Why prediction markets are going mainstream with Kalshi CEO Tarek Mansour

Kalshi is the largest prediction market in America, building a unique trading economy around political, sports, and cultural events. While some states view it as an illegal operation requiring gambling licenses, others—including certain courts and members of the Trump administration—see it as a groundbreaking financial opportunity. On this episode of Equity, Max Zeff sits down with Kalshi CEO Tarek Mansour at the latest StrictlyVC event in San Francisco. Mansour shares why he sees Kalshi as a global source of truth. Listen to the full episode to hear more about: How Kalshi is creating a new trading economy around political and cultural events. The regulatory challenges and opportunities that prediction markets face. Mansour’s vision for Kalshi as a global tool for decision-making and transparency. The controversy surrounding Kalshi’s status and its ongoing legal battles. Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes here. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Anthony Ha?

  This episode of Equity is brought to you by Schneider Electric. Schneider Electric, advancing energy tech.

• 0:17Rebecca Bellan?

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. I'm Rebecca Beland and this is the episode where we bring on industry experts to help us explore a trend in the tech world and dive deep. Today, we're talking to Kalshi CEO Tarek Mansour. Kalshi is the largest prediction market in America, creating an entire trading economy around political, sports and cultural events. To some, including several states, it's an illegal effort that requires gambling licenses. To others, including some courts and members of the Trump administration, it's just a new financial opportunity. TechCrunch senior reporter Maxwell Zeff covered all of that and much more about Mansour's perspective on why he views Kalshi as a global source of truth during a strictly VC event in San Francisco. Let's take a listen.

• 1:02Speaker 02

  Tarek, thank you for being here. Yeah, it's exciting. Thanks for having me. So prediction markets, as Connie said, are a really interesting space right now. I think both on the information side of things and also on the regulatory side, there's a lot of interesting things going on and you're kind of at the center of it. And we're going to get into all of that, but first, I think it's important to just talk about what are some of the real things that people are predicting on your market? I pulled up a few that I pulled last night. One question that you can answer on Kalshi is recession this year? Question mark, and it's currently a 56% chance yes. Another one that I liked was Minecraft movie, what's the Rotten Tomatoes score? It's actually looking pretty good for the Minecraft movie right now, if anyone's wondering.

• 1:47Speaker 02

  And of course, you can bet on the best AI this month. You can bet on when Elon Musk will leave Doge and the presidential nominee for the Democrats and sports, which those two are particularly interesting. But what's your favorite?

• 2:01Speaker 03

  I always liked the TikTok market. I've liked it for like a year or two now.

• 2:05Speaker 02

  The TikTok ban?

• 2:06Speaker 03

  Yeah, it just keeps flipping and you know, they keep fighting over it and it's been really volatile. I mean, the election, a lot of people get excited about the election because everybody cares. But there's a lot of resources that are put into sort of forecasting elections for better or worse. But something like TikTok ban is something that you just really couldn't price before. I mean, it's just one of those things that was really left to dinner table at Thanksgiving. And it's like your uncle's opinion was the only thing you had to rely on for this. So I really liked these sort of markets. They're very important. I mean, you have a whole swath of the economy that could just get eradicated on the other side. You know, if the other side is right, our kids are being manipulated by China. So like, it's something that's pretty important that we didn't have any sort of gauge of what was gonna happen before. I like this market a lot.

• 2:45Speaker 02

  Yeah, no, that's an interesting one. But I did wanna briefly talk about your history, getting into all of this. Because I believe you interned at Goldman and you also worked at Citadel. You also had a brief stint as an AI researcher, according to your LinkedIn. So that's broad. But I also just kinda wanted to talk like, what did you see working these early jobs in financial markets? And why did that prompt you to become a startup founder in this kind of analogous field? And also, what is different about working as a founder versus working in these banking jobs?

• 3:16Speaker 03

  Yeah, a few things. I mean, it's like super different. We'll start sort of a little bit of the history, but I went to MIT. We both, one of my co-founder and I, were not the sort of entrepreneurial product type. I mean, Ethan, I don't know, he started a company at eighteen, seventeen, it looks like. It's crazy. I thought I was young. Started mine at twenty-two, so you know, that was cool outside of this room, I guess. But we were not product builders or entrepreneurs or even trying to. We're just gonna go into trading. That's the thing that was exciting. I was like a math geek. In some ways, I still am. But I spent time at Goldman. I spent time at Citadel. The thing that I was naturally gravitating to, so I like trading, but I found myself obsessing more over things like, like, why are we even trading this thing? I found it fascinating that you could walk in and I encourage anyone to do it. If you haven't walked into a trading floor, you should do it.

