Betting on Reality with Kalshi CEO Tarek Mansour: ACCESS

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We're off for the holiday today, but we have something good for you. An episode of Access with Alex Heath and Ellis Hamburger. In this episode, Alex and Ellis talk about the rise of storytelling in tech and why X is now openly pleading for its haters to come back. As if. Then they sit down with Tariq Mansoor, co founder and CEO of Kalshi, to discuss insider trading, his rivalry with Polymarket, regulatory chaos, sports betting, and why prediction markets are having a real moment. Enjoy and we'll be back in your feeds later this week.

0:56

You recently made a comment that went kind of viral. I think you got a lot of heat for it. You said you want to financialize everything. Do you really mean that?

1:28

Why'd you scare my grandma with that comment?

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If you believe that markets work, what they do is they discover prices. But what if we applied it to some of the most important pressing questions about our future?

1:38

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1:46

A power shift is brewing in the sports betting world. What does this mean for sports betting and the gaming stocks?

2:01

This week on the show, we have Kalshi CEO Tarek Mansour. We talk about insider trading, why Kalshi employees aren't allowed to use Kalshi, what he thinks of Polymarket and his controversial comment about wanting to financialize everything. But first, Ellis and I talk about the rise of storytelling in tech and why X is pleading for its haters to return to the platform. This is Access. Ellis, how's it going, my friend?

2:08

I'm well. How about you?

2:35

I'm good. We've Got a lot to talk about today. We've got Tarek Mansour on the show, the CEO of Kalshi. But first, Ellis, I've been noticing that everyone seems to have FOMO about what you do about being a quote unquote storyteller, that storytelling is the hot new thing.

2:37

According to the Wall Street Journal, at least they had a big story. Was it yesterday talking about the rise of the storyteller and the frankly, the decline of reporters. How did that feel going from earned media to maybe we'd call it invented media, co created media, masturbatory corporate media, One of the above. Take your pick.

2:56

This was one of those stories that got viral, screenshotted on X by a bunch of people we both follow in the tech world. Everyone clamping on about their savvy media strategy that they have. And I just think it's kind of interesting that this is becoming a hot topic. And I think it kind of signals where everyone's head is at, that in an age of infinite AI, everything and products that all kind of do the same thing, maybe the thing that matters is how you talk about your company. I don't know. You're the professional, you tell me.

3:21

Humanity has never been more important. What we need is storytelling. I mean, to me, it's nothing new. I feel like this is just the next evolution of content marketing and social. I mean, it's so crazy to me. I remember being back at The Verge like 12 years ago and our friend Sam Sheffer was doing social. Probably paid a pittance to do this. Like every other social media person in the industry.

3:55

Shout out hypedesk.

4:22

And that's all there is now, is social. And fortunately, these folks are being paid a lot more now for the value of their work and their skill at packaging content to fit in algorithmic social feeds. To me, this whole storytelling revolution, I think kind of coincides with this whole idea of founders and creators being interesting. And when you are telling whatever you have to say from the horse's mouth, it's typically feels more authentic or more interesting than it's being translated by somebody else, whether it's a reporter or the social media desk or otherwise. So, yeah, to me, I mean, this is just kind of the next step. I mean, selfishly, the way that I think about what I do is that it's more than just telling a story, but actually understanding all your audiences these days as a tech founder, whether it's investors or candidates or internal teams or advertisers or retail, even before your ipo. And so I do think there is, like, a meaningful difference there. I guess when I reflect on this, I'm glad it's being appreciated. I'm glad people are seeing this convergence, I guess, of the way that we communicate with the world and just being real about it. But, yeah, I don't know. I mean, it definitely. It feels a little funny as the attention turns away from creators or even influencers and reporters in terms of how you get your narrative out to the world.

4:23

You know, you can still get your narrative out to the world through sources, news. Thank you very much.

5:48

You bring, like, immense context, I feel like, to every story. And so if you're a company that has trouble translating their differentiation, I mean, but that. But that is what a storyteller is in my mind.

