Interview with Kalshi Founder: 95% of Trades are Sports; Disagreement with Polymarket's Philosophy

Original Title: Kalshi's C.E.O. Isn't Interested in Management Advice
Original Author: Jordyn Holman, The New York Times
Original Translation: Luffy, Foresight News

Kalshi is much smaller than many people imagine. The company has 200 employees, most of whom work in an open office in Manhattan's meatpacking district, and it doesn't even occupy an entire floor of an office building.

However, Kalshi is now almost ubiquitous alongside other prediction market platforms like Polymarket.

They are major sponsors of various sports events, and media organizations frequently cite their data in political and financial market reports. Users can bet on the probabilities of various events occurring on these sites: the final score of a soccer match, the results of a new drug clinical trial, and what topics President Trump will mention in his speeches.

Founded in 2018 and opened to the public in 2021, Kalshi was started by two recent graduates from MIT: CEO Tarek Mansour and COO Luana Lopes Lara. In May of this year, the company completed a new round of financing, reaching a valuation of $22 billion. Mansour grew up in Lebanon, while Lopes Lara hails from Brazil. According to Forbes, both are just 30 years old and have already joined the ranks of billionaires.

In the U.S., prediction markets are regulated by the Commodity Futures Trading Commission (CFTC) and can operate nationwide once approved. Gambling companies, on the other hand, must obtain licenses from each state individually, and the regulatory rules differ. A recent investigation by The New York Times revealed that the CFTC has recently reduced its workforce and relaxed enforcement, which has objectively aided the development of the prediction market industry.

The rapid expansion of the industry has attracted a large number of investors and newcomers, including individuals with ties to the Trump family: Donald Trump Jr. is an investor in Polymarket and serves as a paid advisor to Kalshi. Meta's Mark Zuckerberg is also interested in entering the prediction market space.

Some lawmakers and regulatory bodies believe that prediction markets are just a rebranded form of gambling. The industry also faces insider trading risks: in recent months, a U.S. soldier involved in the capture of Venezuelan President Maduro placed bets on Polymarket regarding the event; a White House teleprompter operator placed bets on Kalshi about the content of Trump's speeches.

New York Attorney General Letitia James recently sued Kalshi, accusing it of operating illegally and circumventing state gambling regulations. Kalshi claims that the lawsuit is merely a "political stunt" and asserts that states have no authority to shut down the company. This year, more than ten states have introduced regulatory bills targeting prediction markets.

In its last funding round disclosure, Kalshi stated that its annual trading volume soared to $178 billion. In Mansour's view, allowing people to back their predictions with money creates significant value, helping to "calibrate" (a term he frequently uses) this "information-overloaded but truth-deficient" world.

Below is the content of this interview, edited for clarity and brevity.

Tarek Mansour

Q: You have mentioned that one of Kalshi's visions is the "financialization of everything," which many believe has a dystopian connotation. Why do you think this is a good thing?

I think people have taken that statement out of context. The appeal of prediction markets lies in their ability to transform subjective, emotional, and partisan debates into a mathematical, objective system with clear and transparent incentives. If you conduct thorough research, analyze rationally, and strive to uncover the truth, you are likely to profit; if your views are biased, detached from reality, and extreme, you are likely to lose money.

This market has a unique sense of order: you can clearly judge the motivations behind others' opinions. People participate in the game essentially to pursue the truth, with the goal of earning profits.

Q: Currently, a large number of users are participating in sports event trading. What is the proportion of sports-related trades compared to other categories on the platform?

Indeed, people are keen on trading sports events. Our users mostly enjoy mathematics, economics, and trading, and are enthusiastic about thinking about probabilities and the various variables that influence event outcomes. Sports events are an excellent training ground for probabilistic thinking.

Q: What are the specific figures?

Last year, sports-related trades accounted for about 95%, and now it's close to two-thirds. There are numerous sports events every week, but political events do not occur continuously. Sports trading provides ample liquidity for other categories like cryptocurrencies, politics, and macroeconomics, significantly boosting their growth.

Q: How is the political category developing currently?

The market size for major political events can reach $50 million to $100 million. As more participants join, the accuracy of market pricing has significantly improved, and expectations are more aligned with reality.

Q: Returning to the topic of "financialization of everything," what are Kalshi's next steps?

Everything must be done in moderation. Kalshi supports reasonable regulation. We have always adhered to a compliant path. In the early days of our startup, we spent years planning the categories to launch and seeking federal licenses, which was a very challenging process. At that time, we were only 22 years old, and our first four years of our careers were spent collaborating with lawyers to push for the establishment of a regulatory framework for the industry.

Q: Are you satisfied with the current regulatory environment? Are there any loopholes in the regulatory system?

As long as there is innovation and new things, there will always be gaps in regulation at any time. If regulation were perfect, new things would not emerge in this country.

