Inside the Prediction Market Boom: Kalshi's Rise, Its Rivals, and the Debate Over What It Is

Kalshi is a prediction market platform where users can bet on almost anything, from today's weather to Taylor Swift's wedding. Co-founders Tarek Mansour and Luana Lopes Lara started the company in 2018, when very few people outside academia had heard of prediction markets. The narration notes that billions of dollars in trades have since been placed on the platform.

Mansour describes the platform as peer-to-peer. Every trade is a contract, a simple yes or no on whether something will happen. A buyer of yes is betting that the outcome will happen, and someone on the other side is betting that the buyer is wrong. The price of the contract moves in real time based on what the market believes. Kalshi makes money by charging a transaction fee on every trade.

The narration says that as Kalshi continues on its trajectory, it now faces a host of new competitors, local opponents and a very public debate about what the platform is and the potential harms it can cause. Mansour describes the situation with a metaphor: it can feel a little bit like being in the middle of a hurricane sometimes.

The episode then turns to Mansour's background. He grew up in Lebanon, a volatile country where, he says, the difference between good and bad could be an hour. He says this led him to view the world more probabilistically, and that this has shaped every decision he has made since, including starting Kalshi. He left Lebanon to attend MIT and then became a trader on Wall Street.

Mansour recalls that in 2016, as Brexit and the Trump election unfolded and nobody saw the result coming, big banks and hedge funds scrambled to offset risk. Institutional investors were asking how to take a position on a Trump win and what a Trump trade would be.

What excited Mansour was the idea that investors could simply buy yes on Trump winning the election. He said this seemed a much more direct and simple way to do it than building a complicated trade. That idea became the basis for the platform.

Lopes Lara, Kalshi's co-founder and COO, took an unorthodox path into fintech. She grew up in Brazil, trained as a ballerina, and then pivoted to math and computer science. The two co-founders met at MIT. When asked which stories about them are true, Mansour answers that a lot of them are untrue.

In 2020, in the final months of the first Trump administration, Kalshi cleared a major hurdle when the Commodity Futures Trading Commission approved it as the first federally regulated event contract exchange. However, the approval was limited to the kinds of markets the agency had traditionally regulated.

When Kalshi tried to expand into elections, the CFTC under the Biden administration refused, calling election betting a form of gaming. Kalshi decided to sue its own regulator. Mansour says suing was the only option they had, because otherwise these markets might never see the light of day, since another company had also tried. He says there was a sense of responsibility, but also that they were right.

In 2024, just weeks before the presidential election, Kalshi won its lawsuit against the CFTC and began offering election markets. Prediction markets were thrust into the national conversation as bettors rushed in. While polls showed Kamala Harris and Donald Trump neck and neck, Kalshi's markets gave Trump over 60% odds. In the weeks around the election, Kalshi processed what the transcript describes as over $und00 million in trades; the figure is unclear in the source, so the exact amount should not be treated as confirmed. With Trump back in the White House, prediction markets that the Biden administration had flagged for review were suddenly fine.

The rapid growth of prediction markets has been led by two players: Kalshi and its arch rival Polymarket, led by CEO Shane Copeland. The hostility between Mansour and Copeland is well documented. Asked how bad the bad blood is, Mansour says it really isn't that bad.

Mansour argues that tabloid coverage loves drama. He says that when one actor sullies the industry, the coverage does not say Polymarket did something wrong but instead says prediction markets are that way, which forces Kalshi to keep explaining that it is not running war or death markets. Polymarket did not respond to a request for comment. The company said it prohibits insider trading and manipulation and that Kalshi's ads misinform the public, which it says harms the industry as a whole. Kalshi says it does not offer markets on death, assassinations or war, in keeping with US regulations.

As the number of prediction markets has grown, so has the temptation for some to trade on insider information. Federal regulators said a White House teleprompter operator made over $100,000 by placing bets on Trump's speeches. Former US Representative George Santos posted on social media that he would attend the State of the Union. Meanwhile, he placed multiple bets on Kalshi that he would not attend, making over $17,000. The CFTC called it manipulation, and Kalshi banned him for life.

