Kalshi's $40 Billion CEO Is Taking On Wall Street and Vegas | PBD Podcast #881

Kalshi co-founder Tarek Mansour joins Patrick Bet-David to reveal how prediction markets are challenging Wall Street, threatening casinos, and creating millionaires. He breaks down the company's explosive growth, $100 million in traders, election forecasting, insider trading, and the future of finance. ——— . 👞 Get the NEW Billionaire Suede Loafer: https://bit.ly/4ym5oRA . 🇰 GET STARTED ON KALSHI WITH $10 ON US! SIGN UP HERE: http://kalshi.com/pbd . 👕 SHOP THE ICON COLLECTION: https://bit.ly/3TuUU3x . 👞 GET THE FLB1's: https://bit.ly/4mC4uf6 . Ⓜ️ CONNECT ON MINNECT: https://bit.ly/4kSVkso . Ⓜ️ PBD PODCAST CIRCLES: https://bit.ly/4mAWQAP . 👔 BET-DAVID CONSULTING: https://bit.ly/4lzQph2 . 🥃 BOARDROOM CIGAR LOUNGE: https://bit.ly/4pzLEXj . SUBSCRIBE TO: @VALUETAINMENT @BetDavidConsulting @vtgenz @ValuetainmentComedy . ABOUT US: Patrick Bet-David is the founder and CEO of Valuetainment Media. He is the author of the #1 Wall Street Journal Bestseller “Your Next Five Moves” (Simon & Schuster) and a father of 2 boys and 2 girls. He currently resides in Ft. Lauderdale, Florida. He currently resides in Ft. Lauderdale, Florida.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I mean, this year, we have people that are making over a hundred million dollars this year.

• 0:02Patrick Bet-David?

  But just on Kalshi?

• 0:03Speaker 00

  And they're like, not even thirty years old.

• 0:04Patrick Bet-David?

  Stop it.

• 0:05Speaker 00

  Yeah.

• 0:05Patrick Bet-David?

  And no one knows who these people are.

• 0:07Speaker 00

  They're pretty secretive.

• 0:08Speaker 02

  ... companies in the world, but also one of the most controversial. Kalshi calls itself a prediction market, but a lot of people consider it a gambling.

• 0:16Speaker 00

  You find the card counter, and what do you do with them? You kick them out of the casino. And so if anyone is doing smart research, you incentivize them not to, you push them out. We have an open market where winners can win, actually, that incentivizes people to do research and get better at the thing. Those guys are banned from the casino anyways.

• 0:31Patrick Bet-David?

  So then, why do they hate you?

• 0:32Speaker 00

  I'm building the modern-day financial market. That's what I'm building. Instead of giving the microphone to a select few, we're giving the megaphone to millions of people that are battling it out in the open in a completely transparent way, putting money where their mouth is. Imagine millions of people are doing that, competing on the open market all the time. You get truth out of that.

• 0:49Patrick Bet-David?

  But what if some of these guys try to manipulate this because they see how much of an impact it has? What would that do to the market?

• 0:55Speaker 00

  Complete waste of money. Where should they have put it? Giving it to the campaign, put a bunch of ads on TV, attack ads on the other candidate? Or they should have commissioned their own polls that will say whatever they want them to say, which, by the way, you know, now, in the last stretch of the election, what is gonna happen?

• 1:18Patrick Bet-David?

  So it's great to have you on.

• 1:19Speaker 00

  Thanks for having me. I'm excited.

• 1:21Patrick Bet-David?

  Yeah, Kalshi, you're everywhere. I can't turn on TV without seeing Kalshi, right? Tarek Mansour, co-founder of Kalshi, went from, what, zero to now, they're saying it's twenty-two billion, soon to be forty billion, depending on who's reading what article, but for the audience that doesn't know, maybe walk me through how the whole story of Kalshi came about, your background before starting Kalshi.

• 1:43Speaker 00

  You know, I was born in California, and then at a young age, I moved back to Lebanon because my parents are Lebanese. You know, I grew up with a single mom, and, you know, Lebanon is, you read some of it, it's a crazy country, it's very volatile. And it's kind of a shit show, honestly, like, but there's a lot of positive about it. It's beautiful, and, you know, probably hear some from friends, like, we have a great nightlife, great restaurants, etc., but it's just, the most defining thing is that everything's unpredictable. Like, you don't know what you're gonna wake up to the next day. And, you know, especially with a single mom, that makes you an anxious kid, and I was very anxious, I still am. That led me to love math. I always liked math, and I would play around with, I would read, like, papers, and because math, you know, what's nice about it is, like, you have an answer.

• 2:28Speaker 00

  There's no debate, there's no my opinion versus your opinion.

• 2:30Patrick Bet-David?

  Black and white.

• 2:30Speaker 00

  Yeah, there's an answer, like, either the proof works or it doesn't work, right? That led me to, okay, I wanna go where the math people go, and at times, thinking like, MIT, this is the place. I went to MIT, and then where are the math people going? Finance, because finance is a very good application of math, and, you know, it's funny, like, there's this saying in a time, because I also did the masters during MIT, in academia circles and in Wall Street, there's always this joke, which is like, you know, doing data science and research in academia is the same as Wall Street, because people do data science and research on both. The only difference in Wall Street is they have to be right, you know, because you put a paper out, and then...

• 3:02Patrick Bet-David?

  That's right.

• 3:02Speaker 00

  But in Wall Street, you have to make money.

• 3:03Patrick Bet-David?

  Yep.

• 3:04Speaker 00

  And, you know, that's why I always liked markets, because markets are a good application of incentives. Because what do markets incentivize? If you're right, if you get a piece of information, if you're knowledgeable about the world, you make money, and if you're wrong, you lose money. Went to work at Goldman as an intern in 2016, and, you know, all these complicated products, the everyday layman doesn't understand any of this stuff, you know, swaps and swaptions and credo, and like, all these weird, crazy terms. And then Wall Street, what they do over time is they complexify everything, they add more and more layers so that the average person doesn't understand what's going on. That kind of frustrated me a little bit, and the second thing is, people are coming and asking us simple questions about the future. They're like, hey, I think Trump is gonna win, how do I bet on it? How do I, and these are, by the way, hedge funds, large corporations, like institutional investors, how do I trade on Trump winning the election?

• 3:49Patrick Bet-David?

  So who are you working under at Goldman? Are you working under Charmine, or are you...

• 3:52Speaker 00

  I created derivatives in the trading side.

• 3:54Patrick Bet-David?

  Got it.

• 3:55Speaker 00

  So I was in the trading business, and, you know, they would say, okay, I think Trump is gonna win, how do I play it on the markets? And we would say, you know, at the time, I remember, the Trump trade was to short the S and P. Trump is a populist candidate, if he wins, he's obviously gonna tank the market, so you should, you know, if you think he's gonna win, you should short the S and P. So that's what a lot of people did.

• 4:12Patrick Bet-David?

  Mm-hmm.

• 4:12Speaker 00

  Come November, he won, people were right about the prediction, when the S and P went up, they all lost money.

• 4:16Patrick Bet-David?

  Mm-hmm.

• 4:16Speaker 00

  Bad trade, really bad way to express that opinion, so I started thinking, okay...

• 4:20Patrick Bet-David?

  And that was Goldman's position at the time?

• 4:22Speaker 00

  No, they sold, we sold to a lot of customers, you know, but that's what happens, like, the banks, at the end of the day, you're not taking the position necessarily, you're selling it to, but the key thing is, to me, is like, what is a market? A market is a place that aggregates a large number of, a large diversity of participants, people from all walks of life, to trade on their difference of opinions on, you know, to predict the price of stock, or apple, or price of grain, or oil. What if you build the same mechanic where buyers and sellers, we match buyers and sellers, like the New York Stock Exchange, exactly the same thing? But the underlying thing is something that people care about or relate to, whether it's politics, like Trump is gonna win or not, Brexit happens, weather tomorrow, if it's gonna rain, if, okay, C is gonna win the next game, if inflation's gonna go up or down, just simple question about the future that can bring in a much larger number of people.

• 5:07Speaker 00

  And the more I read about it, you know, the idea wasn't new. A lot of economists love the idea of information markets, dating back to World War II. Why? Because at a time, you know, when they would talk about the idea that market prices are the only form of truth. Why? Because markets, what they do is they aggregate information from everybody, like, you know, you have a piece of information in Hawaii, and California, and Texas, and markets are like a magnet, they incentivize you, if you have a valuable information, what do you do? You go trade on it, and you think something is underpriced, you move it up a little bit, and if you think something is overpriced, you move down a little bit, and imagine millions of people are doing that, competing on the open market all the time, you get truth out of that. And that's what an information market does, and I love that idea, it's like the application of free markets to the pursuit of truth, right?

• 5:50Speaker 00

  Like, if you and I wanna figure out what the price of apple is, we're not gonna go and, like, debate with the price of apple, we're gonna look at the New York Stock Exchange. We have, there's a big why, because there's rigor in it, the incentive is to get it right. But now, in politics, what do we do? We debate. But now, we build a market with the same level of financial rigor, where people are, there's quants and hedge funds, and people are doing research, and if they have good information, they're gonna come trade on it and make money, and if they have bad information, they're having stupid opinions, they're gonna trade on those opinions and lose money. And that's what the beauty of the market is, it filters out bad information from good information, and then aggregates it beautifully across the wisdom of the crowds, millions of people. So I had to start a company. I was like, I gotta do this. I was gonna go work at Citadel, which I love, by the way, Citadel, great place, but I was like, I gotta do this, this is like, I think, too important to not do.

• 6:34Patrick Bet-David?

  Was anybody doing that at the time?

• 6:36Speaker 00

  You know, there was a lot of trials, you know, the, so there was University of Iowa that tried an election market in the nineties, way back in the nineties, and it was super accurate, small-scale, off-for-profit, yeah. And I was like, this is interesting, and then...

• 6:49Patrick Bet-David?

  How did you find out about it?

• 6:50Speaker 00

  I just started reading online, and, because economists really loved the idea forever, they really wanted this to exist, and then, you know, then, then, there was a book, Super Forecasters, written by a MIT professor, which I was, Philip Tetlock, and it's about this idea, like, about super forecasting and, like, the art of, who are the people that are good at forecasting the future? Who are the people that are good at doing this? And, you know, he did, he did this very interesting analysis where he put a bunch of geopolitical experts, like elites, from DC, Wall Street, the big guys, the big talking heads, and he put them against a bunch of random dudes to predict, you know, random dudes and random women, to predict geopolitics, the thing that the experts were experts in. Guess who did better?

• 7:36Patrick Bet-David?

  The random people. Why?

• 7:38Speaker 00

  Because this is what's beautiful about it, is like, what he realized, like, actually, information doesn't sit with the elites, we are always making decisions based on what the elite tell us, top-down, you know...

• 7:48Patrick Bet-David?

  Wow, so it sits with the people instead of the elites?

• 7:50Speaker 00

  It sits with people. A lot of decisions are made by a handful of people, but the information that's important sits with millions of people on the nodes, on the extreme, everywhere, it's decentralized, it's distributed. And so, markets surface that, they are magnets for all that information, for all the people to kind of bring it up and then predict the future, and I love that. And like, to me, right now, as you look at it, why is Kalshi more accurate than all these other places, you know, and, and, you know, we, the Federal Reserve put out a paper in February, they compared our forecast to Kalshi, which is Main Street, average people, to Wall Street on the economy, like inflation, Fed, interest rates, GDP, unemployment, which are the things that Wall Street, Bloomberg, and all these guys are very good at. Guess who did better? Kalshi. And then people will come to me, and it's like, who are these traders? Like, who are these people doing it?

• 8:35Speaker 00

  And like, you know, and there's actually some research, I don't know if you can pull it up, about who the traders are, I think it's one of these, yeah, this one, if you go down a little bit on the chart, and I love this, I mean, a little bit higher, that chart, that's right here, right, like, eighty percent of our customers went to public school. If you look at our customers, our top customers, they're twice as likely to have worked in retail than have worked on Wall Street. You know, our best inflation forecaster is a random dude in Kansas, never traded financial markets, just loves reading about the economy and ask people about what do you think about prices? And imagine millions of these people, but that's the beauty, we're giving people the opportunity.

• 9:08Patrick Bet-David?

  How did you find a guy in Kansas?

• 9:09Speaker 00

  I mean, now we build a, you know, the people know.

• 9:11Patrick Bet-David?

  Because on the backend, you keep asking, why does this guy keep getting it right?

• 9:14Speaker 00

  Yeah, and I thought, you know, I talked to him, he's very anonymous, and like, there's others that are like that, but the people that are no.

• 9:18Patrick Bet-David?

  But do you look at people that are the best at picking? Like, is there like a leaders bulletin on the backend?

• 9:22Speaker 00

  There is some of their public, some of them don't opt into like showing it because they want to be very private, uh, so they, they don't want people to know. It's like Wall Street, a lot of people don't want to know.

• 9:29Patrick Bet-David?

  But do you, do you have the ability to find out who are the people?

• 9:32Speaker 00

  Oh, we do, we do, we do.

• 9:33Patrick Bet-David?

  And what pattern, without giving names, what pattern? Because, uh, last week I had Frances Haugen on from, uh, the Facebook whistleblower who was here.

• 9:40Speaker 00

  That's right, that's right.

• 9:41Patrick Bet-David?

  The movie that they just did, the social reckoning, whatever it was called, she told me about a program Facebook had, well, was called Crosscheck, and under that division, they developed a group where they looked at how many people who high score of reason, reasonability, meaning, say this person's a conservative, but they get the most people from the left that like their post. Or say this person's a liberal, how many people on the right listen to them? And they say this is a reasonable human being, give them a bigger wide audience because they're reasonable, they're fair, even though we know which side they lean on. What patterns did you notice with who gets the most things right?

• 10:14Speaker 00

  What you just described. Because the people, and so this is what's important, it's not the elites. It really is.

• 10:21Patrick Bet-David?

  That's wild to me.

• 10:22Speaker 00

  I mean, this is the, the key thing, and that's why, by the way, prediction markets, you look at the news and the elites, they don't like them, because it's like, at the core, it's moving power from information from being centered with a few gatekeepers and a few people that tell us here's what to believe and what not to believe.

• 10:38Patrick Bet-David?

  Yep.

