Kalshi vs. Everyone: Co-Founder Luana Lopes Lara on the lawsuits and the long game

Prediction markets incentivize truth. Everything else incentivizes clickbait. That's the core argument Luana Lopes Lara makes for Kalshi — the prediction market platform she co-founded that has gone from $5 billion to $22 billion in valuation in under a year, and is now being sued by New York's attorney general for $36 billion. Luana joins Rapid Response to make the case that Kalshi is fundamentally different from DraftKings — even though 75% of its volume is sports — explain why George Santos got banned for trying to trade on his own congressional attendance, and share what Kalshi's data actually says about the midterms. Plus the Timothée Chalamet dentist-chair ad, what ballet taught her about running a company, and what it's actually like to become the world's youngest self-made female billionaire. Visit the Rapid Response website here: https://www.rapidresponseshow.com/ See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:01Speaker 00

  Stripe Treasury is your new financial operating system built for what's next. With Stripe Treasury, the place your business accepts payments is also where you can store balances, move funds, and pay vendors worldwide. If you're building for global scale, get a business bank account that lets your money move instantly, whenever and wherever you need it. Learn more at stripe.com/treasury. Stripe is not a bank. Banking services provided by Fifth Third Bank, National Association, Member FDIC.

• 0:33Speaker 00

  We've all spent money on something that seemed incredible but didn't live up to the hype. A kitchen gadget, a car, when it doesn't deliver, the disappointment is real. Marketers suffer from this too, chasing metrics that look great but don't translate into revenue. LinkedIn calls that bull spend. Invest in what matters and reach the right buyers with LinkedIn Ads. You can target by company, industry, job title, and more. LinkedIn Ads also generates the highest ROAS of all major ad networks. Spend $250 on your first campaign on LinkedIn Ads and get a $250 credit for the next one. Just go to LinkedIn.com/Scale. That's LinkedIn.com/Scale.

• 1:17Speaker 00

  Terms and conditions apply.

• 1:23Speaker 01

  I think there's a lot of misconceptions about prediction markets out there. There's nothing wrong with speculation. Kalshi has always been about how do we bring any thesis about the future into the markets, right? So that any thesis you have about the future, you have a market that perfectly mimics that. And that's what you can expect for us, that we want every new financial innovation, every new financial structure to be on Kalshi first, or at least a very close second. We want to be the biggest derivatives exchange in the world.

• 1:54Bob Safian?

  That's Luana Lopez-Laura, co-founder, president, and COO of Kalshi, the prediction market that has exploded in growth over the past two years. Luana gamely talks to me about what it's like to become an overnight billionaire, what's behind Kalshi's ongoing courthouse battles, and why betting on Kalshi is different than FanDuel or DraftKings. We touch on financial market features like hedging and insider trading, and get into how Kalshi resembles ballet, Timothy Chalamet's strange dentist chair Kalshi ad, and what the platform reveals about the US midterm elections. My prediction, you'll be fascinated. So let's get to it. I'm Bob Safian, and this is Rapid

• 2:39Bob Safian?

  Response.

• 2:48Bob Safian?

  I'm Bob Safian. I'm here with Luana Lopez-Laura, co-founder, president, and COO of Kalshi. Luana, great to see you.

• 2:56Speaker 01

  Great to see you too. Thank you so much for having me. I'm excited.

• 2:59Bob Safian?

  I'm excited about this. You are the world's youngest self-made female billionaire. That is amazing. Congratulations. Is it weird to be part of the billionaires' club? Like, how different is your life?

• 3:12Speaker 01

  I mean, it's definitely weird. I don't know how much my life changed. And I feel like when I think that people always say this, but I actually think it's true that it's in a lot of ways, like my life's still the same. I mean, I wake up, go to the gym, come to work, stay in the office the entire day, go back home, hang out with my husband and my dog, and go to sleep. But I think that what's most exciting is about it really is just like another, I think it's just another kind of metric, maybe that shows how far the company has gone, how hard we've worked, and it's kind of paid off in that way.

• 3:45Bob Safian?

  The growth has been just phenomenal. I mean, you launched in 2021. Last year at this time, Kalshi was valued at $5 billion. I think by early this year, it was up to $22 billion. Like, that scale at that speed, what makes that possible? Like, is there luck in it?

