Kalshi Founder Interview: Sports Trading Accounts for 95%; Misaligned with Polymarket’s Vision

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

Kalshi is much smaller in scale than many would imagine. Its 200 employees mostly work in an open office space in Manhattan's Meatpacking District, not even large enough to occupy a full floor of a building.

However, today, Kalshi and other prediction market platforms like Polymarket are nearly ubiquitous.

They are major sponsors of various sports events, and media outlets frequently cite their data in reporting on politics and financial markets. Users can bet on the probability of various events on these sites: the final score of a soccer match, results of a new drug's clinical trial, or what topics President Trump will mention in a speech.

Founded in 2018, Kalshi opened to the public in 2021 and was founded by two recent graduates of MIT: CEO Tarek Mansour and COO Luana Lopes Lara. In May of this year, the company raised a new round of funding, valuing it at $22 billion. Mansour, who grew up in Lebanon, and Lopes Lara, from Brazil, both in their early 30s, are already among the ranks of billionaires, according to Forbes.

In the United States, prediction markets are regulated by the Commodity Futures Trading Commission (CFTC) and can operate nationwide once approved. On the other hand, gambling companies need licenses from each state, subject to different regulations. A New York Times investigation revealed that the recent downsizing and loosening of enforcement by the CFTC have objectively boosted the development of the prediction market industry.

The rapid expansion of the industry has attracted numerous investors and newcomers, many of whom have ties to the Trump family: Donald Trump Jr. is an investor in Polymarket and also serves as a paid advisor to Kalshi. Meta's Mark Zuckerberg is also eyeing the prediction market track.

Some lawmakers and regulatory bodies believe that prediction markets are merely gambling in a new guise. Additionally, the industry faces insider trading risks: in recent months, a U.S. soldier involved in the capture of Venezuelan President Maduro bet on related events on Polymarket, while a White House teleprompter operator placed bets on Trump's speech content on Kalshi.

New York Attorney General Letitia James has recently sued Kalshi, accusing it of operating illegally and circumventing state gambling regulations. Kalshi has called the lawsuit a "political show" and stated that states have no authority to shut down the company. This year, over a dozen states have introduced regulatory bills targeting prediction markets.

In its latest funding round disclosure, Kalshi reported that the platform's annualized trading volume surged to $178 billion. Mansour believes that allowing people to use funds to endorse their own predictions holds significant value, helping to "calibrate" (a term he frequently uses) this "information-overloaded yet truth-starved" world.

Below is the content of the interview, with the text edited for readability.

Tarek Mansour

Question: You have proposed that one of Kalshi's visions is "Financializing Everything," and many believe this idea carries a dystopian undertone. Why do you think this is a good thing?

I think people have taken this statement out of context. The allure of prediction markets lies in transforming subjective, emotional, and partisan debates into a mathematical, objective system with a clear and transparent incentive mechanism. If you dedicate yourself to research, rational analysis, and a diligent search for the truth, you are likely to profit; if your views are biased, detached from reality, or extreme, you are likely to lose money in the end.

This market has a unique sense of order: you can clearly discern the motives behind others' views. People engage in this game, fundamentally seeking the truth and aiming to earn profits.

Question: Currently, a large number of users are participating in sports event trading. How does the trading volume between the sports category and other categories in platform event contracts compare?

Indeed, many are enthusiastic about trading sports events. Our users mostly enjoy mathematics, economics, and trading, engaging in thoughtful consideration of probabilities and various variables influencing event outcomes. Sports events serve as an excellent training ground for probabilistic thinking.

Question: What about specific data?

Last year, sports-related trading accounted for approximately 95%, now approaching two-thirds. There are numerous sports events weekly, while political events do not occur continuously. Sports trading provides ample liquidity for categories such as cryptocurrency, politics, and macroeconomics, driving a significant increase in growth rate for other sectors.

Question: How is the development of the political category progressing?

Major political event markets can reach a scale of $50 to $100 million. With an increasing number of participants, the accuracy of market pricing has significantly improved, with expectations aligning more closely with reality.

Q: Regarding the topic of "Financialization of Everything," what are Kalshi's next steps?

Everything should be done in moderation. Kalshi supports sensible regulation. We have always been committed to a compliant path. In the early days of our startup, we spent years planning the launch categories, striving for federal-level licenses, a process that was very challenging. At that time, we were only 22 years old, and for the first four years of our careers, we worked with lawyers to drive the industry to establish a regulatory framework.

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

As long as there is innovation and emerging phenomena, there will always be gaps in any period of regulation. If regulation were perfect, no new things would emerge in this country.

