Austin Temp Market Leads Massive 9,423% Arbitrage Spread Between Kalshi and Polymarket

A series of massive pricing discrepancies has opened up between Polymarket and Kalshi on daily temperature markets for May 27 and May 29, led by Austin's May 27 contracts. ### The Execution Play These mispricings sit at the extreme boundaries (0.1¢ vs 1.0¢), presenting a theoretical net profit of 9,423.81% on paper. However, execution requires careful capital allocation and attention to liquidity. While Polymarket's Austin pool has a solid $87,576 in volume, Kalshi's side is thinner at $35,588. ### Critical Risk Parameters 1. **Settlement Mismatch**: The Polymarket contracts settled on May 27, whereas Kalshi contracts do not expire until June 3. This means capital will be locked on Kalshi for a full week post-event, dragging down your annualized ROI if you are running a high-velocity book. 2. **Execution Slippage**: Buying at the absolute 0.1¢ and 1.0¢ floors is highly sensitive to book depth. Large size will immediately blow out the spread. Treat these as small-cap yield-boosters rather than highly scalable institutional plays. 3. **Weather Stations**: Always verify the underlying NOAA/station data used for settlement on both platforms. Minor deviations in official station readings can break the hedge.