• 3:59Speaker 03

  It's kind of a weird experience where you walk in and you see like hundreds of people. They're getting paid, you know, something like seven-figure salaries to trade something called swaps. Like, how do you even get here? What even is a swap? And then I really liked thinking about like, What was financial history? How did we get to things being the way they are? And how did we develop all these financial instruments? Why are we even trading them? And then number two, you know, this example I always like to give in 2016. I was an intern. I was very young, so pretty naive, kind of asking all these questions. And the thing I noticed at the trading desk that we're in is like all these clients, the sort of hedge funds, institutions. Well, you consider very fancy traders, so it's not like average retail individuals. They didn't have a view on the instruments, on the financial markets like you would traditionally think about. Equities or credit or bonds or whatever. They had a view on whether Brexit was gonna happen or not.

• 4:43Speaker 03

  So that was a big chunk of people. And then they had a view on Trump, whether he was gonna win or not. And it was these discrete events. And they wanted to either get exposed to those events, so bet on these events, or hedge against them. And so we would do is like a typical investment bank is like we would sell them a bundle that was super expensive, very opaque. And kind of not really fit for purpose, but we'd sell it very well, so they'd buy it. And so a lot of people, one example, very simple one, is like we'd sell these sort of option structures that were effectively a short on S and P. It's like if Trump wins, you should short the S and P, obviously. Trump won, so they were right. But then the S and P rallied, so they all lost money. And so there was a simple idea, which is like, what if we sort of built a financial market for the thing that they're asking about? Like this simple question like, will Brexit happen? That you could actually price that. And if you structured that market and like, people get paid one dollar if it does and zero if not.

• 5:28Speaker 03

  Then effectively the price at which is trading, like, let's say that people are buying at 50 cents. Is actually the forecast, the probability, the chance that this event happens. And so we got really excited about this idea because one, if you could build that, it should in theory be one of, if not the largest financial market, because it's the broadest. It's capturing the largest universe of things. And two, it'd also be very useful, because then you have this notion of you're aggregating the wisdom of the crowds. And having people with real skin in the game, being paid to forecast the future. So it's just making us all smarter about the future. And that felt like a very worthwhile thing to build. So we decided to do it. It was illegal at the time, and we can talk about that, but.

• 6:04Speaker 02

  What is it now? Legal?

• 6:05Speaker 03

  It's pretty legal now. You know, we've had to eat a lot of shit over the last five years, but it was totally worth it. I'd do it again in a heartbeat.

• 6:13Speaker 02

  Well, let's talk a little bit more of the quote unquote that's being flown at you right now. You were just sent cease and desist letters by New Jersey, Nevada. They were the first two. Now I recently saw Ohio and Illinois. Am I missing any others?

• 6:27Speaker 03

  Montana.

• 6:28Speaker 02

  Montana, got it. I thought you would know. So. You responded to-

• 6:33Speaker 03

  There may be some one or two other one that came to that.

• 6:34Speaker 02

  Hard to track, you know, there's a lot. So I just, just for background of people. So you guys are federally regulated by the CFTC, but these states kind of came in and said that some of the sports gaming, sports betting that was going on in the platforms was not, they thought it was not allowed. They thought you should have to be licensed. That's my understanding of why they wanted you to stop operating in their states. And you responded by suing them and you had this big post on LinkedIn, right? When you sued them, you said that Kashi is a truth machine and that this is like a necessary service to kind of expose the truth about the world. And you kind of had this very bold take about what your platform really is and why they shouldn't be allowed to stop you. So why do you think that these state gaming regulators shouldn't be allowed to regulate you?

• 7:19Speaker 03

  So maybe just a little bit of history. So we had this idea, we decided to start it. And then we realized that this was not allowed in the US. And we looked at the history of these markets and some of these true prediction markets are actually this notion that a lot of people have been excited about for a long time. People wanted these to exist for a very long time because of the things that I just described. But the sort of bane and the thing that has really choked them is the US regulators have generally seen them as a bad thing and something that should just not be allowed. What we decided to do is like, we wanted to address that elephant upfront. We're like, if we wanted to build this company, we have to build everything regulated upfront. We will literally go to the federal government and subject ourselves and say, we want to get regulated and we'll bang our head against the wall until you regulate us. And the reason we did this is like, I didn't want to build a company that had a curse of scale. So like the bigger it got, the higher the risk, which is usually what happens if you're unregulated and operating offshore in the shadows.

• 8:04Speaker 03

  And number two is, I think we always wanted to attract sort of institutional liquidity. And now we're seeing the results of that, like the Schwabs and Robinhood and Citadel's and basically the banks integrate into the exchange. The same way that they would be trading on the New York Stock Exchange or CME or the NASDAQ, large exchanges you would think about. So we spent three years and a half, it was a truly brutal period, getting regulated by the CFTC upfront. CFTC is a commodity future trading commission. A lot of you may be familiar with the SEC, which regulates stocks. CFTC regulates all other types of financial instruments. And we did get regulated, we launched the exchange, and then we had this other issue, which they didn't let us do the election market, which has been illegal since the Great Depression, basically. And then we sued the CFC over it. So we sued our own regulator. Can also talk about that. Our board was not happy about that, but we believe we were right.

