Persistent Gaps, Temporary Gaps, and Telling Them Apart
Some price differences close in minutes and some never close at all. The two kinds have different causes and require completely different responses.
Watch a gap between two venues for a week and it will do one of two things. It will close, or it will sit there. Which one it does tells you what it was.
Temporary gaps
These come from something that will correct.
News arriving unevenly. A story breaks, one venue reprices in seconds, the other takes a few minutes. For that interval there is a real difference between two prices on the same question. It closes because it is simply a lag.
A large order moving one side. Somebody takes out several levels of one book. The price is displaced, then recovers as makers requote.
Staleness. One venue has not traded that market since yesterday. The gap is a gap in time. It disappears the moment somebody trades. Stale quotes and timing.
Temporary gaps are real and mostly unreachable. By the time a polling system notices, records, grades and displays one, the fast ones are gone. Anyone competing for these is competing on infrastructure, and a public dashboard is not the right tool for that competition.
Persistent gaps
These come from something structural, and they do not close because closing them is not attractive.
The questions differ. The most common cause by far. Two different contracts, correctly priced differently. Nothing to close. Resolution differences.
Access is restricted. The set of people who can trade both venues is small. A difference that few people can act on stays open. This is a genuine structural feature and it is the reason a large fraction of persistent gaps exist.
Capital cost exceeds the gap. Locking a dollar for eight months to collect three cents is a poor return. The gap is not unnoticed; it is correctly judged not worth doing. Capital lockup.
One side is untradeable in size. A four-cent gap on a book of twenty contracts is worth eighty cents. Nobody is going to build a process for that. Gap size versus liquidity.
Different participant populations. Two rooms of people can hold different views indefinitely without either being wrong. Why venues disagree.
How to tell them apart
Time series. A single observation cannot distinguish the two cases; a week of observations distinguishes them trivially.
A gap that opens and closes repeatedly is liquidity and lag. Interesting as a description of how the two venues relate, mostly unreachable in practice.
A gap that has been the same size for a month is structural. Ask which structural cause it is, because that determines whether there is anything there. Usually the answer is that the questions differ and the correct response is to downgrade the pair rather than trade it.
A gap that appears and then stays is the one worth looking at. Something changed. Either a new structural difference appeared, or one side has gone quiet and is no longer updating.
This is why this site keeps history rather than only showing the current snapshot: a gap without a history is uninterpretable. Cross-market gaps shows the current state and top movers shows what changed.
The uncomfortable summary
The gaps you can reach are small and require speed. The gaps that are large are large for reasons that also make them unattractive.
That is not a reason to ignore cross-venue data. It is an extremely good reason to describe what it shows as a theoretical cross-market edge — a measurement of what two prices imply — rather than as an available return. What a gap is worth.
Next
The mistakes people make when they skip all of this.
Educational content only. Nothing here is financial advice, a solicitation, or an offer to trade. Prediction markets can move against you and a position can lose its entire value. Where this guide describes a difference between venues it describes a theoretical cross-market edge in observed prices, which is not a profit: fees, spreads, capital lockup, transfer time and differing settlement rules all come out of it first.
Keep reading
Cross-Market Gaps · 3 min readResolution Differences That Break a ComparisonThe specific ways two markets on the same subject can resolve differently: sources, vintages, deadlines, ties and the fallback when data never arrives.
Cross-Market Gaps · 3 min readTen Ways Cross-Market Analysis Goes WrongThe recurring errors in comparing prediction market prices across venues, from stale quotes to mismatched thresholds, and how to catch each one.
Cross-Market Gaps · 3 min readHow Equivalence Grades Work, and Why They Matter MostBefore comparing two prices you have to decide whether the two questions are the same. That judgement is graded, and the grade matters more than the gap.
Kalshi · 3 min readWhat CFTC Regulation Means for an Event ExchangeA designated contract market licence changes what can be listed, how funds are held and who can participate. A plain explanation of the parts that affect users.