# Kalshi Politics — Mispricing Audit

Date: 2026-04-27
Source: https://kalshi-audits.pages.dev/2026-04-27-kalshi-politics-mispricing-audit

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# Kalshi Politics — Mispricing Audit

Pulled 2026-04-27 02:30 UTC. Coverage: politics & elections markets resolving by 2026-06-01. Universe: 6,873 active markets in those categories; ~70 had liquidity > $1.5K/24h; ~12 carried tradable signal.

## 1. How this was researched

The frontrun-bot project at `/Users/lucasnegritto/projects/tg-research/frontrun-bot` has been
snapshotting the entire Kalshi event universe every few minutes for the past two weeks. The local SQLite
DB (`bot.db`) holds 25.0M order-book snapshots over 300K markets. That gave me a live signal
ladder and price history without spending any API quota on discovery.

Method, in order:

- **Filter** — `category IN ('Politics','Elections')`, status='active', close_time within 45 days, 24h volume > $1.5K, and bid-ask spread ≤ 5¢. That cut the 6,873 markets down to ~12 with real signal. (Sports, "what will Trump say" word markets, and announcer-mention markets were excluded — they're noise for fundamentals work.)
- **Price history** — for each candidate I pulled the 14-day intraday trajectory from the snapshots table. Markets with sudden 30¢+ moves on heavy volume are usually news-driven re-pricings; markets with tight ranges and high open interest are consensus.
- **Live verification** — fetched current order book and top-of-book directly from Kalshi's public API (`/trade-api/v2/markets/{ticker}/orderbook`) to confirm depth and rule out stale snapshots.
- **News diligence** — for each candidate, multi-source web search to ground prior probability in observed reality (DOJ filings, congressional schedules, official itineraries, polling aggregators).
- **Edge sizing** — true probability estimate vs. implied; orderbook depth dictated maximum size before I'd push price > 2¢ above ask.

## 2. Markets reviewed (the short list)

| Ticker | Question | Close | YES bid | YES ask | 24h vol | OI | Action |
|---|---|---|---|---|---|---|---|
| KXTRUMPCHINA-26-MAY15 | Trump visits China before May 15 | May 15 | 65¢ | 66¢ | $6.5K | $77K | BUY YES |
| KXTRUMPCHINA-26-JUN01 | Trump visits China before Jun 1 | Jun 1 | 76¢ | 77¢ | $3.6K | $32K | BUY YES |
| KXKASHOUT-26APR-JUN01 | Kash Patel leaves FBI before Jun 1 | Jun 1 | 57¢ | 58¢ | $43.7K | $123K | BUY YES |
| KXKASHANNOUNCEOUT-26APR-JUN01 | Patel _announces_ departure before Jun 1 | Jun 1 | 59¢ | 63¢ | $2.7K | $7K | BUY YES |
| KXDHSFUND-26MAY15 | DHS funding bill becomes law before May 15 | May 15 | 40¢ | 42¢ | $2.6K | $37K | BUY YES |
| KXFEDCHAIRCONFIRMED-26MAY15 | Trump's Fed Chair pick confirmed before May 15 | May 15 | 92¢ | 94¢ | $47K | $137K | PASS — fully priced |
| KXLAGODAYS-26APR-1 | Trump makes exactly 1 Mar-a-Lago trip in April | May 1 | 93¢ | 96¢ | $3.8K | $77K | PASS — wide spread eats edge |
| KXFISAEXTEND-26APR-MAY01 | FISA 702 reauth becomes law before May 1 | May 1 | 58¢ | 61¢ | $7K | $12K | PASS — rules-interpretation risk |
| KXGOLDCARDS-26-B0.0 | Exactly zero "Gold Cards" issued by May 1 | May 1 | 78¢ | 81¢ | $36K | $292K | PASS — definition of "issued" is the whole question |
| KXVOTEHUBTRUMPUPDOWN-26APR30 | Trump approval > 38.7% on Apr 30 (VoteHub) | May 1 | 47¢ | 48¢ | $5.1K | $4.7K | PASS — coinflip on the aggregator |