• 8:48Speaker 03

  And we won in October. So we won three weeks before the election, the DC Circuit of Appeal. And since then, the company has grown truly astronomically, like the numbers have been just absolutely crazy. This year, we entered sports. So we rode election, grew a lot, launched a few brokers and entered sports. A few things generally favorable administration, a lot of customer demand. And there's a very strong argument around the economic use case around sports. The real reason why states are sending us these season assists is because there's like massive casino lobby that's unhappy about this. The core of why we're not necessarily very concerned is like, we are regulated at the federal level. So we're regulated by a federal regulator, the CFTC. And there's this thing called federal preemption, which some of you may be familiar with. But we're basically under exclusive jurisdiction. Like the state law doesn't really apply when you're federally regulated exchange.

• 9:30Speaker 03

  The same way that, for example, like in Kansas, it's illegal to trade grain futures. Obviously, you know, it's not illegal to trade grain futures at the federal level and you can do it in Kansas, even if state law in Kansas says that it's illegal. So that's what's really happening here. And that's why we sued these states, just to clarify, like we are federally regulated. We don't really have authority here.

• 9:46Anthony Ha?

  What moves our world forward? Energy. History has been shaped by it, revolutions won with it, and progress dependent on it. For 190 years, Schneider Electric has been a leading force in this story, creating the technologies that harness energy and transform the competitive landscape. And today, in the dawning era of energy and industrial intelligence, Schneider is helping customers build more efficient, resilient, and sustainable operations across every sector, from data centers to homes, from buildings to industry. Schneider Electric, your energy technology partner. Discover more at se.com.

• 10:23Speaker 02

  But they know that you're federally regulated. It's not like they don't understand.

• 10:27Speaker 03

  I mean, it's funny because the Nevada one, like they leaked it or released it or tweeted about the season assist before it even got to us. We had to call them like four times, like, are you gonna actually send us season assist? Because legally, you cannot receive a season assist on Twitter. You have to actually like, I have to receive it like physically, because otherwise I can't do anything about it. So I mean, you know, it's like a whole press component to this.

• 10:45Speaker 02

  And there, to be clear, the letters say that they take issue with the sports betting that's going on on your platform. And what they're saying is that you need to license, you need to get a license from us, from each gaming commission in each state if you want to do that. So why are you opposed to getting licensed?

• 11:01Speaker 03

  We have a licenses by the CFTC, so we are.

• 11:03Speaker 02

  No, but for them.

• 11:04Speaker 03

  Well, that's a little bit like saying, you know, it's literally the same thing as like if states woke up one day and sent a cease and desist to New York Stock Exchange saying like, hey, wagering on something that is outside of your control to make more money requires you to have a gaming license in my state. Now that New York Stock Exchange has to get 50 state licenses to do their business, we just don't fall under that model. We are literally like a financial exchange, but the underlying that you're trading is events and a regulator is the CFTC. And so if the CFTC tells us to stop, we will absolutely stop. And if they don't, then we won't.

• 11:31Speaker 02

  So I think the core tension in this is that you guys kind of see yourself as a financial market, more something like that. And these guys are kind of treating you a little bit more like you're doing sports gambling. And sports gambling is only legal in 39 states, I believe, not the whole country, but you operate in the whole country. So it seems to me like, I would like you to answer, what is the difference between gambling and prediction markets?

• 11:56Speaker 03

  Yeah, I mean, it's interesting. Like, that's the question that's been sort of pretty central to this company from its very beginning. It is actually a very important and interesting question. The answer is not simple. But the thing I'll say is like, there hasn't been a single financial derivative that has been set up in the US or otherwise, that hasn't been called gambling at the beginning. Like, it's consistently the same thing. You know, going back 100 years, exactly 120 years now, in 1905, there's a Supreme Court decision that legalized grain futures in the US. It went all the way to Supreme Court. The whole question was like, is trading on grain futures gambling? And there's a whole part that was saying it's gambling because some people are speculating, you know, they're putting some money on something they don't control to make more money. So yes, that does fall under some definitions of gambling. And the other side is like, well, that's true, but that's not the only purpose of this market.