• 4:02Speaker 01

  It's a great question, because actually, though, we started the company in 2018, right? So in a lot of ways, it looks like an overnight success, that it was like up two years ago, we just started growing a lot around the election. But it was a result of now eight years of work. When we started the company, it was very important for us to be legal and regulated from the start. So it took us four years before we could launch the product, launch anything, really, have any user to work with the federal government to figure out how to kind of bring prediction markets to the US in a safe and regulated way. A lot of things like helped us grow this much now, but I think it's just like the compounded effort that we've done and the team has done for so many years on the tech and the users and talking to them. It's just like, in the moment that we won the lawsuit against the CFTC, to be able to bring a lot

• 4:47Speaker 01

  more markets to Kalshi, and when that happened, the product was ready to really, really grow and go from there. So I think it's a mix of both. I think we were very prepared when our time came.

• 4:58Bob Safian?

  That kind of hockey stick growth, do you have to pinch yourself? Like, is this totally real? Is there anything about that that scares you, that kind of pace?

• 5:07Speaker 01

  I actually would say it's a very good thing that it happened like so fast, because in a lot of ways, we keep the mentality of being very early stage, right? And I think it's like when companies, I think they're just like compounding at a kind of like very normal rate. I think it's easier to kind of start thinking like, oh, I'm a bigger company, I need to hire more people. And you're kind of like, you don't realize, like, you can start making a lot of mistakes, and it'll take a long time for you to realize you're making that many mistakes. For us, because we grew so fast, we also, our mentality and our kind of like way that we look at the company hasn't changed as fast. So because of that, we're able to, for example, have and operate with way fewer people. We just had to like really keep going on, like building the product as fast as we could. Early-stage team and early-stage mentality, very intense in time of like work intensity, keeping the speed, which I think is the most important thing for startups is the speed.

• 5:53Speaker 01

  You're definitely right that we sometimes will look at the numbers and like two years ago, like before the election, we were making like way less than $10 million a year, right? Now, in a day, we transact way, way more than we used to do in a year, like two years ago. You know, and it's just like, just the transaction volume. And it is crazy, like the numbers we're talking about, and we're very grateful for where we are. But we really, really try to keep the mentality on of we're still underdogs, we still need to have a lot to prove and to grow.

• 6:20Bob Safian?

  I mean, the success you've had has put a bull's eye on your back. There, states are coming after you for being an unlicensed gambling operation. Federal appeals court just ruled that Ohio and Tennessee can regulate Kalshi through their gambling laws. Like, is that kind of an existential threat? I mean, New York alone is suing you for $36 billion, the state where you're headquartered.

• 6:44Speaker 01

  We are very, very confident in legal analysis. And of course, like, as you said, the appeals court that went to the case says, but we also won the Third Circuit. What all of these lawsuits are saying is like, each of them has a different legal thesis. The more important part, if you take a step back, is that like, the mechanics of how Kalshi operates in a sportsbook is completely different, right? And that's why they are regulated different ways. That's why we are federally regulated, right? We are an exchange, which means that you trade against someone else. We don't set the price, we don't set the odds, we don't trade against the users. The users are just trading against each other, and we take a transaction fee. What matters the most here is liquidity, and making sure that we have like national liquidity, right, to build upon. Imagine if you have, for example, the New York Stock Exchange, but you could only buy stocks in the New York Stock Exchange if you're in New York.

• 7:29Speaker 01

  The prices would be significantly worse, it would not be a liquid market, it would just be worse for every participant. And also, the market just wouldn't work well. And the sportsbook, on the other hand, it operates completely different, right? Like, for example, in the exchange, because we also don't trade against our users, we don't make money when users lose. A sportsbook is actually completely different. They make money, their revenue is equal to customer losses. The more the customers lose, the more money they make. For us, it's not the same. The incentive is not to make people lose, because we don't make money when people lose. Because of that as well, we don't cap our winners. So, you know, if you go to a sportsbook or casino, you start making money, they'll make sure that you cannot participate anymore. That's the opposite. We want winners, we want people to come and bring price, and we want price competition. And all of those kind of like, really, there's no like price competition, right? The sportsbook has a monopoly

• 8:14Speaker 01

  on the price, and they're going to put their margins on top, because like they're having a bad month, so they're going to make the prices a little worse, or whatever. And because of that, it's like, they are very fundamentally different mechanics, and very fundamentally different products, and they need to be regulated in different ways, which is how the federal regulation for exchanges develop a certain way. And, you know, we're growing a lot, because, you know, an exchange is a fair, more accessible, more transparent way to trade. You can see all the prices, you can see the competition in the order book in real time. And that's why users like it so much. And I think it's fair, and it should be, that the consumers, at the end of the day, pick what's better for them.

