Archive for May, 2022

Kalshi Market Mechanics

Recently I’ve been studying the prediction market Kalshi. Kalshi is a CFTC approved market for binary event contracts. This post is about how the internal mechanics of Kalshi markets work. This understanding is valuable for writing trading bots that access Kalshi using its REST API, or for prediction market enthusiasts who want to peak under the hood.

Event Contracts

What is an event contract? Let’s look at an example. The MOON-25 contract lets you bet on whether NASA will land a manned mission on the moon by 2025. Like in a futures market, you can open a position on either side of the contract: Yes or No. For instance, if you open a Yes position, you’re buying a contract that will pay out $1 if NASA does land on the moon by 2025, and $0 if they do not.

The Kalshi Web UI

The Kalshi website offers a rich UI that presents each Kalshi market as a typical two-sided market with a standard bids-and-asks order books for both the Yes and No contracts on the event. If you think NASA will land on the moon, you buy Yes at the current best ask price in the order book for Yes. As I’ll show in a moment, that’s not how Kalshi markets work internally. However, it’s a good simplification for people who are used to stock, crypto and other double-sided markets.

Kalshi Markets Under the Hood

This article is about how Kalshi markets work under the hood. You’ll want to understand this to write trading bots that use Kalshi’s API. (You can experiment with my own trading bot toolkit at

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