## 3. Top 5 picks — detail and thesis

### #1 — Trump visits China before May 15 HIGH CONVICTION

**Ticker:** `KXTRUMPCHINA-26-MAY15` · **Action:** BUY YES · **Limit:** ≤ 70¢ · **Last:** 66¢

**Mispricing thesis.** The trip is publicly scheduled. Multiple primary sources confirm
May 14–15 dates, but the market only assigns ~66% probability. The discount looks like
"Trump-cancellation tail" pricing, not a real probability assessment.

**Evidence:**

- Al Jazeera (25 Mar 2026): "Trump to visit Xi Jinping in China on May 14 and 15 after Iran war delay" — explicit dates.
- Al Jazeera (7 Apr 2026): USTR Greer publicly confirmed: "Trump to pursue stability with China's Xi in May meeting".
- South China Morning Post: Trump ally Sen. Steve Daines is making an advance trip to Beijing to set up the summit. Advance teams don't get sent for trips that aren't happening.
- Both governments are actively negotiating "boards of trade" deliverables — a tell that staff is locked in on the meeting date.

**Tail risks (the 35¢ NO is buying):** a flare-up in the Iran war (already postponed once for that), Trump unilaterally cancelling, or a procedural rule that "stepping onto Chinese soil" must occur strictly before 14:00 UTC on May 15 (the contract close time, ~22:00 Beijing time). The trip arriving on May 14 makes the timing risk small.

**Numbers:** True probability ≈ 80–85%. At avg fill 70¢, EV/contract ≈ 100×0.82 − 70 = **+12¢** per contract (17% return on capital).

**Liquidity:** Top-of-book is thin (~$5 at 65¢, $200 at 66¢, $90 at 68¢, $140 at 69¢, $80 at 70¢). To deploy $3K I'll likely fill across 65–72¢ for a blended ~70¢. Use a 70¢ limit GTC and walk it up patiently.

**Price history (last 14 days):** 76→69→81→85→86→80→78 → 65 (sharp drop on 4/26 looks driven by general "Trump unpredictability" repricing, not new China-specific news).

### #2 — Trump visits China before Jun 1 (longer-window of the same trip) HIGH CONVICTION

**Ticker:** `KXTRUMPCHINA-26-JUN01` · **Action:** BUY YES · **Limit:** ≤ 80¢ · **Last:** 77¢

**Mispricing thesis.** Same trip as #1, but with a two-week buffer for slippage. If the May 14–15 dates hold, this resolves YES on the same day. If they slip a week (which has already happened once), pick #1 settles NO but pick #2 still settles YES. This is a structurally cheaper hedge on the same fundamental thesis.

**Why I'm taking both rather than just consolidating:** the May 15 contract pays 1.45× more per dollar (66¢ vs 77¢). If the trip happens on schedule (highest-likelihood scenario), pick #1 is the better return. Pick #2 only outperforms in the slippage scenario, but it has a much deeper book ($8K resting at 79¢ — easy to fill size).

**Numbers:** True probability ≈ 88–92%. At avg fill 79¢, EV/contract ≈ 100×0.90 − 79 = **+11¢** per contract (14% return).

**Liquidity:** Excellent. ~$8K resting at 79¢ ask. Can deploy $1.5K instantly without slippage.

### #3 — Kash Patel leaves FBI before Jun 1 MED CONVICTION

**Ticker:** `KXKASHOUT-26APR-JUN01` · **Action:** BUY YES · **Limit:** ≤ 60¢ · **Last:** 58¢

**Mispricing thesis.** The market is pricing a coinflip but the news momentum is strongly one-directional. A senior White House official told Politico (~25 Apr) that Patel's dismissal is _"only a matter of time."_ The Atlantic published the drinking/absences story; Patel sued for defamation (a tell that the story has teeth — silence would be cheaper). Schumer and Durbin are publicly demanding resignation. None of this is base-rate noise — these are the signals that historically precede a forced exit by 1–6 weeks.