• 8:48Bob Safian?

  Something like 75% of the volume of your business is sports. And for some users' point of view, it can seem like it sort of serves the same function for them. And, you know, the DraftKings and FanDuel's of the world look at you as competition, even if the engine behind operates in a different way.

• 9:09Speaker 01

  Well, the thing is speculation happens in all financial markets. You know, crypto, stocks, options, futures, there's speculation in all of them. And speculation is actually very important because it drives liquidity, right? If you, obviously, every market that we're talking about, and it's actually one of the biggest growing parts of Calci right now, is the hedging and kind of small business hedging. And hedging is very important for financial markets, and it is a differentiator from gambling. But speculation is very important, and it happens in every market, and it should happen, and it's fine. There's nothing wrong with speculation, but the mechanics being different really matters. You know, the house always wins, like, that's not the case in exchange. And on the DraftKings event, it's actually interesting because Jason, CEO of DraftKings, actually, in their latest earnings, said that they're seeing no cannibalization between

• 9:54Speaker 01

  sports betting and prediction markets, because they are fundamentally different. Users understand they're different, and they engage with them in a different way. And because, I think, both models can coexist, they are coexisting, and at the end of the day, the users will pick what's best for them. But it's not, it's not the same, and I think that users kind of know that.

• 10:12Bob Safian?

  You, you mentioned hedging. I did love during the Knicks NBA championship run, there was a bar here in New York that used Calci as a hedge, so it could offer free drinks to everyone if the Knicks won, you know? These are great counterpoints to all the betting talk. Do, do you look for those opportunities to tell those kinds of stories?

• 10:34Speaker 01

  Well, it's a very big, growing part of our business. So in a lot of ways, it's like the same way that we want to grow our retail side, we want to grow our business, you know, our small business arm as well. We're hiring a lot for this part of the business. One of my favorite, favorite stories, actually, is this goat farmer in California. And by the way, I don't know, I'm not a farmer, I don't know, but so I might say something wrong, but there was some new legislation that was going to pass and increases labor costs, I think, by 4X. And he was able to come to Calci and hedge that passing. And we always explain, a lot of what we do on this is like working on the education or explaining to people how this can be useful to them, and then they, of course, they can make their choice. But it's like putting money on what you don't want to happen. So if you don't want to happen, you still make some money to, it's like insurance. And that part of

• 11:18Speaker 01

  the business is growing so much. Like, we have like, small businesses in every single state of the country hedging things like gas prices, diesel, weather, sports, politics. One of the most interesting things that we see, actually, when you think about like gas and oil hedging, right? And you talk to small businesses, and we always ask, like, why don't you just buy oil futures? You know, they've been there for a long time, they're liquid market, why don't you buy it? And the response, actually, every single time has been, wait, what is that? How do I do that? How does this work? Because, like, just don't understand. It's like a game for like, big institutions, they're just like, they're trying to hedge at some certain, like, a big scale, but you don't have access to these things before, like, small businesses don't have access to these

• 12:02Speaker 01

  things. And it's something that we are really excited to bring. And it's part, for example, of our partnership now with the US Hispanic Chamber of Commerce. I went there to talk to them, and the most exciting thing for them is like, we want to be able to do it. Like, businesses in Texas have been telling me, like, we have so much risk associated with the elections. We need a way to hedge it. And I think bringing these is very exciting for us. We see it as a very big, important part of the business, that now, because we're way bigger and more liquid, we can really start growing there.

• 12:29Bob Safian?

  You don't use the term betting. Like, that's not what people are doing.

• 12:34Speaker 01

  They're not. I mean, at the end of the day, like, look, people use the word bet everywhere, right? Like, if you open the Wall Street Journal, it says people are betting on stocks, or there's some big bet on real estate. People use that term for basically, like, taking a view of what's going to happen in the future. Obviously, there's people speculating on Calci. We're not trying to say that there isn't. But I think that the reason we say trade is because it is a fundamentally different mechanics that people, like, understand. But if you want to call it, you know, whatever you want to call it, because people call every financial activity like this nowadays, I think people can, can do whatever they want.

• 13:08Bob Safian?

  There are more contentious stories. Calci listed a contract on whether Iran's supreme leader would die or be removed from power. You had to backpedal and reimburse more than $2 million to users. Who decides what can and can't be traded? Is there a line? Or do you sort of discover that line only in hindsight by, by trying things?

