "YES" on "Will Apple close above $180 on June 30?" at 60c, while a sportsbook offers +110 on "AAPL over 180.5 on 6/30". The math says there’s an arbitrage opportunity. But if the resolution criteria differ, the payouts may not align—even if the prices do.

A few ways this can go wrong:

• Different Data Sources: One venue uses NYSE closing prices, another uses consolidated tape.
• Different Cutoff Times: One resolves at 4:00 PM ET, another at the market’s official close (which might be minutes later due to auction).
• Handling of Cancellations/Delays: Prediction markets may void, sportsbooks may grade as "no action," or even pay out differently.
• Ambiguous Phrasing: Prediction markets often spell out rules; sportsbook lines are sometimes terse or rely on house rules.

Concrete Example: Sports Event Timing

Suppose you spot the following:

• Polymarket: "Will the Super Bowl be played on February 11, 2024?" YES at 85c
• Sportsbook: Super Bowl played on 2/11/24 — NO at +130

Let’s say you want to arbitrage by buying YES on Polymarket and laying NO on the sportsbook.

But:

• The sportsbook’s house rules specify: "If the event is postponed and played within 7 days, wagers stand; otherwise, void."
• Polymarket’s market rules state: "Event must begin on 2/11/24 Eastern Time. Any postponement results in NO."

If the Super Bowl moves to 2/12 due to a storm, Polymarket resolves NO (your YES bet loses), but the sportsbook bet voids (stake returned, no win or loss). The two legs are not perfectly matched. What looked like a riskless arbitrage is actually exposed.

Example: Economic Data Markets

Consider a Kalshi market:

• "Will US CPI YoY be at least 3.0% for June 2024 (as published by BLS)?" YES at 55c.

Suppose a sportsbook offers:

• "US CPI June 2024 Over 3.0%" — Over at -120, Under at -110.

Sounds similar, but:

• Kalshi specifies: "Based on BLS release at 8:30am ET, not subject to later revision."
• The sportsbook says: "Bet graded on first available number, unless officially corrected within 24 hours."

If BLS issues a correction 12 hours after the release, Kalshi sticks with the original, the sportsbook might regrade. If you bet both sides, you could lose on both (or win on both, which sounds nice, but it’s unpredictable and the risk is asymmetric).

Worked Math Example: When Criteria Align

Let’s say you find a perfectly aligned opportunity:

• Event: "Will Team Y win their playoff game on May 10, 2024?"
• Kalshi YES: 48c (potential payout: $1 per contract, minus taker fee at fill)
• Sportsbook NO: -105 (bet $105 to win $100)

Suppose you want to risk about $1,000 total. Here’s how the math unfolds:

Sizing the Bets

On Kalshi:

• Buy 1,000 YES contracts at $0.48 each = $480 staked
• If Team Y wins: payout = $1,000 minus taker fees (calculated at fill)

On sportsbook:

• Bet $1,029.47 on NO at -105 to win $980.45 (so that both legs have similar payouts)

Outcomes

• If Team Y wins: Kalshi pays out net of taker fees (sportsbook bet loses $1,029.47)
• If Team Y loses: Sportsbook pays out $980.45 (Kalshi stake lost: $480)

Net result:

• Team Y wins: (Kalshi net payout) - $1,029.47
• Team Y loses: $980.45 - $480

The difference comes from the fee structure and the odds. The opportunity only exists if the price gap (after fees) is wide enough. But if the resolution rules differ, even this math is moot—you could lose both bets or have one leg voided unexpectedly.

How to Check Resolution Criteria

1. Read Market Rules: Kalshi and Polymarket have explicit market resolution criteria in each contract. Sportsbooks often have house rules (sometimes buried in footnotes).
2. Compare Data Sources: Confirm that both venues use the same official source for outcomes.
3. Check Timing: Settlement time (when, exactly, is the event considered final?)
4. Look for Ambiguities: Vague wording is a red flag. If the sportsbook says "official result" and the prediction market names a specific organization or timestamp, beware.
5. Edge Cases: What happens for cancellations, postponements, or voids? Even rare, these can break the arbitrage math.

Why Resolution Criteria Often Differ

• Regulatory requirements: Prediction markets may write stricter rules to avoid disputes.
• Operational differences: Sportsbooks may rely on third-party feeds, while prediction markets might reference a specific press release or timestamped data.
• Market templates: Sportsbooks reuse generic rules; prediction markets are often bespoke.

How ArbMonster Handles This

ArbMonster scans 20+ sportsbooks, Kalshi, and Polymarket for live opportunities, net of all known fees and at fillable size. But even with automation, human review of resolution criteria is essential before acting on any opportunity. The platform's Learn section covers how to read and compare market rules across venues.

FAQ

Q1: Can arbitrage ever be truly riskless if resolution criteria differ?
A: No. If the rules for settling a market aren’t perfectly aligned, you introduce the possibility that both legs don’t pay out as expected, creating exposure.

Q2: Are prediction market rules usually stricter than sportsbook rules?
A: Often, yes. Prediction markets tend to spell out resolution details more explicitly to avoid disputes, while sportsbooks rely on house rules or general conventions.

Q3: How do I find the resolution criteria for a sportsbook bet?
A: Look for event-specific rules in the bet slip or info icon, and always check the sportsbook’s general house rules section—sometimes under "General Rules" or "Settlement".

ArbMonster is a data service. Nothing here is financial or betting advice; markets carry risk, venues have age and jurisdiction restrictions, and you are responsible for verifying everything before acting.