• 10:38Speaker 00

  And it's giving it to millions of people. Nobody controls the prediction markets. So I don't, it's, all the trading activity is public and you can see who's trading and what they're doing. But it's millions of people saying, here's the percentage of something happening or not happening. And that shift of balance of power, it's, this is what free markets do so well, is they're giving, instead of giving the microphone to select few, we're giving the megaphone to millions of people that are battling it out in the open in a completely transparent way and competing on their opinions. And, and if you look at who they really are, it's not, like, the same people that predict sports are good at predicting politics, economics, uh, uh, financial markets.

• 11:11Patrick Bet-David?

  But do you notice a pattern? Like, be, if you, if you're able to be specific?

• 11:14Speaker 00

  Not age, not gender, not who they are or what their background is, it's more a skill, which is a skill of self-calibration, which is you go out, they're always reading below the headline. They look for information and, uh, uh, like opposing views, they look for information that comes from opposing views that they sent them to understand what the other side has.

• 11:36Patrick Bet-David?

  Cover their own blind spots.

• 11:37Speaker 00

  Yes, where am I wrong? They're always thinking, they're not thinking, they're trying to self-calibrate, because you know, humans, we have this thing called the affect heuristic, have you heard of it?

• 11:45Patrick Bet-David?

  No.

• 11:45Speaker 00

  The affect heuristic is this thing where humans, when they're, when you put something in front of them, in the first five seconds, we have this thing where emotionally we decide whether we like it or not, immediately. And that's why, you know, social media has, has really fueled that, that's why we're beginning, becoming so polarized, because you see a 10-second reel about a person. If it's positive the first time, you're gonna like the person pretty much forever. And if it's negative the second, uh, the first time, you're gonna hate that person pretty much forever. It's gonna be so hard to get it off. And you know how hard it is for us to change opinions, we don't like changing opinions.

• 12:14Speaker 00

  The guys are really good at prediction markets, the women and guys are very good at prediction markets, are the ones that like resist it. They're the ones that are like, why do I believe what I believe? Let me go seek out the opposite side and see what they believe and why they believe it. And like, I'm always calibrating, am I too certain? Am I not certain enough? And by the way, they're not, when people say, you know, people are, people are betting on cash, sure that people are betting, and they're same way they bet on the stock market and same way they bet on anything else. But a lot of what they do is they trade in the sense that like, they're buying low and selling high. They think, you know, you could buy Republicans or Democrats, the same people are buying Democrats or Republicans winning the Senate, not because that's what they want to happen. That's because they're thinking what will happen. And right now, for example, a lot of people are telling me, I think that Republicans are underpriced for the winning, winning the Senate. I think the odds of Republicans under, you know, are like 36% right now.

• 12:58Speaker 00

  That's underpriced, right? And they maybe like buy at 36 and then if it goes up to, you know, 50, they'll sell it at that point. And they're not thinking, they're not, they don't wait till the election, they basically buy and sell, buy low, sell high, they're always figuring out where the value stands. And that's a very different type of thinking than this sort of emotional clickbait that we have on Twitter, you know, and on Twitter and social media, you don't get rewarded for truth, you get rewarded for, you know, if you put out a bunch of misinformation, you don't get punished, you actually get rewarded, you get more likes. In prediction markets, if you trade based on misinformation, you get punished, you lose money.

• 13:26Patrick Bet-David?

  So the, the, do you have a top 50 earners that you look at who have made the most money?

• 13:31Speaker 00

  I, I look.

• 13:31Patrick Bet-David?

  You have to have that.

• 13:32Speaker 00

  Yeah, we have top, I mean, really we look at the top 15,000, because we have 30 million customers now.

• 13:36Patrick Bet-David?

  Top 15,000?

• 13:37Speaker 00

  Yeah.

• 13:38Patrick Bet-David?

  And, and what does a top make? Are there?

• 13:41Speaker 00

  There's people that make millions of dollars, people that make tens of millions of dollars.

• 13:44Patrick Bet-David?

  Off of cash, you're like.

• 13:45Speaker 00

  Yeah, yeah, and people.

• 13:45Patrick Bet-David?

  And some of them are regular people or well-known people?

• 13:47Speaker 00

  They're pretty much all, like, like, the vast majority are regular people.

• 13:50Patrick Bet-David?

  Like, if.

• 13:51Speaker 00

  People think that Wall Street is outperforming on cash, but we're a new Wall Street, we're, we're enabling a much broader people, you know, the, the Big Short, you know, those two guys that were in the basement?

• 13:59Patrick Bet-David?

  Yes.

• 14:00Speaker 00

  You remember those two guys, the, the guys that were in the basement that were, was it Lone Pine Capital or something like that? I forgot, the, uh, um, the ones that like, the two kids that were in their mom's garage and then they were like.

• 14:12Patrick Bet-David?

  I do, so the guy goes to them and talks to them, I, I remember.

• 14:14Speaker 00

  Exactly, those guys.

• 14:14Patrick Bet-David?

  Pull it up, pull up, uh, uh, in the images so people can do, the, the two boys in a basement, just type in next to Big Short.

• 14:22Speaker 00

  Basement, yeah.

• 14:23Patrick Bet-David?

  Yeah.

• 14:24Speaker 00

  Uh, let's see.

• 14:27Patrick Bet-David?

  No, in the movie, type in in the movie?

• 14:30Speaker 00

  Uh, I think you should just do like two, yeah, uh, had, what was it called, Lone Pine Capital or something like that? I forgot.

• 14:36Patrick Bet-David?

  Okay, keep going, I'll find it, I'll send it to them.

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• 17:05Speaker 00

  No, not that, not that. Yeah, but I think those guys are the, uh, you know, uh, uh, no, it's not, it's not this one, it's some, it's one, I think, I forgot what the name is, maybe it's not Lone Pine, it's something capital.

• 17:18Patrick Bet-David?

  Charlie Geller and Jamie Shipley.

• 17:20Speaker 00

  That's exactly right.

• 17:21Patrick Bet-David?

  From, uh, Brownfield Capital.

• 17:23Speaker 00

  Brownfield, Brownfield.

• 17:23Patrick Bet-David?

  Yes.

• 17:24Speaker 00

  And, and that's the customer. It's, it's the people that are like, you know, looking at the world and trying to get smarter about the world, and that's, prediction markets like financial markets, what do they do? They incentivize people to go out and get smarter about the world and get more diligent. And if they do the, the analysis and they get smart, they get rewarded for it, because they're bringing all information to open market. And when people tell me always like, well, how is this different from gambling? Right? Like, how is that, what is the difference? Right? And I always say it's actually very simple structural difference. You know, back in the day when society, when we got grain futures, which I think now we all see it as a financial instrument, boring financial instrument, society thought it was gambling.

• 17:58Speaker 00

  Why? Because farmers were betting on the price of grain. Some farmers were betting, some farmers were hedging, and, and like, how do we decide that this is gambling versus not gambling? And the way they decided, like, yes, some people are speculating, do people bet or gamble on Robinhood? Certainly, they do a form of it. The question is not whether there is some behavior that's like this, the question is like, are you doing it in an open competitive marketplace that rewards you for being smarter and for knowledge? Or are you betting against a sports book or a casino that actually doesn't reward you? It rewards you for basically losing money, right? Like, the person that gets the suite at the casino is not a card counter, that's actually trying to be smart and like, do smart things. It's the person that's basically losing a lot of money to the book and has signs of addiction and is, you know, is, is in there for the entertainment. And those are regulated differently and treated differently, because

• 18:41Speaker 00

  the markets have a lot of positive externality, which is the forecast, right? That's why we look at the forecast of what's gonna happen in the midterms or a sports event or other. And then some people are actually using it, and I think you're gonna like this, they're using it not, they're putting it in a position not to speculate to make money, they're putting it to hedge themselves as a form of insurance.

• 18:57Patrick Bet-David?

  What does that mean?

• 18:59Speaker 00

  So you know, so why, when, when grain futures came around, they were helpful because of the prediction, it would tell the farmers, here's how much you can like sell your, here's the prediction of prices in six months or how much you can sell for. And then hedging, which is like, farmers would basically short the price of grain, so that if the price of grain goes down and they lose revenue. The short pays them the offset of the revenue, right? And so you see this on events, right? Like, for example, in hurricanes in the Keys in Florida.

• 19:24Patrick Bet-David?

  Is this like buying a stock and buying a put at the same time?

• 19:26Speaker 00

  Exactly, same thing. It's the same as buying insurance. So like, a lot of people in the Keys in Florida, they buy, yes, on our hurricane markets as a way to basically get paid if the hurricane hits their town instead of going to insurance companies, because insurance companies don't insure a lot of these homes. The other board, sports is a big source of hedging for us. So last week, there was an article, and there's, you know, hundreds of businesses do the same. We have a restaurant chain that owns 25 bars, and they made their math that they make $120,000 if the Dodgers make it past the playoffs. You know why? Because, you know, if they make it, you're gonna have a lot of customers that come watch the games, and they sell. And $0 if they don't, or like much lower. So what do they do? They basically shorted the Dodgers. They bought Noah on the Dodgers making it past the playoffs so that the event contracts, the hedge pays them the revenue loss. It offsets the revenue loss.

• 20:11Speaker 00

  So now they're $60,000 up. But that's, that's, that's very important, it's very deep.

• 20:15Patrick Bet-David?

  Brilliant.

• 20:16Speaker 00

  It's brilliant, and it's critical, but that's because why grain, you know, people, why did Congress step in and create a national-wide model and regulation for grain futures? Why are they so important? Even though people are betting on the price of grain, like when people are saying it's gambling. Imagine farmers had less predictability of their business in six months. What would they do? They would invest less. They get less lines of credit. Predictability in business is one of the key. Anyone who's run a business would know this. Would you pick a cash flow that's $0 or $120,000? Or you're a cash flow that's $60,000 either way? You'd pick the predictable cash flow. And the reason is that you can give it better loans over time. Predictability helps you invest more certainly for the future. And so over time, this is what derivatives markets do. As we get smarter about what's gonna happen, who's gonna win the midterms, we can make better decisions and then hedge all the things that impact us negatively over time,

• 21:02Speaker 00

  which helps promote investment and so on.

• 21:03Patrick Bet-David?

  Is there a way for somebody to get good at Kalshi where, hey, let me teach you how to be a better trader on Kalshi? Is there things like that as well on how to succeed?

• 21:12Speaker 00

  It's a skill, right?

• 21:13Patrick Bet-David?

  Maybe, let me ask this question.

• 21:15Speaker 00

  For sure.

• 21:16Patrick Bet-David?

  Would I give it a name? Again, I'm not looking for names. I just went on ChatGPT and asked the question, who are the top 10 traders on Kalshi? These are some of the names that came up. BM Markets, 951, can you go back to it? You know, Lost Buck. And so the win rate to the right is what matters the most to me, right? 55%, 73%, 41%. Does this mean based on the position they make, that's how often they win?

• 21:39Speaker 00

  Yeah, win rate is like, yes, exactly. Out of each position you take, how often is a right position?

• 21:45Patrick Bet-David?

  Is the highest ever public on the reported profits?

• 21:48Speaker 00

  We have people that are making like over, I mean, this year, we have people that are making over $100 million this year.

• 21:53Patrick Bet-David?

  Just on Kalshi?

• 21:54Speaker 00

  And they're like, like not even 30 years old.

• 21:56Patrick Bet-David?

  Stop it.

• 21:57Speaker 00

  Yeah.

• 21:57Patrick Bet-David?

  And no one knows who these people are?

• 21:59Speaker 00

  They're pretty secretive.

• 22:01Patrick Bet-David?

  In the States?

• 22:01Speaker 00

  It's like the brownfield capital.

• 22:03Patrick Bet-David?

  In the States?

• 22:04Speaker 00

  Yeah, yeah, yeah. I mean, and by the way, it's not like, we have a lot of people that are making millions, and they tend to be more like private. By the way, that's not everybody. That's why I always say, people tell me, but there's a lot of people that lose, for sure. It's a competition. How many people win the NBA Finals?

• 22:14Patrick Bet-David?

  Is it an 80-20 split? What's the number?

• 22:16Speaker 00

  It's like more 65-35.

• 22:18Patrick Bet-David?

  65, lose 35.

• 22:19Speaker 00

  By the way, here's what's interesting. What percentage of hedge funds outperform the S and P every year?

• 22:23Patrick Bet-David?

  It's a much smaller number.

• 22:25Speaker 00

  20%.

• 22:26Patrick Bet-David?

  Yeah.

• 22:26Speaker 00

  80% underperform the S and P. 80% of hedge funds lose against their benchmark.

• 22:30Patrick Bet-David?

  So you're better off just betting in S and P than betting on any hedge fund?

• 22:34Speaker 00

  But that's, but that hedge funds are benchmark against the S and P, because, you know, if you're below S and P, you're a loss. But like, and the reason it's market, financial markets, including prediction markets, whether it's sports or weather or politics, et cetera, there is skill-based game. If it was a game of chance, it'd be 50-50. 50% of people would win, 50% of people would lose. Which, by the way, like, is what you would see in a casino or whatever. But because it's a skill, some people are gonna put more effort and get better at it over time than others.

• 23:01Patrick Bet-David?

  The top guy made $100 million this year so far?

• 23:03Speaker 00

  It's, it's, it's now he has a small team, it's like a few people on the team.

• 23:06Patrick Bet-David?

  So do you think it's gonna get to a point where a Kalshi person's gonna make a billion? It's gonna be?

• 23:10Speaker 00

  I mean, we could get, I mean, it's like the markets, right? Like Jane Street and these guys make billions of dollars in the open market. So as the market grows, I mean, now we're doing a trillion dollars of volume here. So as the market, you know, as the market grows, it's gonna be, yeah.

• 23:23Patrick Bet-David?

  Okay, what number shocked you the most? You just said we're gonna do a trillion. How much did you guys do during the World Cup? I mean, I don't know what it was.

• 23:30Speaker 00

  I mean, yeah, we, I don't know. We're bigger than we were now, than we were at the time, actually. So I did a billion, billion and some, yeah, I think that was July.

• 23:38Patrick Bet-David?

  That's one game, right?

• 23:39Speaker 00

  Yeah, but that month, I mean, we're doing, right now, we have, because we have prediction markets, we have perpetual futures, traditional commodity futures. I think the prediction markets are annualizing something like 600 billion a year, and then the rest is 400 billion. So we're like around a trillion dollars of annualized volume, but, but.

• 23:53Patrick Bet-David?

  And what is the business model?