• 13:32Speaker 01

  That's a good question. Because we're federally regulated, we don't allow markets on war, terrorism, assassination, and any of that. The reason we decided to list that market, the same thing with the Maduro, is that actually, there are a lot of different ways that a person can be out of power, right? And an example is Maduro, for example, he was an assassin or anything like that. And you could see, like, the, the impact, the clear economic impact that had, for example, in like, price of oil. So what we do for these markets is actually, we let that market operate, but what we do is if there is an assassination, or a terrorism, or a case, or something like that, what we do is we void every trade. So no one can profit from it. And we kind of like, that's kind of how we draw, we drew the line in this case. I think that the reason we did the reimbursement was actually not because we thought there was anything wrong, but I think that we didn't

• 14:13Speaker 01

  do a good enough job in the product to explain to users how that voiding would work. And I think that that's what got confused. Now, after this market, we actually have been way more selective with, with the markets that we list.

• 14:28Bob Safian?

  I've seen some Federal Reserve studies that say that prediction markets are more accurate than almost any forecasting method.

• 14:35Speaker 01

  Right.

• 14:36Bob Safian?

  When money's on the line, people are incentivized to tell the truth in a different way. Like, why do they work?

• 14:42Speaker 01

  If I ask you right now, if you think it's going to rain tomorrow, you might say, oh, maybe it's going to rain. I don't know. Yes, it's going to rain. But if I tell you, I'll give you $100 if it's going to rain tomorrow, the first thing you're going to do is you're going to open your phone, and you're going to open the website, like, the weather.com, you're going to look outside, you're going to maybe call your, you know, your mom and ask, like, you know, do you think it's going to rain tomorrow? What do you think? And there is that first layer, which is if you're incentivizing people that you will make money if you're right, or lose money if you're wrong, they will go out and do research and get more information to bring to the market. So that's layer number one, and also why, like, yeah, they're number one. Layer number two is that you actually have now competition between these people, right? Like, I went and asked my mom and did all my research, you did the same. And now, we are both going to try to compete on the market for the best price, so that we're going to match with someone that's

• 15:27Speaker 01

  willing to trade against us. So now there's price competition. And that price competition, that trading of price competition, really makes the market get to the best forecasted value. That is, everyone in the market kind of agrees that that, that price is fair. Because if someone doesn't agree with it, and they're going to trade, and they're going to move the price, right? So that combination of the incentives for people to bring, like, more information to the market, incentive to make money, and the price competition makes that number the best forecast that you can. Because it's basically everyone that did a lot of research is agreeing that that price is the best one. And you can track it with time, right? Like, because the markets are open 24/7, every, every second, there's some news, maybe that, that fair value changed, and now there's incentive for someone to come and move and trade to make money. And, and because of that, markets become kind

• 16:11Speaker 01

  of efficient, and they, they become the best forecast, and the real-time forecast of what's going to happen in the future. You can go on TV and say, there's a recession tomorrow, and, you know, you're going to get a lot of clicks, everyone's going to watch, because you're, you know, doomsday, and whatever. But it doesn't really matter if you're not right. But on markets, it really, really matters if you're right. We actually put out our own calibration study. And what calibration really means is like, if, if a market says there's 70% chance of something happening, is it actually true that, you know, seven out of 10 times, something will happen? And the results were very, very, very good, that calibration and prediction markets is very good. And as you get closer and closer to the date, or the resolution date, they get even like, high 90s on, on, on calibration and kind of accuracy.

• 16:54Bob Safian?

  Prediction accuracy in the high 90s is pretty darn good. One of the benefits of deploying market dynamics. So what does Calci reveal about the upcoming US midterm elections? And what about Timothy Chalamet's strange dentist chair ad for Calci? We'll talk about that and more after the break. Stay with us.

• 17:19Speaker 00

  We all know the disappointment that comes when a grand gesture falls flat. Something that seemed impressive in the moment, but didn't deliver the results you expected. Marketing budgets too often fall into that trap, aiming for big impressions, big reach, but without the revenue to back it. LinkedIn has a name for it: Bull Spend. LinkedIn ads generate the highest ROAS of all major ad networks. They target by company, industry, job title, and more. Spend $250 on your first campaign on LinkedIn ads and get a $250 credit for the next one. Just go to LinkedIn.com/scale. That's LinkedIn.com/scale. Terms and conditions apply.

