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Kalshi’s daring bet on election betting is paying off

Published

6 days ago

October 31, 2024

Kalshi's daring bet on election betting is paying off

Two individuals in their twenties from New York have revolutionized the 2024 presidential election by introducing legal betting.

The new platform, Kalshi, is the first legal election betting site in the US in over a century. The founders believe it will enhance transparency for voters and increase their engagement in the electoral process.

“It’s actually the best mechanism to get more truth about who’s actually going to win,” said Tarek Mansour, 28, who co-founded Kalshi with Luana Lopes Lara, also 28. “We’re letting the market speak instead of pundits, pollsters, and political figures with biases or conflicts of interest.”

In recent weeks, Kalshi has gained immense popularity, with users placing over $100 million in election bets. The platform has been endorsed by JD Vance, Elon Musk, and comedian Theo Von.

Kalshi operates as a futures exchange where users can trade on various current events, similar to exchanges for commodities like oil or cattle prices.

Individuals can place bets on a range of events, from SpaceX rocket launches to movie ratings on Rotten Tomatoes. The betting markets indicate a higher chance of Trump winning compared to traditional polls.

However, Kalshi aims to provide more than just betting entertainment; it offers a new way for people to engage in the democratic process.

“People can now participate and engage more meaningfully through the election,” Mansour explained.

While Kalshi has allowed betting on various topics since 2021, the approval for election betting was granted in October after a lengthy legal battle.

Mansour’s idea for a betting market on elections began during his time working at Goldman Sachs in 2016, following Trump’s victory that year.

He believed that providing a financial stake in elections could offer a more direct and precise way to gauge public sentiment and hedge risk.

The founders, Mansour and Lopes Lara, started Kalshi in 2018 with investments from prominent figures like Sequoia Capital and Henry Kravis. They see New York as the ideal location to build the future of financial markets.

Despite facing regulatory challenges, Kalshi has persevered and is now offering a unique platform for individuals to engage in elections and other events through betting.

When they first started, neither of them could have predicted how challenging it would be to obtain approval. However, Lopes Laura believes that their lack of knowledge may have actually worked to their advantage.

Despite their naivety, they had the audacity to attempt something that other companies deemed impossible.

Through navigating the complex legal process to gain regulatory approval, they were able to establish themselves as a reliable and trusted product.

Other election betting markets like Polymarket and PredictIt have also been making waves. However, Polymarket is not accessible to US citizens, and PredictIt has only been granted temporary operating privileges.

“Many startups opt for the easy route, but we are focused on the long term,” said Lopes Laura. “If prediction markets have the potential to become significant in ten or twenty years, it’s because we laid the foundation in the right way.”

This story is part of NYNext, a new editorial series that highlights New York City innovation across industries, as well as the personalities leading the way.