5:55

Yeah, I don't know. I. I think founders should go direct more, but I think a lot of founders are wet blankets and have no personality and no ability to talk about what they do beyond the nuts and bolts of the actual thing. And to really do this well, you have to be, I think, someone like Tarek, who we have on later in the show, who can talk about it more at a high level. And that just takes, you know, that takes like a certain personality. It takes experience, it takes training. But, yeah, I mean, I just think storytelling as a concept in the tech world becoming so popular right now with AI, I think, yeah, just to me suggests that there's a lot of copycats and a lot of cookie cutter type things out there. I'm reminded of a quote that Ilya Suskever gave the Dharkesh Patel podcast recently, where he was like, silicon Valley has more companies than ideas right now. And it does feel that way.

6:09

Yeah. And when there's less differentiation or when everybody's building the same thing, the story becomes even more of a potential lever to hook people or just talk about yourself to the world more without pitching your product every day. I mean, that's really how I think about it. It's just a world now where everything is content. And that applies to us as well in the way that, like, we package this podcast, what clips we choose, what platforms we post on. And in some ways I think it's nice that it's a bit more of a meritocracy maybe than it once was where it was all follower driven and it took years and years and years to build followers, so you had any leverage. So I think that's the bright side of it. But, yeah, when everybody's building AI wrappers, it is awfully hard to stand out Now So we need to invent a new job for that.

7:07

Everything is content. Is that the first slide of your deck?

7:56

Kind of. I think the first slide of my deck, which is no longer as relevant as it once was, was like, if you build it, they will come and it's just crossed out. That was more of a hot take a couple years ago. Now that seems kind of like obvious, you know, how's anybody going to use your app if they haven't heard of it?

8:00

Right, right. And I mean, I definitely feel this from my perspective of being an independent journalist now for just a few months, but the amount of outreach I've gotten from VC firms, startups, big companies that want to work with me on quote, unquote storytelling, and I'm like, no thanks. You can just, you know, give me an interview. But it is a wait.

8:18

You don't plug me in that conversation.

8:42

I do.

8:45

If you had a perfect opportunity there and you, you didn't take it.

8:45

No, I plug you a lot. I plug you a lot. But I'm not, I'm not, you know, for the person to come in and like brand to the company. Right. It's like figure out how to reach so and so audience. You know, I think of what you do a little more high level, but yeah, I just, I think there's a lot of people who think analytically and from an engineering mindset or a product manager mindset, but very few people who actually can step back and think about how is this actually going to engage an audience. And, you know, I struggle with that. You know, it's something that I can rotate too much in one way or the other all the time in my work. And you don't want to like be overly, I don't know, programming overly, trying to game the algo. I mean, we talk about this with the podcast and how we, how we do the podcast, but you also want to be relevant. So it's. It seems like a very hard line to walk.

8:49

I think maybe in some ways you have had a bit less practice than others because you have scoops to lean on.

9:39

Yeah, scoops do help.

9:46

You don't need to sensationalize what a company is about when you are breaking news that has that inherent value. You know what I mean?

9:47

Yeah.

9:56

And that is the core of the storytelling to me when I work with any client is in some ways just trying to find what's most newsworthy about them. And you are right. I don't know if I'd call them all wet blankets, but they all do think that what they're building is inherently interesting because that's why they're building it for 24 hours a day. And I do think, as that Wall Street Journal article points out, the reporter's instinct to know what is going to break through, that's all you do every day, three, four, five times a day. Bit different for you. You're probably spending a lot more time over the long term building these relationships. Sometimes the source will tell you something in a year that they may not tell you today. But back when I was doing it, it was like, I mean, especially at Business Insider when I was writing fucking five articles a day getting immediate feedback from the algorithm and also the clicks on the front page of what headlines are working. Sharpie, you get pretty good, right? You get pretty good at understanding what type of language people need. But yeah, I mean, I guess one other nice thing about former reporters is that we also have some pride and dignity in trying not to, like, completely give in to the tricks, if you will. Like, I don't feel comfortable doing that. I think a lot of people probably do.

9:56

That's why we're all broke as reporters.

11:18

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13:31

Well, speaking of scoops, you want to talk about this, this. This interview I did recently?

13:48

Yeah, I want to talk about the interview you did. I mean, this was a good one, man. I mean, this is some stuff I've been wanting to hear for a while. So.