• 18:03Speaker 00

  When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative Planning works with business owners to build a strategy around concentrated equity. When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative Planning, where wealth works together. Learn more at creativeplanning.com/mastersofscale. Every business hits the same wall the moment your business outgrows the systems that got you here. Spreadsheets everywhere, five different logins, data scattered across entities that

• 18:44Speaker 00

  don't even talk to each other. If your finance team spends more time finding data than using it, that's when you need the Intuit ERP. Intuit Enterprise Suite is the AI-native ERP solution that's powerful, painless, and proven, built for businesses scaling fast without the complexity that usually comes with it. From the makers of QuickBooks, learn more at Intuit.com/ERP.

• 19:14Bob Safian?

  Before the break, Calci's Luana Lopis-Lara talked about what makes prediction markets better and broader than sports betting. Now, she talks about election predictions as we near the midterm, plus insider trading surveillance, how Calci is like ballet, and Timothy Chalamet's strange dentist chair ad. Let's jump back in.

• 19:40Bob Safian?

  Election polling has become kind of unreliable. What does Kalshi's current data say about the midterms? Is that 70% accuracy? Or like, at what point does it start to move toward 90%?

• 19:56Speaker 01

  A poll or something. It's top to bottom, right? It's like some editorial board or someone that's doing a poll. They're trying to aggregate the information and just tell people this is the number. This is a forecast. So this was going to happen. But prediction markets are doing their bottoms up, right? They're actually, we want as many people as possible to do as much research as possible and bring that information to the market. So it is kind of an aggregation of what millions of people are thinking and doing. And I think it's like one of the first times that you really see kind of like information that's actually led by people versus like the elites just coming and saying this is what's going to happen. With our big markets, like, you know, like who's going to take control of the Senate or control of the House? I think it's like as accurate as you're going to ever get. The other thing that we have to always talk about, which is like probabilities are not

• 20:41Speaker 01

  certainties, right? Like when we had the, when something happens 1% of the time, it doesn't mean it will never happen. It means that one out of 100 times, something will happen, like it will happen. An election that's like a 60% chance of someone winning. If I told you, if you walk outside right now, there's a 40% chance to get hit by a bus, you're not going to walk outside because, you know, 40% is pretty high. It's the same thing, like 40% does not mean that the person, the underdog is never going to win. And I think that's kind of a challenge that we have on the educational front, which is explaining to people that different from polling. It's not like polling, if you say like someone is like X amount of points, like 10 points ahead, it almost probably in the market would be like over 90% chance of someone winning because they're very, very different things.

• 21:25Speaker 01

  They measure different things and we need to look at it as probabilities. There's thousands and thousands of election markets. It's very hard to actually go market by market and kind of get a full sentiment of what's going on. Is the country leaning Democrat? Is it leaning Republican? How do you think about the margin of victory, all those markets? So one thing that we launched was like our balance of power index, like a K-Bow. It aggregates all of that in one index that you can see kind of sentiments trending more Democrat or Republican, and you can kind of track with time, kind of how the aggregator, the index of all those elections coming together.

• 21:57Bob Safian?

  I saw a report that 70% of the visitors to Kalshi, just look at the data, that they're not even coming to put money behind a prediction. Is that true?

• 22:06Speaker 01

  I think it's actually higher, maybe 78% now. And it goes back to what we talked about on the final, like this betting versus not. Like how many people would open a sports betting app to just look at the odds, right? They won't because it's like this price means nothing. It's just the price that a sports book is trying to give because of their margins or something. But the amount of people coming to Kalshi to consume information is because they really understand the value of that information that they can't get anywhere else, which is this unbiased, market-driven, kind of real-time information. And we see a lot of people saying like, I don't want to trade, but I come here as almost like a substitute of Twitter, a substitute of the New York Times. And I think that what they say and show you is that what prediction markets do is because they incentivize, they incentivize truth.

• 22:49Speaker 01

  If you're right, you make money versus clickbait, right? If you open Twitter, they're going to be incentivizing clickbait. They're like, the most insane thing you're going to read on Twitter is going to have the most likes. On Kalshi or prediction markets in general, it's actually the opposite. If you're saying something absurd, you're just going to lose money.

• 23:05Bob Safian?

  Kalshi recently introduced margin trading, letting users borrow money to make bigger trades. That amplifies risk, doesn't it? I mean, what do you say to folks who say like, oh, Kalshi is getting too dangerous?

