Arbitrage Bot

Automated arbitrage detection bot for prediction markets (Polymarket & Kalshi) made by Jasper Buffet, Mark Burry and Duco Munger.

Features

• Real-time market data from Polymarket and Kalshi
• Fuzzy text matching to find equivalent markets across platforms
• Automatic arbitrage opportunity detection (2%+ profit threshold)
• Discord webhook notifications
• Price validation and liquidity filtering

Setup

1. Install dependencies:

cd arbitrage_bot
pip install -r requirements.txt

2. Configure credentials in .env:

KALSHI_API_KEY_ID=your_api_key_id
KALSHI_PRIVATE_KEY="-----BEGIN RSA PRIVATE KEY-----\n...\n-----END RSA PRIVATE KEY-----"
DISCORD_WEBHOOK=https://discord.com/api/webhooks/...

3. Adjust settings in config.yaml:

arbitrage:
  min_profit_pct: 2.0      # Minimum 2% profit to report
  min_liquidity: 500       # Minimum $500 liquidity
  check_interval: 30       # Check every 30 seconds

matching:
  min_confidence: 0.65     # 65% similarity threshold

Usage

Test with Mock Data

See a guaranteed 27% arbitrage opportunity:

python test_bot.py --mock

Test with Real APIs

Fetch live markets and check for opportunities:

python test_bot.py

Run Continuous Monitoring

Check for opportunities every 30 seconds:

python -m src.main --continuous

Or run once:

python -m src.main --once

How It Works

1. Fetch Markets: Retrieves active markets from Polymarket and Kalshi
2. Match Markets: Uses fuzzy text matching to find equivalent markets
3. Calculate Arbitrage: Checks if buying YES on one platform + NO on another guarantees profit
4. Notify: Sends Discord notification when opportunities are found

Example Arbitrage

If the same event has different prices on each platform:

• Polymarket: YES = $0.35, NO = $0.65
• Kalshi: YES = $0.62, NO = $0.38

Strategy: Buy YES on Polymarket ($0.35) + Buy NO on Kalshi ($0.38)

• Cost: $0.73
• Payout: $1.00 (guaranteed)
• Profit: $0.27 (27%)

No matter the outcome, one position pays $1.00!

Project Structure

arbitrage_bot/
├── config.yaml              # Configuration settings
├── .env                     # API credentials (not in git)
├── test_bot.py             # Testing script
├── src/
│   ├── main.py             # Entry point
│   ├── api/
│   │   ├── polymarket.py   # Polymarket API client
│   │   └── kalshi.py       # Kalshi API client (JWT auth)
│   ├── matching/
│   │   ├── semantic_matcher.py  # Market matching logic
│   │   └── normalizer.py        # Text normalization
│   ├── arbitrage/
│   │   ├── detector.py     # Orchestrates detection
│   │   └── calculator.py   # Arbitrage math
│   └── utils/
│       ├── config.py       # Config loader
│       ├── logger.py       # Logging
│       └── notifier.py     # Discord notifications

Current Status

The bot is fully functional but currently finds 0 opportunities because:

• Polymarket focuses on politics, economics, crypto
• Kalshi currently only has sports betting markets
• No overlap = no arbitrage opportunities

The bot will automatically detect opportunities when the platforms offer the same events.

Security

• .env file is in .gitignore (never commit credentials!)
• API keys stored as environment variables
• RSA private key authentication for Kalshi