13:54

Yeah.

14:02

Alex, you sat down with Nikita Beer, who is the head of product now for X, formerly Twitter. And nice to hear someone actually talk about what they're doing with a fine tooth comb, an actual product builder. I mean, what do you feel like when you look back on this? You know, you took away the most.

14:02

Nice to hear that there's someone there, like, keeping the lights on and thinking about the product direction. Yeah, for sure. Yeah. I mean, I've known Nikita for a long time. He's this. I would say he's become a personality in. In the tech world. He's this viral master of. Of social apps who sold one to Meta back in the day, tbh, and then another called Gas to Discord. And I think Nikita's hilarious. Like I said. I mean, he's in LA too. We've known each other for years. But yeah, when he reached out and was like, look, do you want to. Do you want to do an interview about bringing journalists back to X? I was like, yes, of course. It was his first interview since he took the job about seven months ago. He reports to Elon directly. And, yeah, I thought this was interesting that this was the first thing that a senior leader at X is coming out and saying, which is we really want media and even, you know, Capital J journalists to come back. And I think I know why, which is that, you know, I've been covering Twitter before. Elon bought it. For many years, I extensively covered when Elon bought it. And Twitter has always had this problem where a very small percentage of the user base posts most of the content. And that's true for, I don't know, I guess Snap was a little different because that was messaging, right? But these one to many platforms, that's usually the case. But even by kind of industry standards, Twitter was always pretty top sided that way. And they would call them like Vi. I think they were Vit. So someone's gonna. An X tweet is gonna.

14:24

Very important tweeters.

16:06

Yeah, something like that. Very important tweeters or something. And they would track this obsessively because this would kind of. This, this factor would basically determine whether Twitter was working or not. And I mean what you saw with Elon, right, is like obviously a of lot a bunch of people in the media left, including many of my peers and close friends in the media who to be honest, like kind of made me feel like shit for staying on X. It became like, same here. It became like a. It is a political thing. And you know, you had blue sky happen, you had threads happen. And this diaspora now where everyone's kind of spread out and like I wrote in this interview, and now I check three apps a day instead of one to find out what's going on in the world. And that hasn't changed, you know, three years. It's crazy to think like it's been basically three years since Elon bought Twitter, which is wild. And Nikita basically just outlined with me that, you know, they're making changes in the product that he thinks will hopefully incentivize people to come back. That's a new link viewer that is driving more traffic to web pages. I can attest to that personally in my.

16:07

Are they still like completely shadow banning substack links as they want?

17:18

So he says that's not happening. There's not no shadow banning of like certain link domains. There's no.

17:22

That was not a shadow ban. That was a public ban.

17:28

That was a. No, that was a direct Elon ban. And the interesting backstory to that at the time when that happened, that was again around the acquisition was Elon was trying to buy Substack. He was actually trying to pitch Chris Best, the CEO on being the CEO of, you know, de facto CEO. I mean, Elon's obviously the real CEO, but the de facto CEO of Twitter. So there was, I think some more stuff going on in the background there. But yeah, they were doing that. And you know, Elon was Banning journalists for reporting about the whereabouts of his private jet based on publicly accessible information. I think really stretching the definition of doxing to target journalists who were doing some pretty critical reporting of his acquisition at the time. So again, I have no, there's no fault or no, I have no qualms, I guess, with my friends in the media who just who have said we're never coming back as long as Elon's running it. But it's interesting to see Nikita say, look like you'll get traffic. I mean, he posted like, this is the biggest arbitrage opportunity of your career for your journalist to come back because we have the audience. I think it's like half a billion plus people a month coming to the platform. Who knows how many of those are bots, but you know, and you know, time spent. Is that a record? You don't think it's true?

17:31

No.

18:48

Like they have vacated so much of the quote, unquote, newsiness. I feel like of this platform, like what I see most of the time, I'm very interested in news and yeah, most of the posts I see are still from the last couple days. But it has really become, for better or worse, like TikTok for text or memes or what have you. I mean, I don't know if it feels like that for you, but like, I don't know, I feel like engagement is down when I post about anything newsy. Like it is very much just kind of visual opinion driven stuff similar to the other platforms. It's just kind of incidentally, who's still there, I feel like that's working. And in a lot of ways, because the subject matter is a lot more personalized now as opposed to your follow graph, I think it's actually even harder to stand out.