• 23:54Speaker 00

  We take a small fee, so that's the key. I mean, this is also one of the differences of being a market versus a sports book. A sports book's business model, that's why, you know, betting and gambling, people don't like in society. It's a way to, your revenue is equal to your customers' losses. So what do you do? You figure out who the winners are, and you ban them. You find the card counter, and what do you do with them? You kick them out of the casino. And so if anyone is doing smart research, you incentivize them not to, you push them out. If anyone is signs of addiction, and they keep losing money, and they're not, they're doing it like without really thinking, you incentivize them to keep doing it. That's how you get rewarded. And you give them bonuses and promos so you can keep these losers coming back. Markets, I am a marketplace. You are matching you as a buyer to somebody who's selling to you. And if you open the, for example, the Senate or any of the sports markets we have,

• 24:37Speaker 00

  you know, if you go down a bit, and you click on Democrat Party up, I don't know, yeah, right here. And then you, yeah, if you look at this, if you go down a little bit, yeah, right here, no, yeah, right, right in the middle. The top, the asks is, if you scroll slightly up, just so that we see, yeah, right here. The asks are people that are selling, and the bids are people that are buying. It's the same as the stock market. This is what the New York Stock Exchange looks like. And we match buyers and sellers. And I take a small percentage. So if people trade, let's say, $1,000 here, I'll take 0.7%. So I'll take, you know, seven, let's call it $7, right?

• 25:08Patrick Bet-David?

  On a thousand?

• 25:08Speaker 00

  Yeah.

• 25:09Patrick Bet-David?

  Is that relatively the number?

• 25:10Speaker 00

  Yeah, it's like the New York Stock Exchange, exactly, yeah. And I think that like, that is key, because I do it whether somebody wins or loses, I'm indifferent. Actually, I want the card counters or the smart people. Like, the New York Stock Exchange wants the smart traders. Why? Because the smart traders are the ones that create efficient markets and accurate prices. No one would use my forecasts if it's not calibrated over time. That, those people are very skilled, and that's why the difference in model is so important.

• 25:34Patrick Bet-David?

  It's like poker. You're not the enemy. Blackjack, unlike Blackjack where the enemy is the casino, here.

• 25:40Speaker 00

  It's different from poker in one other sense, is we're discovering the prices of something that has real human impact. So on poker, when people are like, you know, betting against each other, you're not learning anything, because you know what the probability of a card flipping is. Here, you're learning this idea of price discovery. You're learning the prices. If you go back up to the chart, that chart, you would never like, you know, have a chart on which poker hand is gonna play next, because, you know, that chart is a fixed probability. It's a, you know, whereas here, we're like, that positive externality of getting smarter about the world is what makes markets different.

• 26:12Patrick Bet-David?

  Okay, so let's just say, let, walk me through it. If somebody right here puts $100,000 on no 37 cents Democratic Party, what does that mean?

• 26:21Speaker 00

  So if you look at it here, if you, yeah, on the right, if you click on dollars on the, all the way to the right, just a little bit, yeah, right here, shares. And then if you type in 1,000 shares in the, in the thing, it tells you immediately. So you're buying 1,000 shares. The average price you're gonna get filled out is 64 cents, and you're gonna pay 600, let's say, $50 after fees, and then you're gonna get paid $1,000 if you end up being right. Now, now you own those 1,000 shares. They're not shares of a stock or shares of like oil futures. They're shares of, you know, the Democrats winning the Senate, the Senate. And then in a few weeks, if that goes up to like, let's say, 75%, you can sell those shares and you get like.

• 27:00Patrick Bet-David?

  You're not even waiting till the end.

• 27:01Speaker 00

  11%. That's what most people do. Vast majority of volume, they're buying and selling.

• 27:05Patrick Bet-David?

  What percentage doesn't wait till the end?

• 27:07Speaker 00

  Of the volume, I think it's like 70%.

• 27:09Patrick Bet-David?

  70% doesn't wait till the end?

• 27:11Speaker 00

  Yeah, I mean, because they're traders. They're like, they're trading, they're, they're figuring out, like a lot, again, it's, we, we, you need to discuss this. There are people that are in the middle. A lot of these guys are like, also like, you know, some of those jokes, like, they're kind of swing voters, because like, they're dispassionate about the outcome. They're unburdened by ideology. They're like, thinking, okay, the Democrats are a little bit too overpriced or underpriced right now. So if I think it's overpriced, I'm gonna sell.

• 27:31Patrick Bet-David?

  Wow.

• 27:32Speaker 00

  It's like a stock.

• 27:33Patrick Bet-David?

  That totally makes sense, yeah.

• 27:34Speaker 00

  But that, that level of rigor is markets.

• 27:37Patrick Bet-David?

  Okay, so let me ask you, so today, today's a special day. Why? Brazil, election, president, Bolsonaro, Lula, right? Day one, you guys had him at 80%.

• 27:46Speaker 00

  That's right.

• 27:46Patrick Bet-David?

  And if you go to it, widen it a little bit more, yeah, so day one, go back to like, two days ago. Go back two days ago, you had him at 87%. That's about two weeks ago, a week ago, but that's fine, 87%.

• 27:59Speaker 00

  Yeah, 75%.

• 28:00Patrick Bet-David?

  So and all of a sudden, this flips.

• 28:03Speaker 00

  That's right.

• 28:03Patrick Bet-David?

  Lula wins. 15 out of 7, 17 districts that were doing the counting of the, of the votes, said Bolsonaro's gonna win. Last minute, he pleads with the Supreme Court to open up the voting in areas that are pro-Lula, and all of a sudden, he comes out of nowhere, wins, I don't know how many gets, plus minus 10.6 million. This has never happened in history, right? So for you, when you watch it, because you have a data that we don't have, what do you speculate is going on there?

• 28:29Speaker 00

  So this is what's important to understand. There's two things.

• 28:33Speaker 00

  One, a market doesn't create new data. A market aggregates all the data, right? Like, Apple's stock doesn't run the product for Apple, right? Now, Apple's stock is at $100 a share today, let's call it. If Apple does a series of actions, like, for example, if they... Some bad regulatory action comes out, that they were doing something bad in some of their factories, what's gonna happen to the stock? It's gonna go down. Why? Because new information has come to light that is now gonna be priced in by the market. The market is gonna absorb that information in real time. If Apple releases a bunch of great products over the next three weeks, what's gonna happen to the stock? It's gonna go up. So what... And this is always important. Markets, what they do is they absorb new information in real time. They're in aggregate of...

• 29:18Speaker 00

  And in the elections, of the polls, the news, candidate quality. If a candidate has a scandal, what's gonna happen to their odds? They're gonna tank. So markets, that's what they do. They do a very good job at summarizing all the information that's out there. And you know that the incentive to summarize it is clean, because there's no partisan lens or bias. Like, why is Fox saying something, or CNN saying something? There's a partisan lens in here. Whereas the only lens for prediction markets is that people are trying to get to ground truth, because if they're closer to the truth, they're gonna make money. If they're further from the truth, they're gonna lose money. Now, sometimes, there's new piece of information that's very material, right? Like, if a candidate is doing very well, but then their scandal happens, they're gonna tank very quickly. And that's what happened. There's a big new shift that happened yesterday on the election, which is...

• 29:57Patrick Bet-David?

  Could you guys pinpoint what it was, or could...

• 29:59Speaker 00

  I think a big shift happened when the... I think the extensions, I think, started happening. But I hadn't looked at it quite yet. But the more interesting way to evaluate the prediction markets, I think... If you go back to the calibration plot, I think it's... We have it in open... Yeah, right now. If you go down a little bit, it's this. So if you zoom in a little bit on some of these charts, that's what we call a calibration plot. So you cannot evaluate a prediction market accuracy on one market. There's a study on, like, 2 million markets that's public. Anyone can replicate it. Where it says, "What is the probability that we're saying something is gonna happen with? And how often does it happen?" So if you say something has 20% chance, that doesn't mean it's not gonna happen. It means it's gonna happen 1 in 5 times. It's gonna happen 2 in 10 times. It's gonna happen 20% of the time, right?

• 30:39Patrick Bet-David?

  Got it.

• 30:40Speaker 00

  And that's so important. It's like, sometimes, the 10 percenter, if you run the race 10 times, what's gonna happen? It's gonna happen 1 out of 10, right? It's not... And so, that's what shows you in the spot, which is actually very accurate. It's like, when we say something has 20% chance, it actually does happen 20% of the time.

• 30:53Patrick Bet-David?

  So on the back end, what did it show to you guys? Did you... Did Kalshi know that there is a possibility that Lula wins?

• 31:00Speaker 00

  There was a 25% chance, 1 in 4 possibility that Lula wins. And that was, you know, looking at all the prevailing factors. And that changed, obviously, dramatically when the new material informations came to light. But like, again, if Lula... If you play that election 4 times, and Lula wins 0 out of those 4 times, then we would be wrong. He should win 1 out of those 4 times, and that happens. And so, what I say with the midterms right now is, people ask me, "Oh, how do you evaluate the midterms?" It's like, "Look, look at 100 races that Kalshi is predicting, and assume that the... You know, it's saying that the Republican is winning 50% of the time, or like, 40% of the time. How many of those 100 races should go Republican? 40. It shouldn't be 0. It's not like every one of those races should go Democrat.

• 31:41Patrick Bet-David?

  Yeah, and that one makes more sense, because it's a volume of races, right? You're not dealing on 1.

• 31:45Speaker 00

  That's right. But you have to look at elections over time. It's a probabilistic model, right? A probability... Like, right now, we're seeing the Senate is gonna go 64% Democrat, 60... whatever. It's like a three-sided coin, where 2 sides are Democrat, 1 side is Republican. It's a three-sided die. There's 3 sides, 2 Democrat, 1 Republican. If you roll that die, you could still land Republican, 1 in 3 chances. It's not a poll. And people really confuse markets with polls, because polls are, "What are you gonna vote for?" It's checking who's gonna vote for what. Markets are, "What is the probability? What do you think will happen? That something will happen?"

• 32:14Patrick Bet-David?

  So of the guy that does 100 million, does he do a lot of trades?

• 32:19Speaker 00

  Yes, yes.

• 32:20Patrick Bet-David?

  A person like... So it's not one? It's like, diversifying, or is that kind of a...

• 32:23Speaker 00

  For sure, for sure.

• 32:24Patrick Bet-David?

  Got it.

• 32:24Speaker 00

  It's very diverse. You're trading. You're trading in and out, and you're... And that... Those are the guys that make the markets accurate. Those guys would never be allowed on a sportsbook. Why? Because if they were making that money off profit, who is it going from?

• 32:34Patrick Bet-David?

  The casino.

• 32:35Speaker 00

  Yeah. It's a very different model.

• 32:37Patrick Bet-David?

  So you brought up...

• 32:37Speaker 00

  The casino is a way to move money from people to the casino.

• 32:39Patrick Bet-David?

  So who hates you? Who are you? Who is the enemy? Is it the casinos?

• 32:43Speaker 00

  Casinos, yes, because...

• 32:43Patrick Bet-David?

  Who were the top 3 enemies of you?

• 32:45Speaker 00

  In the casinos.

• 32:46Patrick Bet-David?

  Mainly casinos at the time?

• 32:47Speaker 00

  I mean, like, some of... Yeah, because I think that they are the ones that are pushing the states to come after us, and because they wanna monopoly on this too, right? Like, that's how, you know, they... It's a model that's more transparent. It's healthier. But also, it's a market. Like, you know, institutional... We have institutional clients that are using Kalshi signals, but also using it to hedge against different events. You cannot use a sportsbook to hedge against different events. Like, that will never happen.

• 33:10Patrick Bet-David?

  Yeah, so we were doing an event in Las Vegas, and I don't know if you... This got to you or not. MGM Grand Arena. We got the Big Vault Conference. And while we're doing that, all of a sudden, last minute, they're like, "You can't have Kalshi here." We're like, "What does that have to do with anything?"

• 33:23Speaker 00

  Censorship.

• 33:24Patrick Bet-David?

  Kalshi cannot be a sponsor. They said, "Kalshi can't be a sponsor." "No, they can't." They said, "Kal... It's our sponsor. They're... No, you can't have Kalshi in here, because Kal..." So what is the feud with MGM and Kalshi?

• 33:35Speaker 00

  They wanna monopoly on this too. I mean, some industries, you know, don't want more transparency into something.

• 33:41Patrick Bet-David?

  You don't think they want more transparency?

• 33:42Speaker 00

  Yeah, because think about it. Like, if we have an open market where that is... Where winners can win, actually, that incentivizes people to do research and get better at the thing. And now, it compares to the model where, like, every time you do a little bit of research, you get punished for it. You get kicked out of the casino. What does that tell people? Actually, "Oh, I'm getting really screwed with these odds. These odds are terrible. They're giving me bad odds." And then also, they wanna monopoly on any more... It's big business now, and they feel like, "Oh, we should have a monopoly on this too." That's the age-old question. Why do taxis go after Uber? Is it because Uber was worse for a customer?

• 34:13Patrick Bet-David?

  No, absolutely not.

• 34:14Speaker 00

  Never... It's never what it is that... It's never what this is about. It's never about... Because I'm actually, you know... And by the way, this issue of young men and addiction, I think it's a very real issue. And I've been always saying, the beauty of Kalshi is, I don't make money of the people that are, like, losing money and getting addicted, et cetera, as much as the DraftKings does. Because, you know, the sportsbooks, they're betting against those customers, and so they need them. They keep getting more of them over time. The prediction markets, if somebody is losing all the time, they're losing it to somebody else. And so, in my view, I always tell the federal government, it's like, "If you're worried about customer protection, let's regulate this, and let's put sensible guardrails, where like, people that are using it in a way that's dangerous for them, and irresponsible... Irresponsibly, we use tools to add friction to their accounts, and make sure that we're giving them, you know, "Hey, you lost a lot. Relax, stop.

• 34:59Speaker 00

  Maybe you have to take a pause. Maybe you have to exclude yourself and move on." Guess who is the most against those types of things?

• 35:04Patrick Bet-David?

  Hmm, casinos.

• 35:06Speaker 00

  For sure. Because those are the most profitable customers.

• 35:07Patrick Bet-David?

  Interesting.

• 35:08Speaker 00

  And those are the people that are going out publicly, saying, "Oh, you know, the prediction markets are the issue with young men." Prediction markets were never the issue with young men.

• 35:13Patrick Bet-David?

  How much money did you guys lose... Did they lose to you?

• 35:16Speaker 00

  I don't think they are. Because 70% or 80% of our volume is a sophisticated multi-monitor. They're doing modeling. They're doing all this sort of thing. Those guys are banned from the casino anyways. The smart traders cannot be in the sportsbook.

• 35:30Patrick Bet-David?