Bloomberg reporter Christopher Beam, who has covered the rise of prediction markets, said he thinks more such cases are inevitable because the incentives are there, and when they are, someone will take advantage. He noted that Kalshi says it is cracking down on insider trading and manipulation, but wondered how far that will extend.

A speaker in the episode argues that as prediction markets grow and the group of people holding relevant information grows, it becomes harder and harder to prosecute insider trading. In a quick game, Emily Chang offered examples. A White House staffer trading on a presidential announcement would be an insider. A player's girlfriend or boyfriend trading on injury status would also be an insider, and Chang was told Kalshi would never run that market. A Federal Reserve employee trading on interest rates would be an insider if they knew beforehand what the decision would be.

The speaker notes that if there is a market for almost everything, almost everyone can become an insider. The response is that manipulation and insider trading exist in all financial markets, just as fraud and cheating exist in any system. The key question is how to regulate the system so insiders and cheaters are rooted out and fair rules let people participate fairly.

The episode also notes that the CFTC, the agency meant to police this, has been hollowed out. Under President Trump the five-person commission is down to one man, Chair Michael Selig, a Trump appointee whom the narration describes as acting more like a champion than a watchdog. Sports remain Kalshi's biggest category.

During the World Cup, Kalshi recorded $27 billion in trading volume and added 3 million new users. The reporter said that Kalshi has talked a lot about diversifying away from sports, but by the reporter's count sports still make up 75% of volume, asking how diverse the company is if sports still pays.

Mansour responds that he is not sure the count is right and that it depends on how you count, so the share is lower. He says the sports share was 95% at the beginning of the year and is now much lower, around two-thirds or 70%. He describes sports as an effective way for people to enter the product, experience it, understand it, and then start exploring other things.

The narration notes that sports betting is legal in nearly 40 states, and those operators pay millions in state licenses and taxes, which Kalshi does not. The narration says the gambling companies based in the states and regulated by them are probably Kalshi's biggest antagonist right now. Asked what Kalshi would be without sports, Mansour says it would be a much smaller company.

Kalshi says it is different from sports books, which take the opposite side of bets and win when their bettors lose. Opponents argue Kalshi is a gambling platform that has found a legal loophole. Forty-four states have signed a letter calling prediction markets a new form of casino, and 20 are fighting in court over whether state sports betting laws apply. The CFTC has responded by suing states, in what the narration describes as a full-blown turf war over who should regulate prediction markets.

Asked why Kalshi isn't a casino, Mansour says it looks and feels like gambling because someone is speculating. He argues the key difference is that when customers lose, they do not lose to the company but to other customers, and his role is to establish fair rules for the marketplace to thrive. Kalshi takes a 0.8% fee on every trade. He compares that to the New York Stock Exchange, which also takes a fee, and says that does not make the NYSE gambling.

A passerby says prediction markets came out of gambling and trading, and that people use them to pass the time. Asked whether it is gambling or trading, he says it is the same as gambling, since you could bet on anything. He compares it to earlier generations having to leave home to gamble, while now you can wake up and be gambling ten seconds later. He says he knows friends who are addicted and that it ruins lives.

Asked whether it sounds like gambling, another passerby says it can go either way, depending on restraint, and that it is gambling when it is vibes based. The episode adds that for the average user, the experience of a prediction market is pretty much identical to a gambling app, so the argument that these are derivatives or event contracts may pass muster in court but does not pass the smell test for many people.

The narration says the question of whether Kalshi is a financial exchange or a gambling company may ultimately be decided by the highest court. Asked whether the Supreme Court should take up the question of who should regulate prediction markets, one answer given in the episode is that it would probably say yes. Another answer is that it is a question for lawyers.

The episode also points to Donald Trump Jr., who it says is an investor in Polymarket and a paid adviser to Kalshi, and who received a $300,000 equity stake in Kalshi in 2025 that is now potentially worth millions. The narration says it has never had the family of a sitting president so closely involved in a financial instrument growing this fast with so many regulatory questions. Mansour says he talks to Trump Jr. about going direct to customers and says they do not talk about regulatory or policy, and that both parties made clear from the start there would be no involvement on that front.