18:48

Hmm, that's interesting. I mean, that also speaks to what Nikita said about the algorithm.

19:37

Or maybe I just suck at posting.

19:41

No, no, no, I think, I think what they've done is they've replaced the traditional algorithm, which had a bunch of classifiers and labels that someone like Elon could go downrank so and so downrake this category of content or these accounts to this purely GROK based, which is like, yeah, for better or worse, whatever that means. GROK based, personalized LLM based algorithm that is entirely training on your preferences and your interactions. So maybe that's what you're telling X you want Alice.

19:43

Well, I am, but how many people are saying, I mean, I'm obsessed with the news more than most people and like it's, it's Good. These days, you know, like, I start engaging with more. Like, I started playing some old Mega man games and I'm really enjoying them. And now I'm seeing, like, really good Mega man accounts, like doing niche memes and old artwork from the old games. Like, that's great. All I'm saying is that they don't appear to be focusing, especially if they're not tipping the scales on news.

20:13

Well, I don't think they have a lot of news on the platform. That's the problem. I mean, that's. That's why he was doing the interview is like they need the posters to come back and journalists were the posters. And, you know, some of us have stayed, you know. And the reason I never left is because I think it's my job to be close to my sources. I named sources for a reason. And the AI community in particular has never left X. Like to say that you're trying to cover this industry and understand what's going on and you're not on X and you're not interacting. You're not. To me, you're not doing your job well, sure, you can still break news and you can still, you know, you may not need it, but it still has been tremendously advantageous to me from that perspective. And it's the main reason I've stayed on. But yeah, I think that's why he did the interview. It's like, there's not a lot of news. It's kind of all over the place. I mean, I feel like you go to. Do you check Blue sky or Threads much?

20:43

Not really. I think I see threads via the crazy cross promotion module inside of my Instagram home feed, Blue Sky. I get Blue sky links from a friend or two, but that's it. By the way, great headline. I love X wants its haters back. Did that just come to you?

21:37

That just came to me. No LLM involved, actually. Yeah. Thank you. I mean, I want it. I wanted a little bit of rage bait, you know, this was like a classic Blue sky rage bait story, I would say. The vast majority of my peers in tech media are very active on Blue sky and not at all on X. Maybe some on Threads. I think Threads is actually trending in the direction of Reddit. If you look at what they're doing with the community stuff, the sports stuff that they're leaning into. Connor Hayes, the head of Threads, is also going to be in Sources this week, but he. He just did a podcast with a bunch of NBA people. I think they're going more in that direction. And for X, I mean, they really need to convince people to leave Blue sky, which I don't know. I mean, Blue sky is its own echo chamber, man. It's like, yeah, you jump on there and it's like, you better. You can. You can imagine immediately in your head, like, this is. This is what it takes to work on Blue sky and to be successful. And it's a very particular POV on things. It's like you're very skeptical, or you just downright right. Hate AI, you hate Elon, you love Mandami. Like, there's. It's just like there's this Venn diagram of, like, all these things that makes you. On Blue sky. And like, that's. I. I wish we were all together again, I guess. And Elon was. You know, he says he wants to make the town square, and he has utterly failed at that in the last few years. Right. It's the. It's the opposite. And I think everyone is. Is right to be very, very skeptical of that not happening, I guess.

21:58

Well, to close things out before we get to the interview, did he divulge any juicy little funny Elon stories or habits?

23:30

No, he did not. We're gonna have to save that for a future.

23:39

You didn't ask?

23:42

I asked a little bit. He said he meets with Elon multiple times a week and that Elon is spending most of his time on X and Xai.

23:43

Is it still going to be the everything app they're launching?

23:51

X Money, the payments thing that he said he was going to do when he bought the company? I think they're launching it this month before New Year's. So you're going to be able to pay the bots in crypto or whatever. I think it'll be fiat, but, yeah, that's launching very soon.