  You said 80% of them only have a public school diploma, right? Or they...

• 35:34Speaker 00

  Yeah, yeah, yeah.

• 35:35Patrick Bet-David?

  So...

• 35:36Speaker 00

  But I'm saying, it's a separate stat, which 80% of people that are like... The volume that comes from... 80% of volume comes from a small percentage of people that are very... That are doing very highly, like, a lot of research, a lot of analysis.

• 35:46Patrick Bet-David?

  Got it. So the 24% are the banking, wealth... They know what they're doing. These guys are in the space.

• 35:51Speaker 00

  Yeah, and those guys, the point is like, it's not a high percentage, as you'd imagine. People would think, "Oh..."

• 35:55Patrick Bet-David?

  Got it.

• 35:56Speaker 00

  But it's not. It's actually, 50% of our customers worked in retail.

• 36:01Patrick Bet-David?

  Okay. So one of the... Yeah, that's very... That's absolutely amazing. But so...

• 36:05Speaker 00

  It's like, anyone can... Like, if you put the effort, you can win. Now, look, not a lot of people put the effort. A lot of people just do it on the side, or they...

• 36:12Patrick Bet-David?

  Define effort.

• 36:13Speaker 00

  Yeah, like, research, time, energy. You have to read a lot about what's going on in Texas. Who's voting how? I'm gonna break down the different demographics. Like, you have to get deep. The same way that you get deep on a stock. If you're a bank. If you're a bank analyst and Morgan Stanley, what are you doing all day? You're doing quantitative analysis, qualitative analysis. You're doing surveys. You're polling. You're researching the stock. Is the product gonna work? You're asking customers, "Do you like the product? Do you hate the product?" And then, based on that information, you go and say, "Oh, I think the stock is gonna... Is overpriced or underpriced." And you trade based on that. And that's how you make money. You get rewarded by the open market for that information that you brought. That's the same thing that's happening here. But you're doing it on a much broader set of things. Is inflation too high? Is this sports team gonna win or not?

• 36:56Speaker 00

  And that provides us a public good that is this bottom-up, people-driven forecast of what's gonna happen in the world.

• 37:03Patrick Bet-David?

  So I asked the question here. I said, "How much money have casinos lost to Kalshi?" I'll read it to you. You can pull up the same question, see what it tells you. "How much casinos have already lost? In a January 2026 analysis by Citizen estimates, that prediction markets have diverted approximately 5% of legal sports betting volume. This translates to $8 billion in annual betting volume redirected to prediction markets, approximately $800 million in potential annual sportsbook revenue, assuming a 10% sportsbook hold, $1.3 billion in potential state gaming revenue for taxes diverted since 2025." Does that sound about right?

• 37:43Speaker 00

  I don't think so.

• 37:45Patrick Bet-David?

  You think it's smaller?

• 37:46Speaker 00

  Yeah, I mean, like, the CEOs of DraftKings and FanDuel, in their quarterly earnings, said that there's less than 1% cannibalization from prediction.

• 37:52Patrick Bet-David?

  They've said this.

• 37:53Speaker 00

  And they're right about that, yeah.

• 37:54Patrick Bet-David?

  So why are they so worried about you?

• 37:56Speaker 00

  You know, there's a message, like, in the casino, by the way... And this is certainly true for casinos. Like, casinos, they... People... No one is deciding to go and trade on Kalshi, versus like, going with their buddies and have a few drinks at the casino. That's not... If anything, actually, the people that we cannibalize, if we really did that study, we're cannibalizing Robinhood and like, the NASDAQ. And like, people that are like, in the financial markets, that like, now have another financial tool and a financial instrument, but that on things that they relate to. Because a lot of people, when they trade in options, on zero-day expiry options on S&P or NASDAQ...

• 38:28Speaker 00

  They think they don't have an edge against the big Wall Street guys. Whereas this is the same thing, you're buying and selling, you're trading in an open marketplace, but on things that you may have an edge. People read the economy, people read politics, people like the weather and they do studies on the weather. By the way, there's some analysis, an independent school did a study on our weather markets. It shows that it's 10% more accurate than the weather stations. Think about that. We're 10% more accurate than the weather stations at predicting the weather. And that's because of our customers, like they're doing all sorts of crazy analysis on weather patterns, et cetera, that do it. We just did an ad with Shane Gillis on this. I don't know if you saw it, it was, people loved it.

• 39:05Patrick Bet-David?

  With, is that one with Peyton Manning or no?

• 39:08Speaker 00

  It was the one with Shane Gillis and Danny McBride.

• 39:10Patrick Bet-David?

  Which one is it?

• 39:12Speaker 00

  It came out on Friday, it's fun, but it's, you know, they, it's a whole skit about how Shane.

• 39:18Patrick Bet-David?

  This guy?

• 39:19Speaker 00

  They're both meteorologists.

• 39:20Patrick Bet-David?

  Oh, yes, yes, yes.

• 39:21Speaker 00

  And then Danny McBride keeps getting them, you know, he's a weather, they're both weathermen and Danny McBride keeps getting it right and Shane gets.

• 39:27Patrick Bet-David?

  Two phenomenal guys to get to do this.

• 39:31Speaker 00

  They're a lot of fun.

• 39:32Patrick Bet-David?

  Yeah, so the DraftKings CEO, Jason Robbins, in August 2026 said only 1%, and he also said 80 to 90% of prediction markets' volume in states with legal sportsbook came from professional traders and institutions.

• 39:45Speaker 00

  He's exactly right.

• 39:46Patrick Bet-David?

  Rather than traditional sportsbook customers.

• 39:48Speaker 00

  And he's right.

• 39:49Patrick Bet-David?

  So then why do they hate you? Then why do they?

• 39:51Speaker 00

  He's right. I mean, they're not, we're not, it's not just about them, it's the broader casino, because I think casinos feel like they should also get a monopoly on this.

• 39:57Patrick Bet-David?

  So are they in the space or they're not in it yet?

• 40:00Speaker 00

  They want to get into it and like.

• 40:01Patrick Bet-David?

  But it's too late for them?

• 40:02Speaker 00

  It's always interesting, you know, a lot of these guys, the casinos, first they came to us and they were figuring out if there's a way for them to get into it. Then they realized they're too late.

• 40:09Patrick Bet-David?

  When did they come to you, first time?

• 40:11Speaker 00

  18 months ago.

• 40:12Patrick Bet-David?

  And then what did they say, can we work together?

• 40:15Speaker 00

  They were figuring out if there's a way for them to get into the space, et cetera. And a lot of them realized that they were late, so what did they do? They're like, let's litigate. You know, it's always litigate, legislate, and then when you finally realize that this is here to stay and the consumers have adopted it and they, you know, they don't want to change it, you finally innovate. But the state versus federal is never about customer protection. They're trying to ban prediction markets. Why? Because prediction markets, why are markets regulated at the federal level? Why is New York Stock Exchange regulated at the federal level? Or the grain futures, even though states want to regulate as gambling? Because you need a large global liquidity pool, you need a large diversity of participants. Imagine having 15 New York stock exchanges where in Oregon you can only buy Tesla stock from someone in Oregon. It wouldn't make any sense. You wouldn't be able to get as much as you want. You would get worse prices. It'd be completely inefficient.

• 41:00Speaker 00

  It's the end, it's the complete opposite of free markets, right? If free markets get everybody on a uniform set of rules and have people in Texas trading against California, how would we even get our prediction if the person in Texas, if the people in California are the only ones trading, only trading against Californians for the Texas election? It would never work.

• 41:16Patrick Bet-David?

  Is it too late for them? Because if you think about the language learning.

• 41:20Speaker 00

  I'm of the view that you should always innovate, because even if you're late in a market.

• 41:25Patrick Bet-David?

  Do it anyways.

• 41:26Speaker 00

  Yeah, the market is always big, I'm a positive thinker, right? And if they wanted to get, but I think it's a bit different, because the professional traders, they're not going to really, they don't abide by the traditional casino or sportsbook. Like, my biggest competitors are like Robinhood and Goldman over time. And my customers, because the customers are the same. Those professional traders that Jason's talking about, he's right. 80, 90% are coming from professional traders, and he's right about that. Because those are traders that otherwise are trading in equities and commodities and.

• 41:51Patrick Bet-David?

  Would you get into their space or you're not touching what they're doing?

• 41:53Speaker 00

  I'm not doing.

• 41:54Patrick Bet-David?

  You have no, you're not getting into what casinos are doing.

• 41:56Speaker 00

  No, no, no, gaming is different.

• 41:58Patrick Bet-David?

  That's gaming's not you.

• 41:59Speaker 00

  Gaming is completely different.

• 42:00Patrick Bet-David?

  So what is the upside?

• 42:01Speaker 00

  Because there's no price discovery coming from it.

• 42:02Patrick Bet-David?

  So then what's the upside for?

• 42:03Speaker 00

  I'm building the modern day financial market. That's what I'm building. I'm building the next generation CME, the Chicago Board of Trade. Because historically, what we had, why do derivatives markets exist, right? They give us a predictability about an industry. And once that industry matures, it needs instruments to manage that unpredictability for lenders, for certainty, for investment. How do we start? We started with grain futures, why? 100 years, 150 years ago. Because the American economy was primarily agriculture. Then we moved into industrializing, so what did we get? Oil futures, metal futures, things that are basically inputs and outputs of the industrial phase. Then we move into interest rate swaps and interest rate futures and credits and all these other indices, S and P futures, why? Because banks and the services sector started growing, financial services became bigger.

• 42:48Speaker 00

  And to me, Kalshi is a generalization of that, is like, do we believe there's economic impact from politics? From sports? From weather? From all these different things? Certainly. And do we need an industry to help predict the risks around those different industries? For sure over time. And that demand is going to only grow, and Kalshi is in some ways generalizing the stock market.

• 43:05Patrick Bet-David?

  Who would Kalshi take business away from? If it's not sports gambling, who would it?

• 43:09Speaker 00

  I believe these things tend to be more additive than people make it out to be.

• 43:11Patrick Bet-David?

  You think so?

• 43:12Speaker 00

  Yeah, I think so, because like, liquidity begats liquidity. So when I add, so, so, okay. There's a farmer in California, a month or two ago, he's in the goat herding business, he's a goat herder. He has 3,000 goats. Why do these goats exist? They eat the grass that usually leads to wildfires, okay? And that farmer, you know, he had a risk, which is that there was a bill in the legislature in California that was going to up goat herding wages from $70,000 to $240,000. It's going to drive him out of business because he can't afford these.

• 43:47Patrick Bet-David?

  70 to 240, more than 3X.

• 43:50Speaker 00

  More than 3X. So it's going to drive him out of business because how could you afford these wages? He went to insurance companies, can you please underwrite this risk for me? What'd they say? No, there's no way. Who, like, who is in the business of underwriting these different risks? So he came to us, like, can you list the market on it? Like, certainly. Within two hours, the market started trading. We have, you know, again, 30 million customers, we have a hive mind that can, you know, price it. It says that there's 10% chance of this thing happening. If you search for goat herder, you'll see it directly, goat herder, yeah, first one. And then he bought $50,000 at 10%, which pays out $500,000 if the bad thing happens, as a hedge, as insurance. And it happened and he got paid $500,000 that he's now using to diversify his business and stay afloat for another 18 months.

• 44:32Patrick Bet-David?

  He put 50K on Kalshi, made a half a million dollars.

• 44:35Speaker 00

  As a hedge.

• 44:36Patrick Bet-David?

  As a hedge, yeah.

• 44:37Speaker 00

  Because he's now, he has to pay all the different, so he's offsetting some of the additional cost. Who are we taking business from there? Nobody. We're bringing liquidity to a much larger set of things that wouldn't have been liquid otherwise. Like, when a sports business, a bar or marketer comes up and puts a hedge on Kalshi to hedge themselves against sports risk, what is the alternative historically? Like, going and doing it on DraftKings? They're never going to do that on DraftKings, it doesn't make any sense. They need a financial instrument that is traded in an open market where people are going to compete and provide them competitive bids and asks, competitive pricing, so they can book it on their financials as a financial instrument and like, place that hedge as a real hedge. And so it's a new market that's being created that like, basically, you know, makes, like, creates more opportunities to price risk and manage risk.

• 45:20Patrick Bet-David?

  Well, who is an enemy? Who is not happy with Kalshi?

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• 47:46Patrick Bet-David?

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• 48:20Speaker 00

  I generally feel at my core like elites were always not love it. Because I think that's really what we're over like 80% of our customers active. They don't trade. So 30 million customers that have trading accounts, but really close to 100 million in America that use it for the forecast. You see it Fox CNN, you see it, the campaigns are all using Kalshi. What's the problem?

• 48:40Patrick Bet-David?

  80% use it, but don't.

• 48:42Speaker 00

  They use it for the information.

• 48:43Patrick Bet-David?

  They use it for the information.

• 48:44Speaker 00

  That's the public good that comes out of markets. Would a sports book be able to say 80% of my customers don't?

• 48:49Patrick Bet-David?

  No, there's no use to it.

• 48:50Speaker 00

  What is the information that you're getting out of a sports book? Right? But that's what markets do, they surface information to people. And but here's the key thing about it. Elites will never love these markets and they'll always attack us. That's why we often get attacked in the press etc. Because like it's the first time that information is flowing from people bottom up. There's no gatekeepers, there's no elite. We're not listening to a handful of people telling us here's the truth and he's not what's he's not what's true. We don't have gatekeepers of the truth. The truth here is being produced by millions of American people putting money where their mouth is, having skin in the game.

• 49:21Patrick Bet-David?

  Okay, so how about a how about a fanatics? How about a Robin Hood? How about state gaming regulators? How about those guys?

• 49:28Speaker 00

  I think it's take it, look, I think we always say like we're happy to engage. Like I always tell states, it was never about if people want to tax us, people say, oh, we're avoiding taxes. It's not always true. I've always told states, if you want to tax us at a sensible rate, I'm actually not the type that is completely against taxes. I'm fine with it, let's come to a reasonable deal. This is a very fast growing industry and look, if there's ways where we can promote more education and like fund education resources or education in general or healthcare, I'm all for it. Actually, that's my personal view. I'm a free markets guy and I love capitalism, but at the same time, I think things are a little bit too out of whack. There's too much wealth inequality right now. We have to adjust it a little bit to make sure we bring in more people into the system. I think when people are out of the system and they're sitting on the sidelines, it's normal that over time they're going to bubble up feelings that they don't like the system because you know, if I was out of the system, I wouldn't like it either.

