Kalshi CEO Talks About Polymarket: It's Not Competition, It's a Difference in 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's 200 employees mostly work in an open office in Manhattan's meatpacking district, not even occupying an entire floor of an office building.

However, today, Kalshi is almost everywhere 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-related 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 will be mentioned in President Trump's speeches.

Founded in 2018 and officially opened to the public in 2021, Kalshi was established by two graduates just out of 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 entered the billionaire ranks.

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 for the two are different. A recent investigation by The New York Times showed that the CFTC has reduced its workforce and relaxed enforcement, which has objectively boosted 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 also serves as a paid advisor to Kalshi. Mark Zuckerberg of the metaverse platform Meta is also interested in entering the prediction market space.

Some lawmakers and regulatory agencies believe that prediction markets are just gambling in a different guise. The industry also faces insider trading risks: in recent months, a U.S. soldier involved in capturing Venezuelan President Maduro placed bets on Polymarket regarding related events; 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 "political theater" and states that no state has the authority to order the company to cease operations. This year, more than a dozen states have introduced regulatory bills targeting prediction markets.

In the last round of financing disclosure, Kalshi stated that the platform's annual trading volume surged 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.

The following is the content of this interview, edited for readability.

Tarek Mansour

Q: You once stated that one of Kalshi's visions is "financialization of everything," which many people believe has a dystopian tone. Why do you think this is a good thing?

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

This market has a unique sense of order: you can clearly judge the motivations behind others' opinions. People participate in the game essentially to chase 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 trading volume between sports categories and other categories in platform event contracts?

Indeed, everyone is keen on trading sports events. Most of our users love 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 trading accounted for about 95%, and now it is close to two-thirds. There are a vast number of sports events every week, but political events do not occur continuously. Sports trading provides ample liquidity for other categories such as cryptocurrencies, politics, and macroeconomics, significantly boosting the growth of other sectors.

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 plans?

Everything should 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 several years planning the categories to be launched and seeking federal-level licenses, which was a very difficult process. At that time, we were only 22 years old, and the 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 are innovations and emerging 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 a tense relationship between you and Polymarket founder Shayne Coplan; why not share the real situation?

People are always keen to see rivalries among peers. But this is not direct competition. The opponents I truly care about are others: Robinhood, the Chicago Mercantile Exchange (CME), Coinbase, Interactive Brokers, major banks, and Zuckerberg, who is paying attention to the prediction market space. Competing with these players excites me.

The differences between us and Polymarket are fundamentally ideological.

Q: What are the specific differences?

The core difference lies in the development path. Choosing to operate in compliance or to grow wildly without regulation. I believe Polymarket has not established a solid market risk control baseline, which is not good for them in the long run, nor for 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 the platform's trading volume highly concentrated among a few traders?

I do not have exact percentage data, but the distribution of trading volume is indeed uneven. Some users trade sporadically each month; some treat trading as a hobby or side job, while others 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 they contribute 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, with no Wall Street elite background, and many are blue-collar workers, which is quite interesting.

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

First, all users need to complete identity verification, and the platform knows the true identities of traders, allowing for quick tracing of any abnormal transactions. 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 if there are any anomalies, people will immediately question the existence of insider trading; the benefit lies precisely in this: abnormal behavior will be monitored by everyone. If someone wants to engage in insider trading, it is equivalent to committing the act in plain sight.

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

Some economists have suggested 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 building?

Luana and I work very hard, often working weekends; there is always time to squeeze out. When the business reaches a stable stage, 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 frontline employees' achievements. 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 field of artificial intelligence sees new changes almost every two weeks, and the environment is changing rapidly. Corporate organizational structures must adapt to this pace. Therefore, we deliberately avoid rigid hierarchical structures. Whether facing major 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 put in 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: Which recent trade on Kalshi caught your attention?

A: Contracts related to computing power prices.

Q: What is your favorite question to ask when interviewing job candidates?

A: What do you think of Elon Musk?

Q: What is your most unconventional viewpoint?

A: I believe 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 probability of winning in the 2028 midterm elections; now AI can access Kalshi's data for simulations.

Q: What is the worst advice young entrepreneurs are most likely to hear nowadays?

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

Q: What advice would you give to young entrepreneurs?

A: Do not take my words as gospel. Within controllable limits, be as bold as possible in experimenting and taking risks.

Q: What is the best advice regarding meetings?

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