23:54

Yeah, it is interesting to watch. I mean, these platforms, the features, as has long become obvious, are no longer really the differentiators, whether it's the feed or the DMs, or the size of images or videos. It seems like it really just kind of has become who's on here? And that may, I think, be fine for companies of a certain scale, depending on their ambitions. But I'm hopeful that these different platforms can emerge for different communities. Though I really do miss that moment of monoculture where everybody on Twitter was live tweeting the Oscars or the Apple event or whatever it was, that there is no place for that these days. And that was a special moment. I wonder, though, I guess that was the idea with Twitter. That didn't allow them to grow to the size of that their investors wanted is that not enough people wanted that.

24:10

I think Twitter didn't grow for a lot of other more practical, bad execution reasons, but that's a whole other conversation. All right, should we kick it to Trek?

25:01

Yep, let's do it.

25:11

Tarek, we were joking while we were waiting for you that we should have started a market about what time you were going to join.

25:22

That's nice.

25:27

I don't know how specific the markets are getting these days. Do people make them for such specific things?

25:28

No, nothing like that. But there are certain things that, like, people have interested interest in that could be about, like. Well, nothing about like someone who works at the company or anything like that. And also the people at Kalshi can trade. So we, we. Because we run a regulated exchange, so you cannot actually trade.

25:35

Oh, really? You have a no trading rule.

25:56

It's. It's also like the regs. The regulatory framework doesn't enable us to trade on our own exchange. It's an interesting thing because, you know, it's hard to build a product when you can't actually really use it. It makes it a little bit harder. So there's like that interesting dynamic.

25:58

Have you talked about that before? How do you do that? Yeah, how do you. How do you build a product you can't use yourself?

26:12

I just have to be very close to the customers. Like, really, really be very. I mean, it is cliche. Like, all. All companies obviously talk a lot about staying close to the customer, but I think this is especially true here, where you just have to really be at all times as close as possible to the customer to basically figure out what you need to build and how to make it better and what are the points of friction. But there are some industries where the technologists or the product builder cannot fully experience their own product. It could be in hard tech or if you're kind of machinery, you're not sitting in the office and operating some heavy machinery. And so you also have to really kind of embed yourself with the customer. But yeah, no, I think it's feasible, but it is a challenge.

26:17

Do we believe that Tim Cook is actually using the Vision Pro in his office or not, is the real question. I mean, that does strike me as, like, pretty remarkably tough, especially when things are moving so quickly. And I do believe that, like, having worked at Snap and the browser company, that founder does have a unique ability to make changes in the product when things don't feel right. But whether it's with, like, the way a Screen flows or a notification or otherwise. I've definitely come to believe over the years that dogfooding is a pretty critical lever. I wonder if there's any way to like say, hey my friend, you're about to take a sabbatical for a little while, you're gonna gather some feedback, use the app for a while, come back. But I guess that would still be biased, wouldn't it?

27:04

Yeah, but it also would work. You have to have like a 6 month post Kalshi period. So if you leave, you have to wait for six months before you could trade. So, but, but it is, it is. I mean there are ways to kind of like, like, like you could still use the app without trading, right? Like so, so that could get you a lot of the, I mean that could get you a lot of the flows except for maybe the core trading flow. And then we have, you know, we have like an internal like demo, like no, no real money, like free money version of the product. But that's also different. That, that also has different dynamics. So we get close but not quite there yet.

27:49

Same product, no dopamine.

28:25

It's like, I mean the whole point, right, is like having skin in the game, right? Changes the behavior of people, right? Like, like that's the whole point. It goes back to sort of the whole question about polls versus prediction markets or like experts versus prediction markets. Like the whole difference is there's some skin in the game here, right? If, if you take out the, the sort of monetary incentive or this idea of like, you know, put your money or your mouth is, then we, we default back to kind of a regular poll, right? People can just say anything. Sort of the, the, the whole kind of truth seeking aspect sort of erodes. You can bring back the bias, bring back subjectivity. And so the money component is a critical component to kind of take you from the subjective to the objective rational plane. So it's a difference, a big difference.

28:27

I think if your employees were using it, they'd also be spending a lot more time in the bathroom as well as they were.