• 50:13Speaker 00

  Right? And so that's my view. And then if there's really, if people are worried about consumer protections, if we feel like there's not, and I'm a pro regulations guy, I think there's needs to be sensible guardrails around any market. Why? Because you want need to make sure that it's fair. If a marketplace is not fair, there's corruption in a marketplace, what happens? People stop trusting it. Why would you ever participate in a marketplace that is not fair, where the guy on the other side may have a knife and you don't? Right? Like that's unfair. And so I'm a believer in regulation and tell states, look, let's have a good faith discussion of if you think there's a, if you think that we are regulated, the federal, we spend the first where he's getting regulated, but if there should be additional consumer protections in your state, let's have a conversation about that, we're open to it, as long as it doesn't hamper on the free markets principles of a federal regulated exchange.

• 50:54Patrick Bet-David?

  Are you in all 50 states right now?

• 50:56Speaker 00

  Except for Nevada, which you're gonna.

• 50:58Patrick Bet-David?

  Makes sense. Do you think you'll ever will get in there?

• 51:01Speaker 00

  I think, you know, it's bubbling up, there's some litigation, there's litigation that's going on and I think, you know, we feel very good about like, you know, the way that this needs to be regulated, it's federal. And I think that there's a bit of kind of, I think there's some confusion, plus the casino lobby is doing a lot of work right now against us.

• 51:16Patrick Bet-David?

  Interesting. How about polymarket?

• 51:18Speaker 00

  Look, I think I like competition. I think competition is great. And you know, we have competition from polymarket, we have Robin Hood, we have, you know, the big banks are getting, they've announced they're getting into the prediction market space, which is exciting. I mean, we just announced a partnership with S and P, which is the largest.

• 51:32Patrick Bet-David?

  And the NBA.

• 51:33Speaker 00

  And the NBA. But I'm excited about S and P, it's the largest financial data provider on the planet. It's, you know, and I think the difference I have with polymarkets, we took a regulatory first approach to building the business. I wanted to build it in America, the American exchange and pro regulation, regulated first. And I like got regulated as a financial market and like have all the right rules around banning insider trading and banning market manipulation, making sure minors are not on the product, all the kind of sensible guardrails that it needs to be. And I spent the first four years doing that. Right? They just launched offshore and then started growing before, and you remember, remember this, a few years ago, polymarket was the brand, it wasn't Kalshi.

• 52:08Patrick Bet-David?

  I remember that clearly.

• 52:10Speaker 00

  But I was so committed to the regulatory first and doing the right thing.

• 52:12Patrick Bet-David?

  And they didn't, right? Something happened.

• 52:14Speaker 00

  And that's the, I think the philosophical misalignment we have because that's why you started hearing about the insider trades are going on police, they have markets on war and now maybe they're, now they're stopping, but they used to have them. They don't verify customers and so all these bad things started happening, but that wasn't us because we were doing it under the right umbrella with the right consumer protections and the right guardrails. But you know, because it's an nascent industry, people can mingle us, people think it's the same. But no, there's an American regulated market and there's an offshore market that was not really abiding by rules. Now they're coming in and abiding by rules, which I think is a good thing. Like I hope they do more and more of that. But as long as you have the right sensible rules, I think you need more competition. Competition pushes us to get better. And so I hope over time that they really embrace doing things the right way, which I think they're starting to.

• 52:55Patrick Bet-David?

  Is there anything different between the two of you today?

• 52:57Speaker 00

  Oh, for sure. I mean, we're regulated, we're.

• 53:00Patrick Bet-David?

  They're not, they're still not.

• 53:01Speaker 00

  I mean, a lot of it is not, and then we ban insider traders and we police it, we verify our customers when they're coming in, we have consumer guardrails around if people are doing, you know, I think any of these products, there's some irresponsible use. People can, losing is not bad. Competition's some winners and some losers, you know, like you don't, when somebody loses in the NBA, you don't go give them a trophy. Like that's, that's how it works. What's bad is like irresponsible use and addiction. Those exist on prediction markets, they exist in gaming, but they also exist in Robin Hood and they exist in like, you know, the financial markets, right? How many people, how many times you hear about like a guy who lost his shirt on trading options in the open market? It's very common. And you need to regulate that, right? You have to have sensible guardrails on making sure that like, look, I believe people should make their own decisions, but you have to give them warnings.

• 53:45Speaker 00

  You have to say, look, you're getting off your skis, you're doing more than you should, here's all the friction that we're going to add to your account. Make sure that like, you know, you look at how much you're losing, make sure to use these risk management tools and diversify. You're going a little too crazy. And I think it's important to have these guardrails because otherwise you're gonna have some of the irresponsible uses goes unregulated and that's not a good thing.

• 54:05Patrick Bet-David?

  Now, but would you guys and polymarkets and NBA teamed up with both of you or just Kalshi?

• 54:11Speaker 00

  I think I believe they teamed up with both of us today, which is, which I think is good because it's the league saying.

• 54:15Patrick Bet-David?

  How does that happen? How does it happen to team up?

• 54:17Speaker 00

  It happens. I mean, these big leagues have multi partners and they do it with broadcast. Sometimes they do it with broadcast, right? You do broadcast deals with two different.

• 54:24Patrick Bet-David?

  Right, right.

• 54:25Speaker 00

  I think it's important because one of the key things that are important about.

• 54:28Patrick Bet-David?

  What are we gonna see as a fan? Are you gonna see polymarket and Kalshi there?

• 54:31Speaker 00

  Oh, it's more complicated than that. Yeah, I mean, it's, we have different teams that we partner with etc. But the key pillar of that actually partnership that, you know, usually people don't talk about that. That's really what's important about this, why we're very excited about them. It's not the marketing. Marketing is a piece of it, is the market integrity piece. Because now, what we have at NHL, we have at MLB, we have it now at the NBA, is a data sharing agreement to police the bad actors. And that's what's important. Because market integrity is one of the foundations of a free market. I always say this, what's the opposite of free market? It's corruption. Free markets and corruption cannot coexist. Right? Why? Because free markets is, has a, has a requirement of a free, open and fair competition. The competition needs to be fair.

• 55:15Speaker 00

  Some people have access to specific, special rules, that's not a fair competition and nobody's gonna participate. It ruins the competition. And so markets have to work, if they have to work, they have to be fair. And so what we do with these leagues is like, we, for example, we ban athletes from trading on the league. We have a bunch of market integrity and game integrity measures, which is like if we ever catch an athlete that was trying to do something weird, they're gonna get punished and they're gonna get criminally indicted.

• 55:37Patrick Bet-David?

  Do they currently do it?

• 55:38Speaker 00

  They do it on the sports books in general. Also the case that happens.

• 55:41Patrick Bet-David?

  Not with you guys, no.

• 55:42Speaker 00

  We have a very stiff regime around policing that.

• 55:45Patrick Bet-David?

  How do you find it? How do I identify?

• 55:47Speaker 00

  A few things, so one, customer verification. And by the way, it's the same thing with elections. So actually, if you open the senate race in Texas, or you know, either any of these races, elections, yeah, if you go down a little bit, a little bit more, slightly more, slightly more, a little bit more, I'll tell you when, no, that other market. Yeah, but if you scroll down, so a little bit more, I'll tell you when, stop, right, slightly, a little bit lower, lower, lower. A little bit lower, okay, if you look at here, insider trading is prohibited, you open that, those are all the people that are not allowed to trade on this market. So people that are involved in the campaigns, people that, and so who are these? These are the people that have insider information.

• 56:30Speaker 00

  And you want to police them and you want to ban them out of the system and we do that. We actually, if our systems, when you do the customer verification flags, okay, this person might be involved in that campaign, so we ban them proactively. Now what people do is they, you know, when you wanna, if you have a cousin at Tesla that wants to trade on insider information, what do they do? They don't do it themselves, they give you the information so you trade on it.

• 56:47Patrick Bet-David?

  How do you catch them?

• 56:48Speaker 00

  We use the same systems as the NASDAQ. We have actually a partnership with the NASDAQ and a bunch of other systems, the same systems. So what happens is there's suspicious pattern and when we look at suspicious pattern, we run investigation. A third of our team is like compliance. Those guys have investigatory.

• 57:00Patrick Bet-David?

  Your team is compliant?

• 57:01Speaker 00

  A lot, yeah.

• 57:02Patrick Bet-David?

  So how many, how many compliance people do you have?

• 57:04Speaker 00

  We have now, I mean, over 50, 60, I mean, it's, and like the compliance market, regulation lawyers, and they are basically in the business of like, they look at these flags that the system brings and they look at a case, who was the person, how they trade, why they trade? And then if they find that there's something wrong, they, it goes from fines all the way to criminal prosecution. We can refer to the DOJ, which we have, we've referred, you know, George Santos to the DOJ.

• 57:24Patrick Bet-David?

  What happened there by the way? Something happened with that.

• 57:27Speaker 00

  He tried to manipulate the market and we caught him immediately. You know, the other thing that's great about prediction markets, there's not more insider trading on prediction markets than the stock market. What's great is it's all transparent.

• 57:36Speaker 00

  All the traders look at it and they say, hey, something is weird here.

• 57:39Patrick Bet-David?

  Oh, they tell you.

• 57:40Speaker 00

  For sure, because all the trades are transparent. And like when somebody cheats against you, you're incentivized to say, hey, somebody cheated. And so when we look at it like, okay, well, there was cheating here and like, we're gonna enforce it. It's like a crime. It's a financial crime. How do you police crime long term? You catch it and then you heavily punish it so you deter the next person from doing the same thing. And that's what we do. This is what the New York Stock Exchange does. The difference in prediction markets is like, I think more of the, I think there's more insider trading in the stock market than the prediction markets. The difference in prediction markets is we catch more of it because it's so transparent.

• 58:08Patrick Bet-David?

  Tell me why.

• 58:10Speaker 00

  All the trading activity is transparent. Everybody can see it.

• 58:12Patrick Bet-David?

  So is it kind of like a decentralized, like on Bitcoin, where you can kind of see what's going on?

• 58:16Speaker 00

  We're not decentralized. We just like show all the trading activity publicly. And then it's so obvious, you know, if somebody is, if something is trading at 10% and all of a sudden somebody is buying it in bulk, you're gonna look at that. Why are you buying it at 10%? Something is, what do you know? What happened here? Who are you? Who'd you call? What is the piece of information?

• 58:33Patrick Bet-David?

  Do you reach out to them? Does complain?

• 58:35Speaker 00

  Our investigation team reply.

• 58:37Patrick Bet-David?

  And do you, are you getting faster? I want to put a stop to it so that's manipulated.

• 58:41Speaker 00

  Yes, we're very fast on it. We immediately ban the account. But here's the key thing. Instead of trading case on your instruction, they take time to bring. Why? Because you have to bring in a real case. Our standard in America, which is a good standard, is innocent until proven guilty. So you have to establish a fact pattern and go through due process. Like you have to go through the courts and then, you know, show that like you, you, I mean, sometimes people settle. They say, I'm sorry, I did the wrong thing. Let me know what I need to do. And a lot of people do that. A lot of people decide to fight it and there you have to, like it takes time.

• 59:06Patrick Bet-David?

  What happened with Santos?

• 59:08Speaker 00

  I don't remember, honestly. I think he's decided to fight it. I forgot. Or he paid the fine. I'm not sure. I completely forgot, to be honest.

• 59:14Patrick Bet-David?

  For life after prediction market company found he misled public about whether he would.

• 59:18Speaker 00

  We fined him $70,000.

• 59:21Patrick Bet-David?

  And in Kalshi, he was imposed a financial penalties. You guys fined him $72,000.

• 59:24Speaker 00

  Which is way more than he made, yeah.

• 59:26Patrick Bet-David?

  Wow.

• 59:27Speaker 00

  Yeah. And then when we make those fines, we pay them, we give them to like a, a, a, a nonprofit that basically like works on educational resources around like insider trading and like ban, like and training people to business.

• 59:37Patrick Bet-David?

  So you don't even take that money? You give it to the charity?

• 59:39Speaker 00

  Yeah, yeah.

• 59:40Patrick Bet-David?

  Very cool.

• 59:41Speaker 00

  Yeah. I mean, you know, we now hire like a bunch of FBI, ex FBI agents and forensics experts to police the markets. Cause they're very good, you know, they, they do.

• 59:48Patrick Bet-David?

  You almost have to, right?

• 59:49Speaker 00

  Yes, yes. It's, it's, you know, it's systems. People ask me, are you done? Like, is it, no, because it's like cybersecurity. Are we ever safe from cybersecurity? No, like fraudsters get better at like circumventing the defenses and so the defenses need to keep getting better.

• 1:00:00Patrick Bet-David?

  What role does AI play in Calshi for you guys?

• 1:00:03Speaker 00

  We use a lot of AI, you know, I mean, it's amazing, honestly. It's, it's truly amazing how much like productivity gains you can get. And, and, and look, I think, I've been thinking about this a lot, like how much AI is being used in traders? Like, are they using AI? And what I've seen is I talk to our top traders. It's AI plus human that is their best strategy. So the AI lets you code faster, lets you summarize information better. But the layer of human judgment is necessary. Cause I think AI, what it does is it memorizes all of our past. But you know how there's an idiom, which is like past performance in the financial markets don't, are not indicative of future performance? And I think that's true in prediction markets and these financial markets too.

• 1:00:46Speaker 00

  And so humans still have this unique judgment of like, I think this one is different this time. And this is why I think I'm, I'm, I'm going on, on my gut intuition and that gut intuition has, I'd like to believe that it hasn't been replaced yet.

• 1:00:57Patrick Bet-David?

  So, so partnerships, i- i- is it, is it, um, are you watching like what the, I saw Polly Market got LeBron James and it was a bunch of thing about it. 20 to 50 million bucks. I don't know what they paid the guy, but it was a big number. I was seeing a guy talking about on the podcast. Who, do you see spaces and industries to go and say, these guys will be good. This will be a good spokesperson. Is that kind of like the lobbying and the creativity between the two organizations today?

• 1:01:20Speaker 00

  Yeah, it's creativity and look, I, I think our view, I always think the product needs to be the thing that sells itself. And then that's our biggest motion is people like the product and they tell others about it. And our biggest motion is people use the forecast. You know how you see the Kalshi charts? And, and your podcast, you see it and Twitter, people use it as a way to get informed. And that's the way to kind of get more and more people know.

• 1:01:42Patrick Bet-David?

  Phenomenal.

