How to Make Money on Kalshi: A Practical Guide

What Is Kalshi and How Does It Actually Work?

Kalshi is a CFTC-regulated prediction market where you buy and sell contracts tied to real-world events. Each contract pays out $1 if the event happens, and $0 if it doesn't. You buy at some price between 1 and 99 cents, and your profit or loss depends on whether the outcome matches your position.

That's it. No complicated derivatives, no margin calls, no hidden fees eating your returns. The simplicity is the point.

For example: if you think the Fed will cut rates at the next meeting, you buy "Yes" contracts at, say, 62 cents. If the cut happens, you collect $1 per contract. That's a 38-cent profit, or about 61% return. If you're wrong, you lose your 62 cents.

Kalshi became fully legal for political and economic event contracts in the US after a court ruling in 2024 cleared regulatory hurdles. By 2026, it's one of the most liquid retail prediction markets in the country.

Can You Actually Make Money Here?

Yes. But you need to be honest with yourself about what kind of edge you have.

Most retail traders on Kalshi lose money over time. That's not a knock on the platform. It's true of most speculative markets. The people who consistently profit are doing one of a few specific things: they have genuine informational edge, they're finding mispriced contracts, or they're playing the market maker role and collecting spread.

If you go in thinking you'll just bet on obvious outcomes and get rich, you'll lose. The obvious outcomes are already priced in. The edge lives in the gaps.

The Three Main Ways to Make Money on Kalshi

1. Informational Edge

This is the most straightforward approach. You know something the market doesn't, or you've done better analysis than the crowd.

Good examples:

• You follow economic data releases closely and have a better model for CPI or unemployment predictions than what's currently priced
• You have domain expertise in an industry and can predict regulatory outcomes better than generalist traders
• You follow sports or weather with unusual depth and the market is mispriced

The key question to ask yourself before any trade: "Why do I know something the other side of this bet doesn't?" If you can't answer that, don't trade.

2. Finding Mispriced Contracts

Markets aren't always efficient. On Kalshi, thin liquidity in smaller markets means contracts sometimes sit at clearly wrong prices.

We've found mispriced contracts most often in:

• Niche economic indicators with low trading volume
• Long-dated contracts where attention drops off
• Markets that depend on technical definitions that most traders misread

The trick is developing a systematic way to screen for these. Some traders build simple spreadsheets. Others use probability models. The tools you use matter less than having a consistent process.

3. Spread and Liquidity Provision

On more active markets, you can act like a market maker by placing limit orders on both sides of a contract and collecting the bid-ask spread. This is lower-risk but also lower-reward, and it requires capital sitting in the market at all times.

This strategy works best for experienced traders comfortable with position management. If you're new to Kalshi, don't start here.

Which Markets Should You Focus On?

Kalshi runs markets across dozens of categories. Not all of them are equally tradeable.

Market Type	Liquidity	Edge Potential	Good For
Fed Rate Decisions	High	Medium	Macro traders
CPI / Inflation Data	High	High (with models)	Quant-minded traders
Political Elections	Very High	Low (efficient)	Entertainment, small bets
Weather Events	Low	High (domain experts)	Meteorologists, enthusiasts
Tech / Company Earnings	Medium	Medium	Finance professionals
Sports Outcomes	Medium	Medium	Sports analysts

Our recommendation for beginners: start with Fed rate decision markets. They're liquid enough to enter and exit positions easily, the resolution criteria are unambiguous, and there's a ton of public data you can analyze. Economic reports, Fed speeches, futures markets — all of it informs your edge.

Building a Strategy That Actually Works

Start With a Thesis, Not a Hunch

Before placing any trade, write down your reasoning. Literally write it. "I think Yes is underpriced because..." This habit separates disciplined traders from gamblers. It also lets you review your thinking after resolution and learn from mistakes.

Size Your Positions Correctly

Don't bet your whole bankroll on a single contract. Even if you're 90% sure of the outcome, the 10% ruin scenario is real. Most professional prediction market traders risk between 1% and 5% of their bankroll per trade.

A simple framework:

• High confidence, liquid market: up to 5% of bankroll
• Medium confidence, or thinner market: 1-2% of bankroll
• Exploratory or new category: less than 1%

Track Everything

Keep a trade log. Record your entry price, your reasoning, the outcome, and what you'd do differently. After 50+ trades, patterns emerge. You'll see which categories you're actually good at and which ones you're consistently losing on.

Most losing traders skip this step. Don't be one of them.