29:12

Maybe they'd be distracted.

29:19

I was reading recently about how companies are deciding whether or not to ban prediction market trading for their employees as well. So it's interesting to hear that Kalshi bans it. I actually was reading too that Google built its own internal prediction market and that this is becoming more common. So yeah, what's your advice to companies weighing whether they should allow their employees to use your product?

29:22

I think that's okay. Look at the same rules apply. So the rules that applies the stock market generally mostly like basically the same rules apply to prediction market or at least regular prediction markets, which is the case for Kalshi. And that's an important distinction to be drawn, right? Like if from the early days, from the kind of day one, it's like we're, it's, we're in financial services and we're offering a financial product. And I think in, in those in that industry I would say like regulation is a very critical component or pillar of how you build things. And so we define a principle which is regulatory first we do everything regulated upfront. And what it regulated means the thing at a high level is like you know, figure out like customer protection, like make sure that people understand what they're, what they're getting into and what they're doing. And number two is market integrity or this idea of fairness. Create, create rules that are fair and you know, for the different participants it's right like if you, if you go getting into a game that is not fair, you don't want to participate in that or whether it's like anything in life and like if it's. And so you have to kind of create it like the stock market, a set of rules that like make it fair. And so like the stock market, the way that we've regulated this and you know we worked for four years before we launched a single product. So working with the cfc, which is the federal regulator to regulate this like a financial market. And so you have the same set of prohibitions. So like you know like market manipulation is not allowed. Things like wash trading, spoofing and then like this notion of insider trading and what it means, like what is insider trading and how do you define it? And so that is regulated like exactly like the stock market. And so we have the same sort of set of protections. We have systems that flag for these things and then if you flag somebody who committed it, you know, it could go from, from a fine to like, like if you come in inside trading on a stock, it could be like a financial crime, like it could be criminal prosecution. And so it's an interesting question. Like when it comes to companies it's, it's very similar to like if you are an employee of a, of a tech company and you know something about the quarterly earnings, like you cannot buy options based on that knowledge. Right. And the way to draw the line is essentially like you cannot use material non public information to trade. Right. And what does that mean? So it's basically you cannot use information that is not supposed to be public. That is like you are not supposed to make that information public by trading because actually trading with that information is in some way one way of making it public. Like you can go make information public by like saying it to the press or saying it to friends. But another way is actually trade on it because if you trade on it, you're moving the price in a certain direction. And so that's another way to make it public. And the same rules apply to Kalshi. And and so that applies to people at the companies, government, members of for example, like Congress, if they have an impact or knowledge on a specific like bill or something that they are themselves doing. And kind of, you know, it's kind of like a case by case also applies to sports.

29:48

I was just going to ask has anyone ever been fined or sent to the slammer then for something on Kalshi?

32:45

So a few things because we've like, okay, why do we take this whole regulated approach? We take this whole regulator approach because look, we believe this market will be very large and we believe that one of the ways to go like the only way to go mainstream really is to kind of build it regulated, regulated rails so that institutions, big partners can adopt it over time. But then the second thing is that you want to build something with the right set of safeguards so that you mitigate and avoid sort of like the risks to happen. Any new technology, especially financial technology, comes with a certain set of risks. That's always true. Self driving cars, Uber, Airbnb, all of it comes at risk and regulation. What it does is like it is a forcing function because you have a regulator that has decades of experience that have seen how things go wrong, whether it's in drugs or in financial markets or whatever to basically pressure test your systems. And you know, we've done four years of pressure testing before we went live now kind of since start to finish. We started in 2019, now we're basically 2026. It's been like seven years of pressure testing the system. So the systems work really well, like it's working as intended. And you see, you probably have noticed like you don't really like there haven't been kind of cases of like people doing bad things on cash because it was very regulated. We asked you for your kyc. All the trades are reported to the government. It's kind of a bad place to try to commit fraud. There are other alternatives, offshore, unregulated and it's easier way to do it. Right. Like if you want to do something weird with Crypto, you probably won't go to Coinbase, you'll probably go to some offshore, you know, exchange that like offers similar services because there's no kyc. They don't know who you are, they don't report things to the government. So that's, that's one. So I think in casual those risks are very largely mitigated because of a regulated nature. Two, there's something else that's interesting which is the rules for an exchange, the weight exchange, which is an sro, a self regulated organization, you have to have a bifurcation between the commercial business aspects and the market surveillance regulatory functions. So the market surveillance regulatory functions report to the CRO who reports directly to the board. And a lot of the specific cases actually I'm not privy to. So the, yeah, it's interesting because then you, because you don't want to have impact on, you don't want to have like a conflict of interest. Right. Like for example, if it's like a, a big customer that did something wrong, like the business may want to like be like oh maybe you should. But the rules say like actually there's an information wall between those two so that the regulatory side can interface with the regulator and the audit committees, et cetera, independently of the commercial side. So they have full autonomy.