• 1:01:42Speaker 00

  Right? More people, now Fox and CNN use their data as well and partnerships with them as well. Because the data works. It's a market driven way to think about the world, right? Now, and so I, all of our marketing, if you see Kalshi's market, it's never this hard sell, like, oh, come use the product. And I don't like any of that stuff. What I try to think is we try to just be human. It's like, let's have, let's, let's explain these complicated market based concepts in a fun and human way. Because what's the best, what are the two emotions that like get people to do something? One is hatred, but I don't want to go there. That's not a good thing for consumer brand. That's for politicians. Let them do the hatred stuff. You know, they keep hitting on each other. That's the way to get clicks. The second one is laughter, like light. People have already hard lives.

• 1:02:26Speaker 00

  Like, you know, I grew up a single mom in Lebanon. Like, you know, like our day to day was brutal and what do people like? How do people think about things? They want to live. And so, for example, Shane Gillis, I just find him to be very funny. I think he's a very funny guy and he gets cats, so some people don't like him. And, but what I liked about him is he's simple. He just explains things in a simple way. And like, I wanted to explain a lot about how a lot of people use Kalshi as a weather forecast. Cause it's more accurate than the weather station. How do we explain that concept? And he came up with this weatherman concept that I love. I mean.

• 1:02:53Patrick Bet-David?

  He came up with it?

• 1:02:54Speaker 00

  Yeah. He was like, we need to do this and we do it with Danny McBride and it's gonna be amazing. And like, and he was right about that.

• 1:02:58Patrick Bet-David?

  Did he approach you guys with the idea?

• 1:03:00Speaker 00

  We were talking to each other and like.

• 1:03:02Patrick Bet-David?

  Got it.

• 1:03:02Speaker 00

  And, you know, it was really about, I always say it has to be authentic. Don't sell something to the customers. If you sell something to the customers, they're not gonna like it. They're gonna be pissed. And you just put yourself out there, have, have some fun with it, explain what it is, why it's a good thing for society. I mean, think about it, we're a little bit more accurate about predicting the weather, thanks to markets. How incredible is that? And you're not gonna explain it by like putting a bunch of math and data and statistics in front of people. You're gonna explain it by doing something lighthearted that like people can watch and not, you know, throw up when they look at like another ad on live TV.

• 1:03:31Patrick Bet-David?

  That's pretty wild. That's, is there gonna be more bigger things being announced here soon with different partnerships?

• 1:03:37Speaker 00

  You know, I'm really excited about the S and P partnership. That's.

• 1:03:39Patrick Bet-David?

  Yeah, you were talking about that earlier.

• 1:03:40Speaker 00

  Their core partner historically has been CME. And I feel like this Kalshi S and P is, I, I really feel today, I really felt it's the start of a new era. Cause it feels like we're finally being perceived as the next generation of financial markets. Because that they're gonna distribute our products to institutions and we're gonna be developing a bunch of indices. You know, what's S and P's most famous index is the S and P 500, which is a pulse on where America's market is. What if you build the Kalshi S and P Economic Index, Inflation Index, Sports Index, which is what are different teams and how they're performing over time? Political Index, are we leaning more Republican or Democrat? Not like who's gonna win this next midterm. It's like, is the country going towards Republican or country going towards Democrat?

• 1:04:20Speaker 00

  We have this thing called K-Pow. If you pull it up on Google, Kalshi, K-Pow. And, and if you open this thing, look at this chart. I mean, this is, this is, for example, one of the recent, if you go down a little bit. This is like the Kalshi Political Index, which is an aggregate of all the prediction market data into one piece of information. Which is, are we projected to lean more Republican or Democrat over time?

• 1:04:41Patrick Bet-David?

  For the day, by the day.

• 1:04:43Speaker 00

  By the day, real time. Like the S and P, S and P for politics, but this is the beauty of that partnership. We're gonna build the S and P. Here's the thing. Do you think the only thing that's worthy of predicting right now is American stocks? Do you think it's worthy of predicting the economics, the politics, the sports, the weather? All these things are worthy of prediction. And now we have finally a financial market with financial market rigor to predict these things. And this partnership with S and P is, I think, gonna propel that to.

• 1:05:05Patrick Bet-David?

  Like, let's, let's look at this here. If we look at this chart, January 2026.

• 1:05:09Speaker 00

  That's right.

• 1:05:10Patrick Bet-David?

  Republicans are up, right? It was plus, let's just say eight or nine. Okay, whatever that number is, go a little bit, yeah, plus eight. Okay. So then when it goes blue, is that the war?

• 1:05:20Speaker 00

  If you look at that dot.

• 1:05:21Patrick Bet-David?

  Go to the dot, go to the black dot, one behind you, right there. Operation in Iran. Got it. So then it goes.

• 1:05:27Speaker 00

  Real like.

• 1:05:27Patrick Bet-David?

  So then what caused it to go back to red? Go to the next dot? Supreme Court decision Louisiana versus, okay.

• 1:05:32Speaker 00

  Redistricting.

• 1:05:33Patrick Bet-David?

  I remember that. So Virginia Supreme Court and all of a sudden we're gone. It explains every one of them, generic. And then go back down to Democrat, go all the way down to the next dot. What's it saying?

• 1:05:44Speaker 00

  Average gas price.

• 1:05:46Patrick Bet-David?

  And, and you had something you were showing me about the gas price.

• 1:05:49Speaker 00

  Yes, I'm gonna show it to you, but just think about it. It's the rigor. And if you're gonna open that as well. Look at the Democrat control of odds and you, you know, that's the probability of the Democrats winning the Senate, the market base, what millions of people are predicting. And you layer it now, you can do analysis and insights, like you layer it against national gas prices that have moved over time. Look at that correlation. But this is the beauty. You're bringing a level of rigor into these processes. And if you go back to the K-Pow, right, like, that is a financial market. That is a market driven, a prediction market, financial market driven number. That is not what the pundits are saying or the elites are saying, or my opinion is or your opinion is. Markets don't lie. And that's the rigor that I want to bring to everything.

• 1:06:28Patrick Bet-David?

  People ask this question sometimes. They'll say like, go to the Talarico one. Go to the Talarico one, Senate race, you just had it like a minute ago. Yeah. Keep going all the way up. Yeah. So they'll say, okay, $45 million here, 552, $600, $600. Okay. What if a billionaire in the backend puts $20 million into Talarico? Does that kind of manipulate the market to believe that Talarico's got that big of a lead?

• 1:06:51Speaker 00

  So there's a study and I don't know if you can find it, I think in calibration, if you go to publications, I think we might be able to find it there. Let me see. If you click on publications on the top tab, you go down a little bit, let's see. Okay, it's not here. I'll, I'll, I'll surface it later. But there was a study we did on Spencer Pratt at Mayor Race. He was a 10% chance of winning the mayor race. And someone put $2 million, I think 1.5, $2 million to move the odds up. So he moved the, the person moved the odds to, I think 30%.

• 1:07:21Patrick Bet-David?

  From 10 to 30?

• 1:07:22Speaker 00

  Yeah, 25, 30. I forgot the exact numbers, but it moved up. Within, oh, here it is. If you go down, oh, it's great. Uh, let's find the chart. Go down a little bit. Okay. If you zoom out a little bit so I can see, see that, see how it jumped? It's actually, it's actually, okay, 27 to 45.

• 1:07:36Patrick Bet-David?

  It'd make a difference.

• 1:07:37Speaker 00

  But what happened right after? Do you know that delta? Guess how much time it took for it to correct?

• 1:07:41Patrick Bet-David?

  One day.

• 1:07:42Speaker 00

  Nine seconds.

• 1:07:43Patrick Bet-David?

  Stop it. Stop it.

• 1:07:45Speaker 00

  Markets. It's the beauty of markets. So what happened when it went to 45? What happened to the people that are trading on this thing? What did you see?

• 1:07:51Patrick Bet-David?

  The same thing you were talking about.

• 1:07:53Speaker 00

  It's mispriced.

• 1:07:54Patrick Bet-David?

  Got it.

• 1:07:54Speaker 00

  If I give you Apple stock, if you know that my Apple stock and you have your, that is worth $100. And all of a sudden now it's trading at $60, what are you gonna do? Gonna buy it? Gonna keep buying it all the way till?

• 1:08:04Patrick Bet-David?

  So then let me ask you a question. So.

• 1:08:05Speaker 00

  Isn't that, but isn't that beautiful? That's what markets do. By the way, I want to just say one last thing. When people put out a bad poll, you know, Wedgwood, where you saw that poll that last week, there were two guys that come up with fake numbers and like, it was quoted all of media. Who's correcting that?

• 1:08:19Speaker 00

  Isn't that influencing public perception? This is the beauty of it. It's, it's, markets don't lie. They have an embedded structure to constantly calibrate towards the truth, average out towards the truth.

• 1:08:30Patrick Bet-David?

  Okay, so do this. What if somebody does?

• 1:08:32Speaker 00

  And by the way, we, we ran an investigation on this guy.

• 1:08:34Patrick Bet-David?

  I'm gonna ask you multiple questions. So let's just say they say, all right, let's do a million dollars, but 20 times over the next week. What would that do?

• 1:08:41Speaker 00

  Same thing.

• 1:08:42Patrick Bet-David?

  Same thing.

• 1:08:43Speaker 00

  I mean, it would always, the market is always thinking, is this person knows something? Are they trying to do something else? Why are they trading it? So maybe it moves, but then it, after that, it's kind of like, it's the same as the stock market. So when someone puts a big order on Apple, the market thinks about it. They're like, look, are they putting it because there's a new piece of information that we're not aware of? Or are they putting it because they're trying to buy a lot, or are they putting it for some other reason?

• 1:09:04Patrick Bet-David?

  Yeah, and this is great because this is overcoming a lot of the objections that people think about. Back in the days, there was a business where.

• 1:09:10Speaker 00

  And by the way, it's illegal if you're actually trying to manipulate the market. It's a financial crime.

• 1:09:15Patrick Bet-David?

  I get that, but this won't be the first time someone's trying to.

• 1:09:17Speaker 00

  For sure, but like the polls, what is the punishment that these guys got?

• 1:09:20Patrick Bet-David?

  Nothing happens to them. Go away and it's like, ah, it's a funny spoof, whatever.

• 1:09:23Speaker 00

  Nothing happens.

• 1:09:24Patrick Bet-David?

  But remember back in the days, they would say, hey, pay us $200,000. We're gonna have 6,000 people that are gonna buy your book to help you become a New York Times. And then our company got caught. I don't know if you remember that or not. The company ended up getting caught. You can even pull this up. You may find a story on it. But what if some of these guys try to manipulate this because they see how much of an impact it has? They say, hey, we're gonna give you this much money, you keep 250 of it, but bet, do this, do that. But what would that do to the market?

• 1:09:51Speaker 00

  So here's the, go back to thinking about that thing, that $2 million or whatever, 1.25 million dollars they put on that. What happened at the end? They just wasted it.

• 1:09:58Patrick Bet-David?

  Waste.

• 1:09:59Speaker 00

  Complete waste of money. Where should they have put it? They should put it, giving it to the campaign, that'd have been a better use of money. Put a bunch of ads on TV, attack ads on the other candidates. Or they should have commissioned their own polls that will say whatever they want them to say. Which by the way, you know, now, in the last stretch of the election, what is gonna happen in the last, next seven days? The Democrats and the Republicans are gonna both put polls that are saying the opposite thing. The Democrats are gonna say the Democrats are up by whatever points, and the Republicans are gonna say I'm up by whatever points. Because they commissioned the polls to make them say whatever they want to say. That money would have been much better used, done in a more, in a more opaque system. On an open market, it's much harder to game the market because people are seeing it in broad daylight. And if we catch you, if we catch you doing this, you commit a financial crime and we're gonna enforce against you. And see, look at this. It's very hard not to catch.

• 1:10:42Patrick Bet-David?

  What's gonna happen to that guy that did the 1.25?

• 1:10:44Speaker 00

  So I, I don't, I actually don't know because there's an ongoing investigation going on. I don't, I'm not privy to what's happening because the market regulation department is in, like, the way that we regulate, we regulate as a financial exchange, like the New York Stock Exchange. Those exchanges, this compliance and regulatory functions, don't report directly to the CEO. They report to Regulatory Oversight Committee. So these investigations, I don't know about them up until they're basically done. And the reason is because you don't want the business side to impact the regulation.

• 1:11:10Patrick Bet-David?

  So there was a couple of stories with military. I don't know if you heard, Hexit, a couple of days ago, Hexit said, you can't, you know, if you're in the military service, you can no longer do anything with, with Kashi, Poly, none of that. That just happened like.

• 1:11:23Speaker 00

  I'm in favor of that.

• 1:11:24Patrick Bet-David?

  That's great. I'm sure you are. So, but there was something with a.

• 1:11:28Speaker 00

  The Maduro trader.

• 1:11:29Patrick Bet-David?

  The Maduro trader.

• 1:11:30Speaker 00

  That's right.

• 1:11:30Patrick Bet-David?

  What was that all about?

• 1:11:31Speaker 00

  It was on Polymark. I mean, because there, there's no customer verification. So by the way, that trader tried to do it on Kashi, and he blocked him.

• 1:11:38Patrick Bet-David?

  Same trader tried to do it on Kashi?

• 1:11:41Speaker 00

  DOJ indictment, they tell you like, oh, there was another exchange where he tried to open an account and we got back.

• 1:11:45Patrick Bet-David?

  What caught it?

• 1:11:46Speaker 00

  And it doesn't always work. We have a system. That's the whole point. We have a system that catches people upfront to ban them from proactive, proactively ban them from trading on things they might have control over. And by the way, to be clear, we don't do war, terrorism, assassination, violence, like missile strikes, markets, et cetera, that exists offshore. We don't do them. We cannot do them.

• 1:12:02Patrick Bet-David?

  They do them?

• 1:12:03Speaker 00

  So they have, they used to. Now I think they're starting to clean up and take them out, which I'm in favor of. But they're still, they're still like wildfires. They've done them. I think those are bad. But that's the key thing of distinction between the regulated onshore American markets versus offshore unregulated markets. Right? And then that distinction is very important, but the press, you know, lumps us in.

• 1:12:21Patrick Bet-David?

  So in this case, this is a soldier that's working on the project with Maduro.

• 1:12:25Speaker 00

  Yeah, bad. That's bad.

• 1:12:27Patrick Bet-David?

  And he ends up, he's a special forces guy. Does he end up getting the money or he gets caught?

• 1:12:31Speaker 00

  He got caught.

• 1:12:32Patrick Bet-David?

  He got caught?