The narration reports that earlier this year Donald Trump Jr. showed up at a closed-door gathering of Republican attorneys general and told them to back off prediction markets. The controversy has not slowed Kalshi's marketing. Chasing new users, the company has aggressively targeted Gen Z with celebrity ads, viral TikToks and influencer deals.

The episode features a trader who focuses on weather markets, specifically high temperatures, and says he had a theory last year that people were underestimating temperatures while it was cooling. Traders who win more often than they lose are described as the minority.

Asked about young people getting hooked, Mansour says irresponsible use is a real worry for any of these products. He says the current law is 18-plus and that he follows the law, and that if policymakers move the age to 21, Kalshi would respect that.

Asked about the claim that 75% of people lose money, Mansour says the company is very transparent that there are risks in every trading product. He argues that the 75% figure is never quoted next to how many people lose money day trading, which he says is 95% of retail losses in day-trading options.

On the argument, he says it is common knowledge that day traders lose a lot of money, and that he was taught from an early age not to day trade. He cites recent studies saying people are more likely to allocate money they would otherwise put into investing toward sports betting. He says the most important question is where the money comes from: future savings or investment money that could earn better returns elsewhere. The episode notes that users between 18 and 21, too young to walk into a casino in most states, traded $5 billion on Kalshi this year.

Asked at what point it stops pointing to a worse option and takes responsibility, Mansour says the company is not just arguing that there is a worse option so it does not have to do anything. He says he wants to talk about regulation, figure out the right regulations and safeguards, and welcomes that conversation. When talking to policymakers, he says the message is not that there is nothing to see here, but let's regulate it and figure out the right guardrails and where the gaps are.

Asked about parallels with a large settlement and restrictions on Meta's platforms, he says any technology comes with risks, as AI does, and that this is true for options, futures, the stock market and prediction markets. He says there will be a small percentage of customers who are irresponsible traders when people can speculate on different things. Critics, the narration says, want platforms like Kalshi to create more safeguards for their youngest users, and a young person interviewed describes losing about $5,000 and says gambling feels like the only chance people have given expensive living costs.

Even as concerns grow about prediction markets and gambling addiction, Kalshi is doubling down on the category that arguably started it all: elections. The co-founder says elections are the holy grail of prediction markets because they prove to everyone what these markets are, prove their utility, and provide the most value. With the 2026 midterms, Kalshi is trying to be seen as a go-to source for election odds.

Critics say this is more likely to add confusion and give bad actors a new tool to spread misinformation. The episode shows Kalshi's midterms dashboard, which the narration says looks official but whose numbers are bets, not polling data. In smaller races, the narration says, it can take as little as a few thousand or even a few hundred dollars to push a candidate's odds up or down.

The episode cites a January case in which an anonymous Polymarket trader spent $44,000 to push a California gubernatorial candidate's odds to 96%, even though polls had him at less than 5%. A recent study found that for $3,500 one could move 97% of midterm-related prediction markets by five cents or more.

Kalshi is paying for partnerships with several media organizations, giving it visibility on national television. Asked whether putting prediction market data next to polls could confuse viewers, the co-founder says it definitely raises the question of whether it is clearly defined, what the polls are saying and what prediction markets are saying. He says placing them right next to each other and comparing them can create a lot of issues.

He says that around any big moment there will be more energy and attention, which is good, and that the stakes are high and the onus is on the company to educate people about how to use the data.

The narration says that the fickle world of political fortunes could be an existential threat, and asks what happens to Kalshi when Trump leaves office and the regulatory pendulum swings back. The co-founder says the company has supporters and detractors on both sides of the aisle, with some people seeing the value of prediction markets and others not seeing it yet.

He says the focus is that Kalshi now has tens of millions of customers and is a fast-growing industry outside of AI that is here to stay. He argues the question is no longer whether prediction markets will be here, because the industry is well past that point.