32:53

Wow. So not only do you not get to use the products but you don't actually fully know when people misuse the product.

35:18

It sounds like, well the relevant team including exactly the chief regulatory officer know, but the commercial side doesn't know. So and this by the way, this is common for example, you know how at like Goldman so at banks you know how like the, the trading side and the banking side cannot share information between each other. I guess the trading side can share with the banking but the banking cannot share with the trading. And it's the same thing I guess commercial can share with the regulatory, but there's some, some set of information that the regulatory cannot share with the business.

35:26

Are these regulatory bodies equipped to investigate potential insider trading on this scale as the number of things that you could bet on or trade just dramatically multiplies?

35:57

The answer is definitely. I mean like look the, the cftc, it's interesting people talk about the scale of prediction markets but look, I mean this year we, we prediction markets have grown massive. Like to be clear. So the right now, I mean, I think so Kalshi is doing something like 70, $80 billion of volume A year and the broader industry maybe is 150, $200 billion with millions of customers participating. But Then let's compare that to the commodities markets and the swaps markets that the CFTC regulates. And actually let me ask you, how much volume, notional volume, do you think goes through the Chicago Mercantile Exchange a year?

36:09

I was more interested maybe, I mean, I don't know the number, but I think maybe the more relevant number is volume per trader per se.

36:44

Like I know that still pretty small for Kalshi. It's tiny, right?

36:54

And so that's what I'm saying. I realize it might be smaller, but I think the number of potential retail investors or just everyday people who are getting involved has just got to be on a very different scale, I would think.

36:59

I mean that number that I was going to mention is a quadrillion.

37:12

Haven't heard quadrillion on the podcast yet. We need an air horn or something.

37:17

Yeah, it's 1,000 trillion. So, so, so you know the, the CME does like $3 trillion of volume A day and it's a massive market. There's very large diversity of participants in the US and outside of the US some of it is institutional, a lot of it is retail. But, and, and then you have, you know, the S and P futures, you have a bunch of different kind of products but it's a regulator that has kind of overseen like mass, mass amounts of data, like mass amounts of transactions on a daily basis across could have a composition. And, and I think it's not as kind of, kind of, we still have sort of a concentration of volume amongst the kind of like prosumer traders or institutions. These, these things are not like, they're not like uniform, right? It's not like you have 100 traders that do equal amount of volumes. It's kind of very tilted and it's also existent in the traditional markets. You have kind of a, kind of a long tail distribution or like a skew distribution. And, but the important thing here is like actually, and this is very interesting, when people look to commit fraud, they don't do it for like 10 bucks or $20, right? Like they usually, you know, they try to make money out of it, right. Otherwise why are you, why are you violating the law? And the fortunate thing about that is that the larger the size, the easier it is to flag, the more unusual the pattern is. You know, it's like, you know, when someone for example goes out, like when you hear about the SEC investigate some insider trading, it's because usually some, some trader at a bank bought a kind of an out of the money option two days before earnings. But that option they Bought like millions of it, right? Or they bought like a large size that usually is actually pretty. It's. It's kind of a problem that's like a much easier one to solve.

37:21

Not very sneaky, realistically.

39:01

It gets flagged. It gets flagged, yeah. And then you look at it like, who are you? Who do you know? How do you get this information? And then you can escalate to investigations and the regulators.