• 23:19Speaker 01

  Well, that is a concern of ours. We've been working on margin for over two years at this point. And all of that, it started with a lot of work with the regulators, a lot of work in the margin models, making sure the exchange and the clearinghouse will be safe. And also who gets margin, right? You need to apply to get margins. It's not like you sign up to Kalshi, you can get margin directly. You have an extra application that you tell us, for example, how much experience you have investing or trading, you know, your net worth, all those things to make sure that it's, you should have access to these products. It's not open to everyone. But margin is very important, actually. If you look at, for example, financial, the traditional financial markets, almost everything has margin. And it's because it's very complicated for an institution to like, for example, if they're going to take a $100 million trade to just park $100 million on something that maybe

• 24:04Speaker 01

  can happen in a year, there's a lot of opportunity cost for that money and it's, you need to make capital efficient, right? And if you think about, for example, a business trying to hedge an election, right? They think they're like a green energy startup, they're very concerned about some Republican coming and taking away their subsidies, and they want to hedge that election. If they want to put $100 million, you need someone to put $100 million and park that for two years. So what you can do is like, we offer leverage to the person, the seller, for example, so that it makes it worthwhile for them to actually participate in that trade. And that's how all financial markets operate, right? If you look at futures markets, you trade everything on leverage. And it's just a very important step for us in our institutional adoption.

• 24:44Speaker 01

  When we started Kalshi, actually, we, the idea of Kalshi always came, really came from the financial world, right? Like I worked at Bridgewater and Citadel Securities, my co-founder at Goldman and Citadel. And what, when we first thought about Kalshi was, people always have some thesis about what's going to happen in the future, right? They think someone's going to win a recession or someone's going to win an election, Brexit's going to happen. And you try to figure out how to put that in the markets, but there isn't a direct way to do it. So the premise of Kalshi from the start is how do we allow all this trading that's happening through proxies? How do we make all of that in an exchange in a way, better way, in a transparent, accessible to everyone way? So that's why, like, bringing this product to institutions is so important. And a precondition for that really is having a very good and efficient margin model.

• 25:29Bob Safian?

  One of the issues for all markets is insider trading. On a stock exchange, insider trading rules are pretty clear. On a sports platform, athletes and coaches are barred from betting on their own games. Kalshi is like a new vector that's sort of harder to police.

• 25:48Speaker 01

  I wouldn't say it's harder to police, but for starters, it's like, you know, insider trading is prohibited on Kalshi. We're federally regulated. You cannot insider trade, you cannot try to manipulate markets. And if you do, we have an entire surveillance team that has actually brought a lot of enforcement cases recently. There was the teleprompter White House case, there was the case of George Santos.

• 26:06Bob Safian?

  Yeah, George Santos, you barred purportedly trying to get a contract trade on his own attendance at the State of the Union.

• 26:15Speaker 01

  That shows that the system is working, right? We found the people try to do bad things. We banned them from the exchange, we put fines on them, we send them to the regulators and they can go to the Department of Justice and end up in jail because these things are, they're illegal in a federally regulated exchange. And I also don't think it's like harder for us to look for insiders because they're, the topic is always narrower and we have everyone that sign up. We have their name, address, date of birth, social security number, ID, we have self-verification, employment verification. And with all of that, it becomes kind of easier to find those people. And we do a lot of proactive stops, right? Like as you mentioned, like an athlete or a coach cannot, you know, participate in sports

• 26:59Speaker 01

  betting, they also cannot like participate on Kalshi. So for example, if you're a politician, you're going to be blocked from your own election even before you try to put money on it. If you're an athlete, same thing from your sport. And that type of proactive ban is something that we are doing that the New York Stock Exchange and all other financial exchanges aren't even doing. And I think that we're deterring a lot of this activity. What's really bad is what happens kind of in the kind of offshore platforms. So you don't know people's names and addresses.

• 27:27Bob Safian?

  You mean polymarket, right? That's what?

• 27:29Speaker 01

  There's more than just polymarket, by the way. Obviously, the polymarket offshore is a great example of like, I think it's impossible to know who's trading or what's going on there unless the person really, really tries to leave very clear clues, like putting their name as like their username, which, you know, most people that really want to do something bad, they won't do that. So polymarket is a great example of like, I think it's impossible to really surveil for insider trading there. But you have a lot of other platforms outside of the US that are doing the same thing. And I think all of them are very dangerous. And that's why we keep saying that banning things and all, it's never the answer because if you ban them, you just move them activity offshore and then it's, all the concerns you might have about the activity in the US are now 100 times worse.

• 28:08Bob Safian?

  How do you do the surveillance for, say, like, there's a mention market, right? Contracts on specific word choices and speeches?