Q: There have been rumors of tensions between you and Polymarket founder Shayne Coplan. Care to shed light on the real situation?

Everyone is always eager to see peers in conflict. But this is not considered direct competition. The real opponents I value are elsewhere: Robinhood, Chicago Mercantile Exchange (CME), Coinbase, Interactive Brokers, major banks, and Zuckerberg, who is paying attention to the prediction market track. Being able to compete with these players excites me.

Our disagreement with Polymarket fundamentally stems from a difference in philosophy.

Q: What specific differences are there?

The core difference lies in the development path. Choosing to operate compliantly or grow in an unregulated manner. I believe Polymarket has not established a robust market risk control baseline, which, in the long run, is not good for them, or the entire industry.

Q: How can you make the outside world believe that the regulatory rules Kalshi is pushing to establish are truly in the users' best interests?

The continuous growth of the industry itself is proof of trust; users are willing to entrust us with their funds. If everyone's interests are harmed, and they no longer trust the platform, they will naturally stop using it and warn others.

Q: Is the platform's trading volume highly concentrated in the hands of a few traders?

I do not have specific percentage data, but the distribution of trading volume is indeed uneven. Some users engage in sporadic trading every month, treating trading as a hobby or side job, while others are full-time participants, known as super predictors. Super predictors sift through vast amounts of information. This group may comprise less than 2% of users but contributes 70% to 80% of the trading volume.

Our most accurate inflation predictor is just an ordinary person from Kansas; the top ten political predictors also come from various backgrounds, without a Wall Street elite background. Many are blue-collar workers, which is very interesting.

Q: What measures has Kalshi taken to prevent insider trading?

First, all users are required to complete identity verification, allowing the platform to know the true identity of traders and enabling quick tracing in case of unusual trading activity. Second, we have built a system benchmarked against the NYSE to automatically flag suspicious trading patterns. Third, we have implemented a full transparency mechanism, making all trade data publicly available.

This situation has both pros and cons. The downside is that everyone can see the trading records, so any unusual activity immediately raises suspicion of insider trading. However, the upside is also here: any abnormal behavior is under public scrutiny. If someone attempts insider trading, they are essentially committing the act in plain sight.

Insider trading is very delicate. In a sense, insider information can make market prices more efficient. But we firmly prohibit insider trading because it undermines fairness and ultimately discourages regular traders.

Some economists argue that insider trading can improve forecasting accuracy and actually make people trust market conclusions more. However, fairness is the baseline we prioritize.

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

Luana and I have a very intense work schedule, often working overtime on weekends; time can always be made. As the business enters a stable phase, many affairs can form standardized processes and be handed over to the team. She is in charge of internal operations, while I mainly handle external affairs, and this model has been quite effective.

Kalshi adopts a highly flat organizational structure to facilitate efficient project advancement. There are very few management levels to prevent managers from taking credit for the frontline employees' achievements. Those who do the actual work are the team leaders, creating a sense of urgency and intrinsic motivation.

Q: Where does your management style originate from?

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

In the current field of artificial intelligence, there are new changes almost every two weeks, and the environment is constantly changing. The organizational structure of a company must adapt to this pace. Therefore, we deliberately avoid a rigid hierarchical structure. Whether facing major challenges or brand-new opportunities, the team can flexibly reorganize and collaborate.

Q: Continuing on the topic of your growth experiences, what is the most important advice your parents have given you?

My mother has always told me: always give 120% effort and strive for perfection. The difference in the end result often lies in that final 20% of effort.

Rapid-Fire Question Round

Question: Which recent Kalshi transaction has caught your attention?

Answer: The hashrate price-related contract.

Question: When interviewing a job applicant, what is your favorite question to ask?

Answer: How do you view Elon Musk?

Question: What is your most contrarian view?

Answer: I believe that the success of any great company is not primarily dependent on the executives.

Question: Do you consider yourself a manager?

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

Question: What was the recent question you posed to artificial intelligence?

Answer: I inquired ChatGPT about the winning odds of the 2028 midterm elections, as AI can now access Kalshi's data for simulations.

Question: What is the worst advice that young entrepreneurs tend to hear nowadays?

Answer: Many people advise entrepreneurs to seek advice from all sources. However, entrepreneurship does not have a one-size-fits-all formula. People overly rely on others' opinions, and many are eager to give advice to feel superior, yet most advice lacks value.

Question: So, what advice would you give to young entrepreneurs?

Answer: Do not take my words as absolute truth. Within a controllable range, dare to make bold mistakes and take risks.

Question: What is the best advice regarding meetings?

Answer: If you can avoid a meeting, then avoid it.

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