**Evidence:**

- Politico (26 Apr): senior White House official says departure is "only a matter of time" — the canonical anonymous-WH-source-floats-the-pink-slip pattern.
- Pravda EN (26 Apr): "FBI Director Kash Patel is likely to be dismissed from his post."
- The Atlantic story → Patel files defamation suit → Senate Judiciary Democrats publicly call for replacement. Sequence suggests reputational pressure has crossed a threshold.
- 5+ week window to the contract close — long enough for the typical Trump-cabinet-shakeup arc (story → days of denial → resignation).

**Tail risks:** Patel digs in and Trump backs him publicly (Trump has done this before). The 5-week window doesn't accommodate a long battle.

**Numbers:** True probability ≈ 65%. At avg fill 59¢, EV/contract ≈ 100×0.65 − 59 = **+6¢** per contract (10% return).

**Volume tell:** 4/26 saw **$178K** 24h volume vs <$50K typical — heavy informed flow on the news, market clearly being repriced. Worth watching for further directional confirmation.

**Liquidity:** Deep. Open interest $123K, $43K daily volume. Easy to deploy $1.5K.

### #4 — Patel announces departure before Jun 1 MED CONVICTION

**Ticker:** `KXKASHANNOUNCEOUT-26APR-JUN01` · **Action:** BUY YES · **Limit:** ≤ 64¢ · **Last:** 63¢

**Mispricing thesis.** Same Patel thesis, but on a strictly easier bar (announcement, not actual departure). A logical floor: P(announce) ≥ P(actually leave). Pick #3 prices "leave" at 58¢; this market prices "announce" at 63¢. The 5¢ gap implies traders think there's only a 5% chance of "announces but doesn't leave by Jun 1" — that's too low for cabinet-style departures, which often have multi-week transition periods.

**Why both Patel markets and not just one:** the two markets settle on slightly different events. If Patel announces in late May with a July departure date, pick #4 wins and pick #3 loses. Owning both captures more of the probability mass that "the news cycle resolves the question" without committing to the precise timing.

**Numbers:** True probability ≈ 70%. At avg fill 64¢, EV/contract ≈ 100×0.70 − 64 = **+6¢** per contract (9.4% return).

**Liquidity caveat:** spread is wider (59/63) and book is thinner (~$880 between 63–66¢). Allocation kept modest accordingly.

### #5 — DHS funding bill becomes law before May 15 MED CONVICTION

**Ticker:** `KXDHSFUND-26MAY15` · **Action:** BUY YES · **Limit:** ≤ 47¢ · **Last:** 42¢

**Mispricing thesis.** The bill is much further along than 42¢ implies. The DHS shutdown has been running ~50 days, House passed HR 7744 on March 5, Senate has unanimously passed a DHS funding bill (Apr 23). The remaining gating items (conference reconciliation if needed, then signature) are mechanical. With 18 days to close, the prior on "Trump signs a bill that ends the longest DHS shutdown in history during his term" is high.

**Evidence:**

- HR 7744 passed the House 221–209 on 5 Mar 2026.
- Senate unanimously passed a DHS funding measure (Apr 23, per Federal News Network coverage).
- Senate GOP launched a separate $70B reconciliation track for ICE/CBP — increases the number of paths to law.
- Politically, Republicans _need_ the shutdown over before the May–June news cycle.

**Tail risks:** conference snags, ICE/CBP carve-out fights, Trump conditional veto over an immigration provision. The June 1 sister contract trades at ~70¢ — confirms the market sees high probability eventually, just not by May 15.

**Numbers:** True probability ≈ 55–60%. At avg fill 46¢, EV/contract ≈ 100×0.58 − 46 = **+12¢** per contract (26% return). Highest expected return per contract in the basket — but biggest model uncertainty.

**Liquidity:** Thin top-of-book ($93 at 43¢, $109 at 44¢, $104 at 45¢, $366 at 46¢, $30 at 47¢, $500 at 48¢) — manageable with patient limit orders. Watch out for headline-driven gap risk.