• 28:17Speaker 01

  Well, I think a great example that we got here is the Trump, the person that works in the White House now, they're the teleprompter, right? And that person obviously has insider information because they know what's going to show up in the teleprompter. And that is material, no public information. That was actually pretty easy, quote unquote, for us to catch. We know the information from the person. We do a lot of like AI machine learning on the trades themselves to see if there are anomalies or things that are like, you know, someone that is a new account that just traded a certain way, that's very different. So there's a lot of things that we look for on making, like on trying to detect information. Then it goes to compliance team that does a full investigation, including, you know, looking at the person's social media, reaching out to the person, there's multiple interviews, all of that to catch it.

• 29:01Speaker 01

  Also, there is like users themselves, when they notice something weird in the markets, they will point it out to us and say like, hey, like we're noticing something weird here. When I say it took us four years to get regulated, people are always like, why does it take so long? And one of the things is like the development of this surveillance system with the CFTC took a long time because we had to like prove them, prove to them that how these things worked. And now our systems are very, very advanced. I would actually claim it's probably our kind of like most important IP in a way, is the kind of how these models have developed.

• 29:31Bob Safian?

  There's a lot of buzz around AI agents trading on financial markets. Are there AI agents on Kalshi? Like, does Kalshi have a philosophy about where agents fit into your future and your model?

• 29:45Speaker 01

  Yeah, so we allow, like, you can use an API to trade on Kalshi. The only thing is that, of course, like you are responsible for your agent. So all the, all the rules that apply to a person apply to an agent. And in a lot of ways, like, we're definitely not against it because it's like... The good thing about the markets is that, as we talked about, it gets to that one number that's the best forecast of the future. For us, what we want is more and more informed people and more and more informed traders, and the winners really come and like get us the best and most accurate number that we can. And if that is, that some agents are competing for orders and bringing the price to an even better price and a better forecast, that's very good for us.

• 30:22Bob Safian?

  Are you game for a for a rapid fire round of questions? Can I throw a bunch of different things at you?

• 30:27Speaker 01

  Let's do it.

• 30:28Bob Safian?

  All right. So prediction markets have come a long way in a short time. What are things we should use prediction markets for that we're not yet?

• 30:38Speaker 01

  I would say the hedging side is something that like, I think we're seeing a lot of small businesses adopt it, adopt it. But I think that a lot of like just individuals can use it too. Like, we're seeing now some start of like people hedging the weather in their wedding day. And I think that on that hedging side is as being as used now as we want and believe it should be.

• 30:56Bob Safian?

  Prior to Kalshi, you worked at the MIT Media Lab in personal robotics. Do you have any predictions about robots in our everyday lives?

• 31:06Speaker 01

  I think very soon we'll be able to use robots for the vast majority of our the chores that we don't want to do in our personal lives. I'm very excited to have a robot to do laundry and, you know, wash my dishes. So hopefully, hopefully that comes very soon.

• 31:19Bob Safian?

  You were raised as a highly trained ballerina, I understand. What can ballet teach us about business?

• 31:26Speaker 01

  I think is the discipline side. And I think the discipline side is most applicable to everyone, which is like, it doesn't matter if you're having a good or a bad day, you need to go train. And I think that discipline of it doesn't matter what's happening, I will have to do my job and I'll have to get these things done, is very important, especially for running a business. Because if you if you're a founder, if you're a leader of a company, your fluctuations will mean the company's fluctuations. Discipline really comes from example and making sure that as a leader, you're very stable emotionally and very stable on kind of your work ethic is like, one of the biggest gifts you can give for for productivity in the company.

• 32:03Bob Safian?

  I wasn't sure whether you were going to give an answer about balance. I'm always amazed by how ballet dancers manage to maintain their balance doing extraordinary things.

• 32:13Speaker 01

  I mean, I do think that not falling is a very important thing in daily life. I'm actually way more clumsy than I was before, because in ballet, I actually lost with multiple accidents, I guess, I lost like a couple ligaments on my foot, foot, and I have a bad knee. So I actually fall, I have worse balance than normal people for sure at this point.

• 32:32Bob Safian?

  Do you think about how you keep from what from getting the equivalent of injuries like that in your business so that you can maintain your balance?