• 1:12:32Speaker 00

  By luck. I mean, obviously by luck because he uses his name on the email.

• 1:12:36Patrick Bet-David?

  So he's also not a smart criminal?

• 1:12:38Speaker 00

  They don't do customer verification there. So how would you, that's the problem. You have to KYC, what you call know your customers, like the banks. So they caught him by luck because he, his name was in the email. Now, for us, we have systems because we ask them for your social security or.

• 1:12:50Patrick Bet-David?

  You do ask them for social security.

• 1:12:51Speaker 00

  We're like opening a shop.

• 1:12:52Patrick Bet-David?

  And they're not asking for social security?

• 1:12:54Speaker 00

  Now they're starting, they're working on a regulated US platform, which I'm very favored. I'm happy that they're doing that. It's where they're regulated property. So there's Polymarket offshore, Polymarket US, which is great. But I think over time, we want more regulated, more of the regulated onshore.

• 1:13:05Patrick Bet-David?

  What happened with the Chamonix situation, the 54 million?

• 1:13:08Speaker 00

  Oh, that's an interesting one. So, so that, that one actually, um, um, anyway, I don't think that lawsuit is gonna go anywhere. Because what's happened is we had a market on like whether the leader was gonna be out. Now here's the thing that's very important. I told you, we don't do death markets. What does that mean? All of our markets have a death card. And it's very clear. It's always clear in the box right when you're trading. That says, if a candidate, God forbid, dies or other things, we settle the market the price before the event happened. So no one can ever profit from a death.

• 1:13:40Speaker 00

  Because you don't wanna create the incentive for someone to do something bad.

• 1:13:41Patrick Bet-David?

  For sure, yeah.

• 1:13:42Speaker 00

  Yeah. But obviously people were like, oh, well, I should have profited because it, you know, he, he was out. And you know, people get, you know, when people don't, they wanted to get paid because you would have made a lot of money. But we stood by our principles. It's like, we are not gonna pay based on death. That's the principle. That's the rules from the start. And some people are gonna get pissed about that. And that's what's hard about building a business that has 30 million customers now is like, sometimes you're gonna have to make decisions that are right. I strongly believe that was the right decision. I would never change it. I would do it again. Uh, but some people are gonna be pissed about that. And that's just how it is. And we reimbursed what we did. It's like, look, if, to the extent that there was confusion, if there was, we're gonna reimburse you all your fees. We didn't make any money on this market. And all your losses. If you lost on this market, we're gonna reimburse you. They were still pissed because they felt like they should have won.

• 1:14:24Patrick Bet-David?

  Oh, I, we.

• 1:14:25Speaker 00

  And that happens in consumer product.

• 1:14:26Patrick Bet-David?

  We had a person here, okay? We had a person here who won. He's like, oh my God, you know, I keep, obviously. Uh, he's like, hey, you know, I put on the whole thing with Chamonix and, you know, and then all of a sudden he comes like, so man, I'm not getting anything because they decided to do everything back and I didn't lose any money, but I didn't make the money.

• 1:14:42Speaker 00

  Nobody lost. I made sure of that. But, but like, we made it clear. The rules are the rules.

• 1:14:46Patrick Bet-David?

  You remember this one that happened here? Connor, you remember?

• 1:14:50Speaker 03

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• 1:16:43Patrick Bet-David?

  From the studio that brought you WandaVision. I was an Avenger, but I'm not a hero anymore.

• 1:16:51Patrick Bet-David?

  The Vision returns for the final chapter of the groundbreaking trilogy. That family wasn't real. You sure about that? I had a father called Vision. How is this possible?

• 1:17:13Patrick Bet-David?

  For that whole, yeah.

• 1:17:14Speaker 00

  But you know, the rules, you know, these markets, if you go back to the Senate race, let's go back to that for a second. And if you go down, there's something called, if you're Ctrl F rules, you'll see it, but

• 1:17:27Speaker 00

  here, maybe go down a little bit more. Here on the view of full rules on the bottom. Each market is a legal contract. That's what we call them event contracts. There's rules of exactly how it's going to settle.

• 1:17:39Patrick Bet-David?

  Zoom in a little bit.

• 1:17:42Patrick Bet-David?

  Minimum trade size, a penny.

• 1:17:44Speaker 00

  And payout criteria and it's like encompasses that the first candidate who presents certification of election, et cetera, et cetera. And that's what it's, the market has to have certainty on what is going to be a yes and what is going to be a no. And if we can never move away from those rules. Because if the rule, if people don't trust that we're going to follow the rules to a T, then you're buying, you know, then you're not, never going to trust that we're going to settle it the right way, right? And that's the key thing. And, and it's important to understand that because, you know, sometimes what is a yes, what is a no, right? How do you define if the straight of hormones is open? And so we have a very specific definition of like the seven day average of boats reported by this agency. That's the kind of definition that we have. And that's always been a challenge for financial markets, you know? I'll, I'll give you this funny example. Have you ever heard of butter futures?

• 1:18:25Patrick Bet-David?

  No.

• 1:18:26Speaker 00

  Butter futures are one of the big futures are traded.

• 1:18:28Patrick Bet-David?

  Okay.

• 1:18:29Speaker 00

  And because butter, you know, butter producers need futures to hedge and et cetera. You know, it took a while to define butter because, you know, people would freak out on the Chicago World Trade and CME at the time saying, no, no, no, you're not accounting for butter the right way because that form of milk should be accounted as butter. And that, and then at some point, the way, how they resolve it, they're like, you know what? I don't care what everybody's definition of butter is. The definition of butter that we're going to use in this market is this level of saturation, this level of density, this level of salt.

• 1:18:54Patrick Bet-David?

  That's what you guys do.

• 1:18:55Speaker 00

  And that you have to, it's the only way to create.

• 1:18:57Patrick Bet-David?

  And then, so what's the step process? That when somebody wants to create a position, then who writes the contract, then?

• 1:19:03Speaker 00

  We have a team that like, so a lot of customers want to trade it. Then we have a team that is now very good because we've listed so many, tens of thousands of markets. So most markets look and feel like a market that we had in the past. So we pull up templates and then we see if there needs refinement on like the specific rules, if it's something completely new that we haven't done before. We create a very uniform set of rules on it that is certain upfront, then we list, and then we have to make sure that the regulation department is okay with it, which is like, we're not doing some of the markets are banned. And then we basically put it out in the open market.

• 1:19:31Patrick Bet-David?

  How many total markets have you guys ever?

• 1:19:33Speaker 00

  We have tens of thou, I mean, ten, oh.

• 1:19:35Patrick Bet-David?

  All time.

• 1:19:35Speaker 00

  Millions now.

• 1:19:36Patrick Bet-David?

  Millions now. How many active do you have right now?

• 1:19:38Speaker 00

  Ten, tens of thousands.

• 1:19:39Patrick Bet-David?

  Tens of thousands.

• 1:19:42Patrick Bet-David?

  And the, the.

• 1:19:43Speaker 00

  It's amazing.

• 1:19:44Patrick Bet-David?

  The method of creating, tracking, approving, how, what is that process? Like, there's a group coming in, what things will you say no?

• 1:19:51Speaker 00

  It does, I mean, like, look at the Dodgers market real quick. If you like, if you Google, maybe like Dodgers or Calci hedge, maybe just Google it.

• 1:20:00Speaker 00

  Calci Dodgers, I mean.

• 1:20:05Speaker 00

  Maybe Reuters, the, the article right below that one.

• 1:20:11Speaker 00

  You know, that was a market that we, we, we, we already had, we, I mean, we already had a market on the teams. They were like, okay, I want that specific market and then not paying it past the playoffs because that's the risk that we really incur. And you see that $60,000 hedge, they didn't do it to make money. They did it to offset some of the, the, the risks that they had. And we discussed this a little bit. Sometimes these market formations is like a specific to the risk that a person has. And sometimes it's more broad where like they basically buy the index, like, oh, the, the Dodgers is going to do well over time or do less well over time. And we always have to balance like, is there going to be enough liquidity? Are there going to be enough, how do liquidity comes? It's from people that are speculating. Right? Because whenever someone is hedging, who's on the other side? It's a speculator, someone is doing it for making money. And that's the key thing.

• 1:20:56Speaker 00

  We always think about what are the markets that will have enough liquidity where people are going to be speculating, trading it up. You know, people say, do people bet on Calci? Like, yeah, they bet, like they bet on the stock market. But that speculation is the thing that helps get the market efficiency and the prices to help the hedgers do what they need to do.

• 1:21:09Patrick Bet-David?

  Give me the weirdest markets you've had, weirdest positions you've had.

• 1:21:11Speaker 00

  Oh, the goat herder is one of them. I mean.

• 1:21:13Patrick Bet-David?

  That's one of them. What else, what else have you?

• 1:21:15Speaker 00

  Taylor Swift is always very popular.

• 1:21:18Speaker 00

  Taylor Swift.

• 1:21:18Patrick Bet-David?

  Any kind.

• 1:21:19Speaker 00

  Where was, she was getting married. You know, I have a deal with MSG. So people always, you know, when I talk to policymakers, they come to me and they say, why are people trading on Taylor Swift? Like, what, what is the economic purpose of her? Like, it's, it's, it's, if you, you know, wedding dress is another example. And I'll tell you, I'll tell you that. The wedding, whether she picks Dior or not, do you believe it's going to move the Dior stock price? Now they're a private company, but you believe it will move it?

• 1:21:44Patrick Bet-David?

  I think so.

• 1:21:44Speaker 00

  For sure. I mean, like.

• 1:21:45Patrick Bet-David?

  Yeah.

• 1:21:46Speaker 00

  I mean, think about.

• 1:21:46Patrick Bet-David?

  Four hundred and two thousand, so what?

• 1:21:48Speaker 00

  Think about the number of people, think about the number of people that will pick Dior as their wedding dress just because Taylor Swift picked, picked her wedding dress as Dior. Just think about that, just truly that.

• 1:21:57Patrick Bet-David?

  So, so isn't that a lot of opportunities there for somebody for, even for her team to go to Dior and say, hey, $50 million will have you be the dress up? Isn't there like opportunities like that?

• 1:22:11Speaker 00

  I mean, but they probably pay her to do that, by the way. Think about it. You, you don't think Dior is going to pay?

• 1:22:15Patrick Bet-David?

  That's what I'm saying, I would.

• 1:22:16Speaker 00

  But that's advertisers, what they do, I mean, you know, people, we had a market where she was going to get married. Okay? People were like, well, that's frivolous. Why would anyone care about that? I'll tell you, like, I care about, I mean, I have a partnership with MSG where the concourse on the Six Flags is not the cashy concourse. And I can tell you right now, we have an internal model that tells you how much value is that part, you know, we pay, let's call it, that's not the right number, but let's say we call, we pay a million dollars a year for that partnership. After Taylor Swift decided to get married there, that million dollars a year of value is now 2.5 million dollars a year of value.

• 1:22:50Speaker 00

  Think about it. I mean, it's, you have, but think, think about, you know, when, when advert, people always tell me sports have economic consequences. Obviously they have economic consequences, like if you, we, we, if you sponsor, like, do you think my MSG deal, my, the deal value of my MSG partnership went up after the Knicks won?

• 1:23:06Patrick Bet-David?

  No, three X, two and a half X.

• 1:23:08Speaker 00

  Exactly. What, so is that a binary risk that I actually hold?

• 1:23:11Patrick Bet-David?

  They're all in three this season so far, they gotta, they gotta.

• 1:23:13Speaker 00

  Yeah, they gotta do better. But is there an economic impact from the Knicks winning or losing? There's no question about that.

• 1:23:18Patrick Bet-David?

  Again, the main thing is the manipulation.

• 1:23:20Speaker 00

  And that's why it's regulated. That's why it's regulated, right? Like the regulatory, what do you do about, there's manipulation in the stock market? I mean, actually, you know, this is funny. You know that onion futures are illegal in America?

• 1:23:33Patrick Bet-David?

  Illegal?

• 1:23:34Speaker 00

  Illegal. Look at the Onion Act. No, there's no, you're not, you're, you're going to find if the Onion Act is going to be repealed, but you're not going to have. If you, if you go look at Wikipedia, Onion, Onion Act. You know why? So onion is the only vegetable where it's illegal to have a future on in America.

• 1:23:49Patrick Bet-David?

  Why is that?

• 1:23:50Speaker 00

  So onion, no, just do Onion, Onion Act, not actor.

• 1:23:54Patrick Bet-David?

  Yeah.

• 1:23:55Speaker 00

  Onion future that.

• 1:23:57Speaker 00

  Is the United States law banning the trading of futures contract on onions as well as motion picture box office, which motion picture box office is very, is another story and we can talk about that. But what happened? Two guys, 1955, Sam Siegel and Vincent Kosuga, what did they do? They, they, have you heard of a short squeeze? They put a short.

• 1:24:15Patrick Bet-David?

  Squeeze, yeah, of course, yeah.

• 1:24:16Speaker 00

  Yeah, they bought all the onion supply, put a short squeeze and then tanked the market, which bankrupted a lot of farmers. They manipulated the, the onion markets to make a profit.

• 1:24:24Speaker 00

  What did Congress decide? What did, what was Congress's conclusion at the time? Congress was like, you know what? The problem is clearly onions here, not humans. So we should ban onion futures, that will fix the issue. As if that could never happen in corn futures or soybean futures or, or financial markets at large. The answer is not banning onion futures, as we know. The answer is actually regulating them, add the right set of guardrails and the same guardrails, the risk exists anyways. Humans will always try to game a system. And by the way, you know, this is a bad outcome because onion futures are one of, so if you go to my Twitter, you'll see a tweet I put out recently on, I compared the oil price volatility to onion prices, which is not a one to one comparison, but still it gives you a little bit of a, of a feeling. So if you go down a little bit, a little bit more, you're going to find the chart a little bit more here.

• 1:25:09Speaker 00

  If you open that chart, look at the volatility of onion prices against oil. And by the way, oil is considered to be a volatile, you know how oil will be excluded from inflation because it's a very volatile commodity? Look at the volatility of onion prices. You know why? There's no futures market for it. It's less predictable. That's a bad thing.

• 1:25:29Patrick Bet-David?

  So because of that, interesting.

• 1:25:32Speaker 00

  Isn't that like, isn't that, I mean, this is an actual, should we have banned onions? And the answer is unequivocally no. It was a terrible decision.

• 1:25:38Patrick Bet-David?

  Very interesting. Very interesting. I, I, I read somewhere where for you, you had 150 people reporting to you. Is that true?

• 1:25:46Speaker 00

  Yeah, me and Luana, like.