## 4. Recommended $10,000 portfolio

| # | Ticker | Side | Limit ¢ | $ Allocated | Shares (est.) | Max payout | EV % | Edge $ |
|---|---|---|---|---|---|---|---|---|
| 1 | KXTRUMPCHINA-26-MAY15 | YES | 70 | $3,000 | ~4,225 | $4,225 | +17% | +$510 |
| 2 | KXTRUMPCHINA-26-JUN01 | YES | 80 | $1,500 | ~1,875 | $1,875 | +14% | +$210 |
| 3 | KXKASHOUT-26APR-JUN01 | YES | 60 | $1,500 | ~2,540 | $2,540 | +10% | +$150 |
| 4 | KXKASHANNOUNCEOUT-26APR-JUN01 | YES | 64 | $1,500 | ~2,344 | $2,344 | +9% | +$140 |
| 5 | KXDHSFUND-26MAY15 | YES | 47 | $1,500 | ~3,260 | $3,260 | +26% | +$390 |
| **Cash reserve (opportunistic adds, hedges)** | — | **$1,000** | — | — | — | — |  |  |
| TOTAL DEPLOYED | $10,000 | — | $14,244 max | +15.3% blended | +$1,400 EV |  |  |  |

### Risk profile

- **Worst case (everything loses):** −$9,000 (the $1,000 reserve survives).
- **Best case (everything wins):** +$4,244 (42% return on $10K).
- **Most likely outcome:** 3 of 5 win; portfolio +10% to +20%. The two China contracts are the same underlying event, so they win or lose as a pair. The two Patel contracts are 90% correlated. Effectively this is a 3-bet basket (China trip × 1, Patel exit × 1, DHS funding × 1) with one ladder hedge each on the Trump and Kash positions.
- **Concentration:** $4.5K (45%) on China-trip thesis, $3K (30%) on Patel-exit thesis, $1.5K (15%) on DHS funding, $1K cash. No single political event >45% of book.

### Execution notes

- Use **limit orders only**. Top-of-book on most of these is too thin for market orders without paying 3–5¢ slippage.
- For pick #1 (China May 15), enter ~$1,500 immediately at 68¢ to take the visible book; rest the remaining $1,500 at 70¢ GTC. If the trip gets confirmed by Trump publicly in next 5 days, expect snap to 80¢+.
- Pick #5 (DHS) is event-driven — set a price alert at 55¢ and 35¢. Headlines on a signed bill move it instantly.
- Re-check Patel positions daily — if Trump makes a public statement of support, exit immediately at whatever price; that's a thesis-killer.
- The Kalshi public API is rate-limited (~500ms between calls) but free. The frontrun-bot snapshotter is still running — use it to monitor positions intraday.

## 5. What I rejected and why

- **KXFEDCHAIRCONFIRMED-26MAY15 (94¢ ask):** Tillis cleared, DOJ probe dropped, Senate Banking vote scheduled Apr 29 — the news is real but the price has already absorbed it (price moved 30→92¢ in three days on $317K of volume). At 94¢ the upside is 6¢ on a position with non-zero Senate-procedure-slippage tail. EV ≈ 0.
- **KXLAGODAYS-26APR-1 (96¢ ask):** Trump made exactly one Mar-a-Lago trip in April (the 4/26 crypto-holders gala) and is back in DC. The market is essentially right. 4¢ of upside, 4-day window, but the bid-ask is 91/96 which means real fill is ~94¢ and you're paid 6¢ for non-trivial "Trump goes back to FL on a whim" risk.
- **KXFISAEXTEND-26APR-MAY01 (61¢ ask):** Trump did sign the 10-day Section 702 extension on Apr 18, which technically reauthorizes the authority through Apr 30. The market should arguably already be at 95¢+, but it crashed from 86 → 60 on Apr 26. Either Kalshi clarified the rule to require a longer reauth, or traders saw something I didn't. The 26¢ one-day move is a screaming "rules-interpretation risk" signal — too large an unknown to take the position.
- **KXGOLDCARDS-26-B0.0 (81¢ ask):** Lutnick testified that 1 Gold Card has been "approved." The Kalshi rules require "received legal U.S. residency." If "approved" = "received," the contract resolves NO; if not, YES. The whole bet is one definitional ruling. No edge.
- **KXVOTEHUBTRUMPUPDOWN-26APR30 (48¢):** coinflip with the aggregator running ~39%. No view.
- **Strait of Hormuz weekly (KXHORMUZWEEKLY-26APR26-T*):** resolves Apr 28. Whoever has the AIS maritime feed is going to clean these up — without that primary data source, no edge.