• 32:40Speaker 01

  I think it's, that is a good question, actually. No one ever asked me that before. I think that

• 32:47Speaker 01

  I think that the interesting point of ballet that you always have to be thinking about is kind of like, you want to push yourself to as much as you can before you get injured. It's very competitive. And, and, you know, to Timothy Chalamet's, you know, he was right, that way fewer people go watch ballet nowadays. That makes it way more competitive, and which means that if you get injured, most of the times, you can't actually afford to just like, take two, three months off to get fully better. You just need to kind of push through and do it. So it's a kind of the sense of like, if you do too much today, and then you get injured, tomorrow, you're just going to be worse for for some time. I always tell people in the companies, like, okay, if you're pulling all night today to finish something,

• 33:30Speaker 01

  that's great. But you really need to make sure that every other day of the week, that you're going to be less productive because you're more tired. You always need to be thinking at the end of the day of like, to maximize kind of like, your productivity and your output. There are times that you're not maximizing the kind of like, each specific step.

• 33:47Bob Safian?

  Sometimes you have to take a break in order to be able to come back and do the next performance or have the next challenge there. Yeah. You, you, when you mentioned Timothy Chalamet, it made me think of that Kalshi ad where he's in the dentist's chair saying, kind of like, that was just bizarre. When you saw that, were you like, oh, that's exactly what you want, what we want? Or were you like, what is this about?

• 34:10Speaker 01

  When we started working with him, it was part of like, kind of what he wanted was like, let's make it very different. Let's make people be like, what's going on? And let's just really like, kind of question a little bit, like how advertising is done. And at the start, we were like, wow, are we sure like this is just like, you know, it's a very big for us. It was the World Cup. It's like, are we sure that this is the way to go? But we're like, look, he's clearly like a, you know, creative genius. Let's trust his intuition. And he was 100% right. I think if you look at the metric from, from kind of how that ad performed versus a lot of our other ads or competitors, it's just, it was such a great ad and performed so well for us. And I think that's kind of what we always try to do with our marketing team, which is like,

• 34:51Speaker 01

  we want to be different. We need to be telling our story in like, a different way. And with that, that ad was very good for it. I think there's a lot of misconstrued narratives about prediction markets out there, that we need to use a part of it of advertising and marketing to explain to people how it is different.

• 35:08Bob Safian?

  What's next for Kalshi?

• 35:10Speaker 01

  Kalshi has always been about how do we bring any thesis about the future into the markets? Right. So for us, it's that is always a goal in the roadmap is how do we expand our market structure offering, our margin offering, our topics offering and the liquidity, so that any thesis you have about the future, you have a market that perfectly mimics that. And that's what you can expect for us. And we want every new financial innovation, every new financial structure, or, you know, to be on Kalshi first, or at least a very close second. We want to be the biggest derivatives exchange in the world. It's just a matter of like, if we out execute everyone else, we'll get there in just a matter of time. But but we need to out execute everyone.

• 35:49Bob Safian?

  No small goals for you, Luana. Really fun talking to you. Thanks for doing it.

• 35:54Speaker 01

  Thank you so much for the time. This was great.

• 35:59Bob Safian?

  I'll confess that I was a bit skeptical heading into the conversation with Luana. But she made Kalshi's prediction market sound more appealing than I'd expected. I like the idea of an information counterpoint in a world of clickbait, though of course, clickbait could be influencing the market. What strikes me most isn't just the ambition and creativity behind Kalshi. It's Luana's ballet lessons about discipline and constant fine tuning, and also an awareness that overreaching, pushing too hard, can lead to long term negative results. New innovations, whether prediction markets or agentic AI, can have lots of

• 36:41Bob Safian?

  unintended consequences. We need to capture the good and protect against the bad with each leap into the unknown. I'm Bob Safian. Thanks for listening.

• 37:01Speaker 03

  Humans will never be more intelligent than AI.

• 37:04Speaker 04

  There's going to be two types of companies. Those are great at AI, and those that went out of business because they weren't.

• 37:09Speaker 05

  How do we build a future that is human centered?

• 37:15Speaker 06

  I'm Rana Elkhayubi. And on my podcast, Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find Pioneers of AI wherever you tune in.

• 37:44Bob Safian?

  Hey, listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday, we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely, from Ford CEO to NASA's administrator, to the lessons from the devil wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

• 38:22Bob Safian?

  Rapid Response is a Wait What original. I'm Bob Safian. Our executive producer is Eve Trow. Our senior producer is Alex Morris, and our associate producer is Masha Makutonina. Mixing and mastering by Aaron Bastinelli and Brian Pugh. Our theme music is by Ryan Holiday. Our head of podcasts is Lital Malad. For more, visit rapidresponseshow.com.