Kalshi CEO: Calling prediction markets gambling is “easy low-hanging fruit” 

Kalshi CEO and co-founder Tarek Mansour has claimed that referring to prediction markets as a form of gambling is “easy low-hanging fruit” as he hit back against critics of the exploding sector.

Speaking on Sequoia Capital’s Long Strange Trip podcast, Mansour suggested the pushback against prediction markets stems from frustration that these platforms are taking spend and consumers away from online sports betting operators. 

Mansour said: “At some point you’re going to build something very big, especially in consumer. And when it truly hits mainstream,  you’re going to get haters. There’s going to be a bucket of society that’s going to be worried because they don’t understand it or they don’t get it. And they’re worried about the risks. 

“Then you have incumbents, because inevitably if you go mainstream, you’re going to be taking it from someone, and those incumbents will go very hard after you. For us, the easy low-hanging fruit is to call it [prediction markets] gambling.”  

The 30-year-old co-founder added: “It’s interesting, because pretty much all trading products that have ever come to society have basically emerged through a fight of them being called gambling.

“Grain futures were actually legalised with the Supreme Court decision in the 1900s. Like futures, a boring commodity futures market, at the time, the states were suing and there were lawsuits.” 

Kalshi is one of a number of prediction market platforms to butt heads with state-level gambling regulators in recent months.  

Last month, Michigan Attorney General Dana Nessel secured a temporary restraining order against the firm, preventing Kalshi from offering sports event contracts in the state. 

Nessel’s Rhode Island counterpart, Peter Neronha, also filed lawsuits against Kalshi and Polymarket in May. 

Mansour went on to describe the distinction between prediction markets and gambling operators, in his view. The former Citadel trader has consistently insisted his product is not a form of gambling.

He continued: “There’s a few things that are very important. One, the incentive structure in the model. I don’t really like gambling. I like trading.

“Gambling is a business model where the revenue of the company is equal to the customer’s losses. So over time, you block the winners, which is what they do.

“They don’t want the smart, mathematically oriented people that are doing research, and they want the people that continuously lose. And those people, they give them promos to come back, and that’s how you create these addictions. 

“But they cannot really solve the problem of addiction because the revenues are equal to the losses. So over time, what do you do? Well, you have to increase the losses. That’s what you do. You have to create those types of behaviours, or at least not throttle them too much. The losses don’t go to me on Kalshi. That’s the beauty of a derivatives market. 

“I want smart trading. I want to incentivise people to do research, because the more liquid, the better the forecast, the more truthful my forecast, the more people look at it, the more my top of funnel increases. I want the smart traders, which is a very different structure from the casino, where you don’t want the smart behaviour; you want just the excessive money losing.” 

Kalshi earns revenue by taking a small transaction fee for trades actioned on its platform. It also earns interest on idle cash balances sitting in customer accounts. 

The pushback against prediction markets has extended beyond the US, though. Both Kalshi and Polymarket had their platforms blocked in Spain, prompting the country’s gambling regulator and government to open disciplinary proceedings against the pair.

In June, nine regulators across Europe also released a joint statement vowing to take a hardline stance against prediction market platforms on the continent. 

Mansour insisted young people will see benefits from using prediction market platforms that they wouldn’t get from online casinos and sportsbooks.

He added: “They’re [young people] spending time getting smarter about the world, which I think is the whole premise of what we’re building. I think this is going to be the ultimate antidote to a lot of the polarisation and extremism we’re seeing, because these calibrated, well-reasoned takes are not getting reward on social media, but they get reward in prediction markets.

“That trains people over time to get a little bit smarter, and I want it [Kalshi] to be a tool for that, especially for younger people, rather than a tool for losing money and excessive behaviours.” 

Earlier this year, Kalshi pledged $2m to the National Council on Problem Gambling (NCPG) despite its attempts to distance itself from the gambling industry.

Last month, Mansour confirmed the New York-based firm was considering an initial public offering (IPO) in the near future.

The company achieved a $22bn valuation following its Series F funding round in May which raised $1bn.

On 13 July, Dillon Borgida, former vice-president of VIP and player experience at Underdog, announced on LinkedIn that he had joined Kalshi as head of private client sales and services to “bring a white glove approach to our traders”.

The hire came as the company unveiled Kalshi Pro, an advanced trading product and interface for the more active users on its platform.

The post Kalshi CEO: Calling prediction markets gambling is “easy low-hanging fruit”  first appeared on EGR Intel.

 Tarek Mansour likens the sector to other verticals which have “emerged through a fight of them being called gambling” and reiterates event contracts should be regulated as financial markets
The post Kalshi CEO: Calling prediction markets gambling is “easy low-hanging fruit”  first appeared on EGR Intel.