Q: I want to ask about the rumors of tension between you and Polymarket founder Shayne Coplan; could you share the real situation?

Everyone is always eager to see rivalries among peers. But this doesn't count as direct competition. The competitors I truly care about are different: Robinhood, the Chicago Mercantile Exchange (CME), Coinbase, Interactive Brokers, major banks, and Zuckerberg, who is paying attention to the prediction market space. Competing alongside these players excites me.

The differences between us and Polymarket essentially stem from a disagreement in philosophy.

Q: What are the specific differences?

The core difference lies in the development path. Choosing between compliant operations or unregulated, wild growth. I believe Polymarket has not established a solid market risk control baseline, which, in the long run, is not good for them or the entire industry.

Q: How can you convince the outside world that the regulatory rules Kalshi is promoting truly stand on the side of user interests?

The continuous growth of the industry itself is a testament to trust; users are willing to entrust their funds to us. If people's interests are harmed and they no longer trust the platform, they will naturally stop using it and warn those around them.

Q: Is trading volume on the platform highly concentrated among a few traders?

I don't have exact percentage data, but the distribution of trading volume is indeed uneven. Some users trade sporadically each month, while others treat trading as a hobby or side job, and there are full-time participants, known as super forecasters. Super forecasters sift through vast amounts of information. This group may account for less than 2%, yet contributes 70% to 80% of the trading volume.

Our most accurate inflation forecaster is just an ordinary person from Kansas; the top ten political forecasters also come from various backgrounds, without Wall Street elite backgrounds, many of whom are blue-collar workers, which is quite interesting.

Q: What measures does Kalshi take to prevent insider trading?

First, all users are required to complete identity verification, allowing the platform to know the true identities of traders and quickly trace any unusual trades. Second, we have built a system comparable to the New York Stock Exchange that automatically flags suspicious trading patterns. Third, we implement a comprehensive transparency mechanism, making all trading data publicly available.

This matter has both pros and cons. The downside is that everyone can see the trading records, and once there is an anomaly, people will immediately question the existence of insider trading; the benefit lies precisely in this: unusual behavior will be monitored by everyone. If someone wants to engage in insider trading, it would be akin to committing a crime in plain sight.

Insider trading is very subtle. In a sense, insider information can make market prices more efficient. However, we firmly prohibit insider trading because it undermines fairness and ultimately deters ordinary traders.

Some economists argue that insider trading can enhance predictive accuracy, which in turn makes people trust market conclusions more. But fairness is our top priority.

Q: The company is expanding rapidly. How do you balance external affairs while focusing on company development?

Luana and I work very hard, often working weekends, and time can always be squeezed out. Once the business stabilizes, many affairs can be standardized and handed over to the team. She is responsible for internal operations, while I mainly handle external affairs, and this model works well.

Kalshi adopts a highly flat structure, which helps efficiently advance projects. There are very few management levels, preventing managers from taking credit for the achievements of frontline employees. Doers are the team leaders, creating a sense of urgency and intrinsic motivation.

Q: Where does your management style come from?

Lebanese people generally have a strong adaptability, and the local environment is full of uncertainties. This upbringing made me realize that the world itself is full of variables.

Currently, the artificial intelligence field sees new changes almost every two weeks, and the environment is constantly changing. Corporate organizational structures must adapt to this pace. Therefore, we deliberately avoid rigid hierarchical structures. Whether facing significant challenges or new opportunities, the team can flexibly reorganize and collaborate.

Q: Continuing on the topic of your upbringing, what is the most important advice your parents gave you?

My mother always told me: Always give 120% effort and strive for excellence. The difference in the final results often lies in that last 20% of effort.

Quick Q&A Session

Q: What recent trade on Kalshi caught your attention?

A: Contracts related to computing power prices.

Q: What is your favorite question to ask job candidates during interviews?

A: What do you think of Elon Musk?

Q: What is your most contrarian viewpoint?

A: I believe that the success of any great company does not fundamentally depend on its executives.

Q: Do you consider yourself a manager?

A: No, I am not good at managing others.

Q: What is the most recent question you asked artificial intelligence?

A: I asked ChatGPT about the winning probabilities for the 2028 midterm elections; now AI can access Kalshi's data for simulations.

Q: What is the worst advice young entrepreneurs often hear?

A: Many people advise entrepreneurs to collect various suggestions everywhere. But there is no universal formula for entrepreneurship. People overly rely on others' opinions; at the same time, many are eager to point fingers at others to gain a sense of superiority, but most advice is not valuable.

Q: What advice would you give to young entrepreneurs?

A: Don't take my words as gospel. Within a controllable range, be as bold as possible in trial and error and take risks.

Q: What is the best advice regarding meetings?

A: If you can avoid a meeting, do so.

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