• 1:25:47Patrick Bet-David?

  How do you have 150 people reporting to you?

• 1:25:49Speaker 00

  I work a lot, I really do. Like, you know, I, I, and, and I want to talk a little bit about this and I know you, you talked a lot about this, but you know, I, I believe in hard work. I really believe in like being committed to the thing and really believing it. And the soul of an organization is going to be the founder at the end because you're making the decisions. I think, I pretty much work like seven days a week and, and, and long hours. I think it's scalable because we have a lot of tools now to scale companies, especially with AI. Like, I, I think companies over time, you know, the, the traditional structure is you have a boss who has reports and those reports are bosses for other reports and you go down in a tree-like structure. And then that layer in the middle is what we call the management layer. And you know, when people complain all the time, what do they say? The management layer is the worst. They don't get things done is why all innovation dies. And why?

• 1:26:34Speaker 00

  Because managers are in the business of politics. And no matter what, when an industry gets big enough, what you need is leadership. And what is leadership? It's like you point the vision and communicate and motivate your people to go one and row in one direction. And management is the thing that like checks in on people all the time. Make sure they're done. That whole thing, the checking in, making sure something was done, make sure it was not done. Guess what's very good at doing it right now? AI. It's very good at tracking and measuring and like summarizing and all these different things. You don't need that massive management layer. So I think organization is going to be structured more as a circle over time where founders and leaders can like use AI to track a much greater number of people than they could have in their brain beforehand. And that's what we are trying to build at Kalshi.

• 1:27:18Speaker 00

  We've been really very kind of at the front of using AI. And that's what that's what excites me, by the way. We're we're a 250 people company now, which is very small given the size of the company. And I always say these young people are so much.

• 1:27:29Patrick Bet-David?

  You're a $22 billion company with 350 people?

• 1:27:31Speaker 00

  250, yeah.

• 1:27:33Patrick Bet-David?

  250 people. That's it.

• 1:27:34Speaker 00

  Yeah, we're actually the highest revenue per employee company in the might be the planet. But that to me is the opportunity and I want more young people to really, you have all these tools now, you can go and build things, you can go do things. You have, and I want young people to trust themselves more and like, if you have a good idea, put it out in the world. You'll be surprised. You'll be, and you have a bad idea, put it out in the world and fail and learn how to make it better for next time. Right? And I think I worry that young people are not thinking about the world that way. I think they're too negative and I think it's very important.

• 1:28:03Patrick Bet-David?

  Why do you think they're negative?

• 1:28:05Speaker 00

  I think it's a little bit what we discussed. I think a lot of people feel like that, you know, capitalism is pushing them out of the system and, and, you know, I mean, I grew up in Lebanon and that's, that's how upsets me a little bit. It's sad to me because like, when I came to the country, I was so pumped, like I was so excited, you know? And I grew, I was born here, grew up in Lebanon. My mom was always go to America. If you work hard, you're going to make it. And you know, you're the same thing, right? Like you build, you work hard, you you push yourself to your extreme and you get rewarded. It's a country that rewards you. And I worry that a lot of people don't believe that anymore.

• 1:28:30Patrick Bet-David?

  Do you think they're right? Or do you think they've been brainwashed? Do you think they've given up? Do you think the influences from the outside to inside? What do you think?

• 1:28:37Speaker 00

  My feeling is it doesn't really matter because they think that. Right?

• 1:28:41Patrick Bet-David?

  Your feeling is it doesn't really matter what's causing it. It's just the fact.

• 1:28:44Speaker 00

  We are where we are.

• 1:28:45Patrick Bet-David?

  Think that that's a bad thing.

• 1:28:46Speaker 00

  We are where we are. Right? And so we got to fix it. We got to figure out ways of fixing it. And I think that, you know, to my feeling is like the fix is going to have to be a way to educate and communicate to a lot of people that they can, they don't, they shouldn't sit on the sidelines, they shouldn't be on the sidelines. They should jump into the game and start playing. And now with AI, with all these tools, it's so much easier to start playing and start doing cool things. Right? And, and, you know, you.

• 1:29:11Patrick Bet-David?

  What's the process? Walk me through it. So let's just say, the way you came up with the idea Kalshi, you're in a meeting, you're like, okay, what if we did this? What if we created these markets? Right? And you read about what happened in Iowa and you read this book, Super Forecaster, whatever it was and Super Force, which by the way, I looked at the book, the book came out in 2016, you started Kalshi in 18. So what is the lens to look at something and say, I'm going to get into this industry? I'm going to get into that industry?

• 1:29:38Speaker 00

  I, my honest feeling and like, look, I'm a risk averse guy, by the way. I told you I'm a little bit anxious and Luana was my co-founder is always more risk on. She's faith based. She likes to, you know, she believes that things are going to work out.

• 1:29:50Patrick Bet-David?

  She's the Brazilian, Brazilian.

• 1:29:52Speaker 00

  Yeah, she believes that things are going to work out. She pushes, she pushes things, right? And, and it took me a while to really come to terms, but my, my, the core thing is I really believe people should just like follow their instincts and do the thing they really are like, like childishly excited about. If you're childishly excited about something like, everybody has a child in them. I don't think that ever expires. Some people ignore it because like, oh, I have to become an adult and do all these different things. But you don't, you don't have to ignore it. And like, you should just like follow the things that like you kind of, you find yourself sometimes at night just reading about. Doesn't matter what it is. It could be sports, it could be, I don't know, some people are into like Reddit channels, some people, whatever it is, that thing that like gets you going and you know, you, you know, you, you start talking about it, like that thing that gets your friends to eye roll

• 1:30:35Speaker 00

  when somebody brings it up because you know, they know that you're going to like not stop, not stop talking for another 45 minutes. That's probably the thing that you should work on. I really believe that. And people think too much about how do I be successful, et cetera. Like you have the tools now to imbue your personality and your thing on a lot of like society. Like, and if you're excited enough about something, I think over time you're going to bring enough people on the, on the journey.

• 1:30:54Patrick Bet-David?

  When's your birthday?

• 1:30:55Speaker 00

  May 7th, 96. I was born in 96.

• 1:30:57Patrick Bet-David?

  Okay. And anime, what role did anime play for you?

• 1:31:00Speaker 00

  Oh, I love anime.

• 1:31:01Patrick Bet-David?

  Tell me why.

• 1:31:02Speaker 00

  I love, I, you know.

• 1:31:03Patrick Bet-David?

  And is there a favorite one? Is there one that you?

• 1:31:06Speaker 00

  You know, I was like kind of a, a lot. I mean, Dragon Ball, One Piece, there's a lot of new ones. I mean, I mean, I was like, you know, a nerd in high school. So like a lot of nerds at the time, you know, it's funny, like a lot of people were like closeted anime watchers and, and now it's kind of cool because people are into Japanese culture and it's become a cool thing. So a lot of people that like, I didn't know would watch when we were younger. Now I realize we're all watching, but we never told each other because you know, you'd get bullied in recess if like you ever said that. But I love it because there's something about it, you know, it's, it's the thing that's I love the most about it is like, there's sort of this notion of like all the characters have some unifying traits, which around self improvements. Like I always think, you know, the, the people that do the best, that are essentially at the top of the food chain and like, you know, most of the animes, there's always like

• 1:31:51Speaker 00

  this dynamic of the, the main, the main protagonist and then like the secondary protagonist, that's usually their arch rival or arch enemy or their competitor. The main guy is usually mostly focused on himself and like getting better. He's always competing against himself. He's always stressed about not achieving his full potential and not doing enough to versus what he's capable of. And the second guy is the guy who's trying to beat the main guy. He's usually a little bit more envious, more, you know, he's desiring what the main guy. And the main guy, you know, always outperforms and there's always that foundational thing of like, be the main guy, be the guy who's just pushing yourself. Because if you push yourself and do, deliver the best you can, you're probably going to get somewhere. And there's something neat about that. It's a positive view of society. You don't have to beat others to do your thing. Just find your own path and beat yourself and keep beating yourself every week.

• 1:32:33Speaker 00

  And if you do that for a long enough period of time, beautiful results will happen.

• 1:32:38Speaker 03

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• 1:34:31Patrick Bet-David?

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  You sure about that? I had a father called Vision. How is this possible?

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• 1:35:02Speaker 00

  It really does.

• 1:35:02Patrick Bet-David?

  What's your you go from zero. You're at Goldman, little bit of that Citadel in Chicago or here, probably in Chicago.

• 1:35:10Speaker 00

  I was in New York, actually.

• 1:35:11Patrick Bet-David?

  Oh, New York. Okay. So New York Citadel.

• 1:35:12Speaker 00

  All these as an intern. I never really had a full time job.

• 1:35:15Patrick Bet-David?

  So at what point these guys watch Jujutsu Kaisen.

• 1:35:18Speaker 00

  I watched Jujutsu Kaisen, yeah.

• 1:35:20Patrick Bet-David?

  They're they're they're my my son's gone through like he's like.

• 1:35:22Speaker 00

  What are they saying? So Jujutsu Kaisen is incredible. JJK, you said.

• 1:35:26Patrick Bet-David?

  JJK is all he talks about and.

• 1:35:27Speaker 00

  I love, I love.

• 1:35:28Patrick Bet-David?

  Between two of them, this and another one. What is the main character's name?

• 1:35:32Speaker 00

  Gojo.

• 1:35:32Patrick Bet-David?

  Yeah, Gojo.

• 1:35:33Speaker 00

  But Gojo is the same what I just described, by the way. Never cares about beating others. He just like cares about being just beating himself.

• 1:35:39Patrick Bet-David?

  When he sits with me, explains it to me for forty five minutes. When I tell you the way he breaks.

• 1:35:45Speaker 00

  He lights up, right?

• 1:35:46Patrick Bet-David?

  Yeah, he says there's this one character that he cuts himself and, you know, he's able to cut you and it's fascinating. He lights up when he talks. He got everybody recruited in the Hamptons to watch it. And they're just saying they're twenty minute episodes, one after another.

• 1:35:57Speaker 00

  Yeah, incredible.

• 1:35:58Patrick Bet-David?

  Well, go back, go back to. So you go from Goldman, then Citadel, New York. And then you got, um, and then you.

• 1:36:06Speaker 00

  And I was going in and out of MIT, so I did Citadel, but then I went back to finish my master.

• 1:36:09Patrick Bet-David?

  And you're doing the stuff with MIT. So when you're when you're doing that, when you're going through it. Um, in your mind, when you're saying, okay, I'm going to get in and all of a sudden you got a company that's two hundred twenty two billion dollars, you know, whatever. It's about to get a valuation of forty billion. Two hundred fifty employees. You have influences, enemies, all these people that are. How do you keep yourself sane? How do you not lose?

• 1:36:29Speaker 00

  I just like, I think it's the core is like, it's interesting. Like I always, you know, I always tell people like, I like what I'm doing. I like markets. I really like free markets. I believe in free markets. I believe that we should have more of them. The more we have of them, the more every time we did more free markets, we got better results for society. Every single time. It never misses. Um, now you have to have some sensible guardrails, but I think and and I believe in the mission of markets. I believe in prediction markets. They will depolarize us over time. They will make us smarter. You know, people ask me, what's the difference? Like, you know, we talked a little bit about the gambling. Gambling is incentivizing bad behaviors, keep losing and, you know, doing it for entertainment. Prediction markets incentivize people to think more over time, to think more rationally, to think probabilistically. You know, the the truth is not Republicans are going to win or Democrats are going to win.

• 1:37:13Speaker 00

  The truth right now is forty percent chance is going to move over the next week as new information develops. And I want people to get more and more mathematical about the world. That excitement that I have, the thing that I just described, the childish excitement about what I'm building is the thing that gives you same because I'm not doing at the court. Obviously, I'm very happy and like things are, you know, we've got we're very lucky to have been have all the success we had. In some ways, I'm living the American dream and it's amazing. But like, I don't spend much more than I used to. Like, I, you know, uh, you know, I like fly better. I think that's one of the best things about, you know, making some money is like you can fly more more comfortably because, you know, honestly, like flights are getting really tough these days. Um, I eat nice things and like, you know, but but things have not changed materially. I just like what I'm doing and I'm locked in on like

• 1:37:57Speaker 00

  I love doing it. Like, work is is fun for me. It's play. Like, we're like, oh, why do you go to a weekend? Are you miserable? No, I love I love going to the office. It's like amazing, you know, I like go and like there's new ideas and there's like this thing that I can build and like, oh, my God, and like, wait, what are customers? Oh, customers didn't like that feature. They're liking that new one. And that's why I always tell people like, that's the best thing to do because I think over time we've got acquisition offers over time and like, we didn't really want to sell because I thought about it. I was like, okay, if I sold it and made a lot of money, what would I do? I don't know. I know myself. If I go and like do nothing with a bunch of money, I think I'm going to get depressed. People always think about if you don't have purpose, doesn't matter. You can have all the money in the world doesn't really matter. And you know, you'd know this, right? Like, um, I was like, I probably would go back to maybe being in financial markets and being a builder. And I thought, well, it's exactly what I'm doing right now. So like.

• 1:38:41Patrick Bet-David?

  So.

• 1:38:41Speaker 00

  Yeah, well, I feel like I would go back to.

• 1:38:43Patrick Bet-David?

  You're married.

• 1:38:43Speaker 00

  I would be building, you know, I know I have a girlfriend for four years now. And so I I think like, I I tell people, figure out the thing that makes you light up. And if you don't know what it is, ask your friends what it is. They will know. And you should probably work on that.

• 1:38:58Patrick Bet-David?

  I tell you what, Kalshi, incredible concept. And it's amazing what it's turned into. And I'm so curious to know where you take it next because for us, when we look at anything with election, decision, any of that stuff, we go straight to Kalshi. And if you're not already doing it, you ought to go out there and do it for yourself as well.

• 1:39:14Speaker 00

  Thanks so much.

• 1:39:15Patrick Bet-David?

  This has been a pleasure, man. I really enjoyed it. Thank you.

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• 1:41:04Patrick Bet-David?

  From the studio that brought you WandaVision. I was an Avenger, but I'm not a hero anymore.

• 1:41:12Patrick Bet-David?

  The Vision returns from the final chapter of the groundbreaking trilogy. That family wasn't real.

• 1:41:17Speaker 05

  You sure about that? I had a father called Vision. How is this possible?

• 1:41:23Patrick Bet-David?

  Don't miss the two episode premiere of Marvel Television's Vision Quest. Nothing bonds a family together quite like Mortal Jeopardy.

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