Use AI Tools Thoughtfully

Some traders are now using AI assistants to help analyze economic data or synthesize news before major events. Tools like Claude or ChatGPT can help you quickly process Fed statements, research historical precedents, or check your reasoning for gaps. We've compared those tools in depth in our ChatGPT vs Claude 2026 breakdown.

That said, don't use AI to make your trading decisions. Use it to inform your analysis. The final call needs to be yours, based on your thesis.

Common Mistakes That Kill Kalshi Profits

Chasing Obvious Contracts

If the contract is at 85 cents, the market already thinks it's very likely. You need to decide if you think it's even more likely than 85%, and why. Buying obvious contracts at high prices caps your upside and doesn't give you real edge.

Ignoring Resolution Rules

Every Kalshi market has specific resolution criteria. Read them. Carefully. We've seen traders lose money on contracts they were "right" about because they misunderstood how the outcome would be determined. For example, some CPI markets resolve based on a specific data revision, not the initial print.

Overtrading

There's always a new contract to trade. That doesn't mean you should. The best trades are the ones where you have a clear edge. Waiting for those takes patience. Overtrading dilutes your returns and increases the amount of luck involved in your results.

Letting Winners Ride Too Long

If a contract moves sharply in your favor before resolution, you can sell it for profit now rather than waiting. A contract you bought at 40 cents that's now trading at 75 cents has already given you most of its upside. Sometimes selling early and redeploying capital is the smarter move.

Bankroll Management: The Foundation

Treat your Kalshi account like a small investment portfolio, not a slot machine. Only deposit what you can afford to lose entirely. Start with a small amount, maybe $200-500, until you've proven to yourself that your strategy works.

Withdraw profits regularly. This keeps you honest about whether you're actually profitable and prevents you from losing gains back to the market during a cold streak.

The goal isn't to make money fast on Kalshi. It's to develop an edge and apply it consistently over hundreds of trades. The money follows the process.

Is Kalshi Better Than Other Prediction Markets?

Kalshi's main advantages are its legal status in the US, its CFTC regulation, and the clean contract structure. Polymarket is a crypto-based alternative with more markets and sometimes better liquidity, but it operates in a different regulatory space.

For US-based traders who want a legitimate, tax-reportable platform, Kalshi is the clearest choice right now. The tax treatment is relatively straightforward since it's regulated as a derivatives exchange.

One thing to note: Kalshi's fees are modest but real. They take a small percentage on winning contracts. Factor this into your expected value calculations. A contract where you have a 60% edge sounds great until you realize fees eat 5% of that.

Using AI and Data Tools to Gain an Edge

The traders who do well on Kalshi in 2026 are increasingly using data and AI tools to sharpen their analysis. A few practical approaches:

• Pull historical Fed decision data and model the probability of rate changes based on economic indicators
• Use AI writing or research tools to quickly summarize long Federal Reserve meeting transcripts or economic reports
• Set up news alerts for your key market categories so you're never caught flat-footed by relevant events
• Build simple probability models in spreadsheets and calibrate them against market prices

If you're interested in how AI tools can generally improve your analytical workflow, our coverage of the best AI tools for business research covers some useful options that translate well to research-heavy tasks like this.

Taxes and Record-Keeping

Kalshi is a CFTC-regulated exchange, and your winnings are taxable. Keep records of every trade. Kalshi provides tax documents, but having your own records is smart practice.

Talk to a tax professional if your trading volume gets significant. The tax treatment for prediction market contracts can vary depending on how regulators classify your activity, and this area is still evolving in 2026.

Realistic Expectations

Here's a number to keep in mind: most active retail traders on any speculative market don't outperform over time. The ones who do tend to have genuine expertise in the categories they trade, treat it like a skill to develop rather than a lottery, and stick to strict bankroll discipline.

A realistic goal for a skilled Kalshi trader is something like 15-30% annual return on deployed capital. That sounds modest compared to lottery-ticket fantasies, but it compounds dramatically over time and beats most traditional investments if you can sustain it.

If you're making 30% consistent returns on Kalshi, you've built something genuinely valuable. That takes time, data, and honest self-evaluation.

Getting Started: A Simple Action Plan

1. Create your Kalshi account and complete verification
2. Deposit a small starting amount ($200-500) that you're comfortable losing
3. Spend two weeks browsing markets without trading. Read resolution rules. Note which markets interest you
4. Pick one market category where you have genuine knowledge or interest
5. Place small test trades (5-10 contracts) while keeping a trade log
6. Review your results after 30 days honestly
7. Scale up only what's working

Kalshi is one of the few places where being genuinely right about the world translates directly into returns. That's rare. Treat it with respect, build your edge carefully, and you've got a real shot at consistent profitability.