Prediction Market Fees and Rebates
Definition
Prediction market fees are the charges a venue takes on trades, and rebates are payments back to traders, usually market makers, from those fees. Both Kalshi and Polymarket charge a fee on the taker, the order that trades against a resting quote, using a formula proportional to the number of contracts times price times one minus price, so the dollar fee per contract is largest near 50 cents.
Why it matters
Fees are the one cost a trader can calculate exactly in advance, and on cheap or small trades they dominate. Investors should read the current schedule for the specific market, distinguish maker from taker, and include fees on both entry and exit in any breakeven calculation.
Common misconceptions
- •A fee-free market is not cost-free; the spread still applies.
- •Fee schedules change and vary by series; a general formula is a starting point.
- •Rebates go mostly to market makers, funded by takers.
- •The label is only a starting point. Investor outcomes usually depend on the governing documents, cash-flow priority, valuation policy, disclosure quality, and manager discretion surrounding the term, not just the shorthand definition used in marketing materials.
Technical details
Net proceeds (illustrative)
Buy 100 yes at $0.60 on Kalshi: $60.00 + $1.68 fee.
Sell at $0.75 before settlement: $75.00 - $1.32 fee.
Net profit $12.00 after both fees.
Same trades on a Polymarket finance-category market (0.04): fees of about $0.96 and $0.75, if both orders take liquidity.
Polymarket fee table (100 shares, crypto category)
At $0.10: $0.63. At $0.30: $1.47. At $0.50: $1.75 (the peak). At $0.70: $1.47. At $0.90: $0.63.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- How do fees change the return on a prediction market trade?
- They are paid on each trade, so they raise the cost of entry and reduce the proceeds of any exit. Kalshi's standard schedule, as read for AltStreet's Kalshi review, is 0.07 x contracts x price x (1 - price), rounded up to the cent; 100 contracts at 60 cents cost $1.68. Polymarket's is 'fee = C x feeRate x p x (1 - p),' with a category rate.
- What are the rates?
- On Polymarket the taker fee rate is 0.07 for crypto; 0.05 for sports, economics, culture, weather and other markets; 0.04 for finance, politics, mentions and tech; and zero for geopolitics. 'Makers are never charged fees,' and maker rebates of 15% to 25% of fees are paid by category. Kalshi publishes a per-series schedule with 156 non-standard series in AltStreet's review, some with maker fees and some fee-free.
- Do small orders pay more?
- On Kalshi, proportionally yes, because the fee rounds up to the cent. One contract at 10 cents carries a one-cent fee, 10% of its price, against $0.63, or 6.3% of the $10.00 paid, on 100 contracts at the same price.