## 6. Sources

- Trump Fed Chair / Warsh confirmation track: [CNBC, 26 Apr 2026](https://www.cnbc.com/2026/04/26/thom-tillis-kevin-warsh-federal-reserve.html) · [Axios DOJ probe drop, 24 Apr 2026](https://www.axios.com/2026/04/24/fed-powell-trump-doj) · [Senate Banking nomination hearing](https://www.banking.senate.gov/hearings/04/14/2026/nomination-hearing)
- Trump China visit May 14–15: [Al Jazeera, 25 Mar 2026](https://www.aljazeera.com/news/2026/3/25/trump-to-visit-xi-jinping-in-china-on-may-14-and-15-after-iran-war-delay) · [USTR Greer confirmation, 7 Apr 2026](https://www.aljazeera.com/economy/2026/4/7/trump-to-pursue-stability-with-chinas-xi-in-may-meeting-ustr-greer-says) · [SCMP — Daines advance trip](https://www.scmp.com/news/china/diplomacy/article/3351219/trump-ally-visit-china-us-turns-pressure-may-summit)
- Kash Patel departure speculation: [Politico via Tribune, 26 Apr 2026](https://www.tribuneindia.com/news/usa-news/only-a-matter-of-time-fbi-director-kash-patel-on-line-for-next-high-level-departure-from-trump-administration-reports-politico/) · [Schumer call for resignation](https://www.yahoo.com/news/articles/chuck-schumer-calls-fbi-director-213104440.html)
- FISA 702 short-term extension: [CBS, Trump signed short-term extension](https://www.cbsnews.com/news/senate-passes-short-term-fisa-extension-after-house-does/) · [Axios, Senate clears extension](https://www.axios.com/2026/04/17/fisa-senate-vote-april-30-house-revolt)
- DHS funding bill: [Congress.gov HR 7744](https://www.congress.gov/bill/119th-congress/house-bill/7744) · [Federal News Network](https://federalnewsnetwork.com/government-shutdown/2026/04/republicans-are-launching-a-new-effort-to-fund-the-department-of-homeland-security/) · [CNN — Senate $70B plan, 21 Apr 2026](https://www.cnn.com/2026/04/21/politics/gop-senate-budget-proposal-dhs-funding)
- Trump Gold Card approvals: [NBC News, Lutnick testimony](https://www.nbcnews.com/news/us-news/trumps-gold-card-visa-starting-1-million-granted-just-1-person-far-whi-rcna341855)
- Trump approval polling: [Silver Bulletin tracker](https://www.natesilver.net/p/trump-approval-ratings-nate-silver-bulletin) · [FiftyPlusOne aggregate](https://fiftyplusone.news/polls/approval/president)

Local data: `/Users/lucasnegritto/projects/tg-research/frontrun-bot/bot.db` (25M snapshots, 14-day rolling).
Live data: `https://api.elections.kalshi.com/trade-api/v2`. All prices and order books re-fetched from
the Kalshi public API at the time of report generation (~02:30 UTC on 27 Apr 2026).

**Disclaimer:** probability estimates are subjective, news-grounded but not verified against
private information. Kalshi positions can resolve to zero. The recommended portfolio reflects
the analysis above; do your own due diligence before deploying capital.