• 12:40Speaker 03

  And that's not the only thing that justify the existence of this market. There are other things that come out of it, which is like, some people are actually managing risk. Including the farmers, which makes these things extremely important. And the second thing is there is this notion of the existence of these markets allow you to discover prices, the price of grain, which helps people make more investment, but be smarter about investing around their farms and so on and so forth. So it has economic utility beyond the speculative activity. And that's what makes it a financial instrument, not a gambling instrument. There are others simpler, and the one that I really like is generally if you're creating an artificial risk to bet on it, that to me falls really under gambling. Like if we roll a dice and we bet on it, that is gambling. But if you're betting on the outcome of whether Brexit is going to happen or not, there's a real event that impacts real people. Some people may want to speculate on it, and that's fine. The same way they speculate in the stock market, but some may actually want to reduce

• 13:25Speaker 03

  their risk or very simply know, like, okay, there's 55 or 60% chance that Brexit happens, which by the way, at the time, people thought it was impossible. Everybody got surprised and shocked when it happened. And so there is an economic utility outside of the activity itself, basically.

• 13:38Speaker 02

  Right. I think that you have some convincing arguments. I know you guys have a lot of very strong lawyers who are helping you come up with this stuff right now, frankly, but I think it's ultimately just a bigger thing going on. Like, there's a battle between these federal regulators and these state gaming regulators, and you guys are totally at the center of it, very interested to see how that plays out. However, you guys do have some ammo at the federal level, some sway there. I mean, you have recently put Donald Trump Jr. as an advisor to your company and just some other moves that have happened recently. I think your top lawyer actually just left to join Doge, and then someone who used to be a board member at your company is now heading up the CFTC who regulates you.

• 14:22Speaker 02

  So it seems like there's a lot of back and forth between your company and at the federal level. How key is the Trump administration to you guys continuing to exist as a platform?

• 14:33Speaker 03

  I mean, we existed a year ago, and there was no Trump administration. So I don't know. I mean, I think like, we definitely see sort of a more pro-innovation in financial services, specifically administration. I cannot speak more broadly, and there's different industries that disagree on this point. But like, any, this kind of, you talk to anyone in financial services, like, the last four years were difficult for anyone who's trying to build, especially a regulated financial services company. Like, it was actually easier to go offshore, do things in an unregulated way. If you sort of try to engage and work with regulators, it was difficult. I think there was sort of this general apprehension, this general sort of reaction to like if you are trying to do something new within financial services, it's generally a bad thing. You are doing something bad unless you prove otherwise. I think the important thing right now, there's a few things. One, after two years and a half of having sued the federal government,

• 15:18Speaker 03

  we were actually right. And by the way, this was like a Biden court of three Biden, pretty extremely liberal judges, ruling three oh in our favor. So it wasn't sort of like two Republican versus one. It was three liberal judges ruling in our favor. And so there was, number one, we were right on the law. We are actually squarely unequivocally right on the law. And that's always been our principle. If you believe and read the law and we are right on the law, then we will do it because we follow the law. It's not about what we like or dislike as regulators. It's about following the law and applying it uniformly to everybody. And so that's number one. Number two, we did list the election market and a lot of the concerns around sort of, are we going to break democracy by doing this? We're kind of like mooted.

• 15:55Speaker 03

  In some ways, actually, this was the only source of truth that people had about the fact that Donald Trump indeed had sixty-two, sixty-three percent chance of winning the US election.

• 16:04Speaker 02

  And they really championed you and other prediction markets for kind of showing that.

• 16:08Speaker 03

  That's because the odds were up, right? When Harris' odds were up, not so much. The other side was championing us. So whoever's odds are up, and I expect this for twenty twenty-eight, is going to be championing their odds being up. And that's fine. That's part of the game. It's cool. But the important thing is like a market-based mechanism does actually work better. If you look at polling and you know, the polling accuracy has been going down year over year for a decade. It's just worse and worse. Obviously, the media is extremely polarized. You know, if you go on Fox versus CNN, like you literally are playing two separate movies that have nothing to do with each other. I mean, it's insane. And this was true, by the way, even on election night. And we saw an insane spike during election night. And we still don't know because we used a service called Netlify that went down for two hours. So we don't know exact data. What we do know is we had anywhere between three hundred and five hundred million unique site visits on election night.

• 16:51Speaker 03

  And that's a testament to like, you know, there was like a few hours of people that know who was winning. And actually, the market odds were the only source of truth. And so that's another thing that's going in our favor, which is we list the market. It actually was extremely helpful, not just to people, but also people in DC. And people are realizing like this thing that we were fearing is actually You know, a force for good. I think there's quite a bit of momentum behind us to do more and more. And I think that's really what I think is going to be really helpful as we engage with regulators and as we engage with Congress.

• 17:15Speaker 02

  The prediction markets and Kalshi has been very popular. I know tons of people who use them every day to get a data point about the world. I think it's been really successful so far and I'm excited to see what you guys do next. Trek, thank you so much.

• 17:28Speaker 03

  Great. Thanks for having me.

• 17:32Rebecca Bellan?

  Equity is produced by Teresa Locan Solo with editing by Kel. We'd also like to thank TechCrunch's audience development team. Thank you so much for listening and we'll talk to you next time.