39:03

So in this context, people are probably seeing headlines recently about, there was this trader, I think the name was like Alpha Raccoon or something, who netted over like a million dollars by very accurately predicting Google's 2025 Year in Search rankings. To the extent that, like, this person probably worked inside Google. But that happened on Polymarket. And you don't actually hear stories of this, or at least I haven't seen stories of something like this on Kalshi. Maybe I just haven't seen it. But I imagine for you, you get lumped in with those kind of headlines and it's like, oh, prediction markets allow insider trading, blah, blah, blah. Like, why, why did that happen on polymarket and not Kalshi?

39:11

It's the same as the kind of like the regulated versus unregulated model, right? Like it. And I always say this, it's like, you can take any financial market. Like, you can take the stock market, right, Which a lot of us perceive is regulated, and there's the right set of rules and et cetera. And if somebody offshore, like, opens up a stock market without kyc, without the sort of, like, same level of protections, yes, things are going to happen on that marketplace. Right. Like, it's not like, like the thing I always say is, like, there are bad actors everywhere, right? The bad actors are like, they'll always try to find outlets to, you know, do bad acts. That's what they do. And, and so there's this key distinction between regulated and unregulated. And I think generally with nascent technologies, people sort of like, merge the two and treat them as similar. And you see this with crypto, right? Like, there were good actors in crypto that were doing things regulated. And, you know, sometimes they had challenges with the government. Like Coinbase had all sorts of challenges with the government, but that was a good actor. It was like trusted kyc, you know what, you know, where your money sits and you can trust us with it, and we report to the federal government and so on and so forth. And then they were like, you know, offshore actors where you, you could put your money and you have no idea where it's going. Right. Like, you have absolutely no guarantees that that money could be going to somebody's pocket, it could be going whatever. And but for new technologies, people, like if something goes wrong in the unregulated piece, they can lump like they can lump the entire sort of space in one, as you said. I mean, it's totally right, Alex. Like, I totally agree with this. It's a matter of education. It's a matter to show that like, you know, look, there are actors that are going to do things the right way and then there are actors that, you know, may have started to do things maybe not so. So so much the right way and over time they kind of converge. But the most important thing, and maybe this is kind of the thing that we're getting at in some ways, like if you want to commit a bad act, you're not doing a regulated exchange. We would know the name of that person, we would investigate that transaction, we would report to the government and everybody could see it transparently. Right. You would prefer doing it by paying somebody in some crypto and not traceable, like dark web thing. Right. And that actually reinforces the importance of a regulated transparent model for this because then all the activity is out there for everybody to see. And you know, we can work with regulators and we could put the right set of like sort of checks and balances and enforce them.

39:53

Yeah, you all are really big, but polymarket is too. And it's actually amazing to me the amount of mindshare Poly market has in the tech community, especially considering they're not officially launched yet in the US I was just at the Dealbook Summit in New York where Andrew Ross Sorkin was talking about polymarket from the stage constantly. The all in guys talk about them. They're everywhere. Chain is everywhere. I really want to know how you feel about that. I have to imagine polymarket being so prevalent in the mind of like the tech community specifically bothers you. But how do you think about that and your rivalry with them right now?

42:09

I don't know if it bothers us as much. I mean, like I would say a few things, like the number one metric we track is not really mind share or like, you know, I don't know, like visits or other. It's, it's like actual number of users, volume, financial health of the company and do have a real business. And I, and I think on that sort of from that perspective we're much larger and there's a bunch of ways to kind of measure that. And you know, you probably have seen the sort of charts coming around and other to us that's kind of the most important thing, like number of users, real volume, real kind of revenue, like financial metrics. It's interesting because last year if you were to kind of look at the mind share of calcium, like versus polymarket, we were probably kind of like 5 to 10% of the mind share. There's ways to measure. You can look at Google Search, for example, like how many people know about a company versus the other. It was a tough year because you know, in 2024, in the early 2024, really kind of that similar dynamic was happening. So we again stood firm by our principle, which is regulatory first. We are not going to do anything that is sort of like outside of the bonds of the law. That's kind of a principle. We're never going to.

42:47

You didn't want to be a shoot first, ask questions later tech company.

43:52

Just financial services I don't think is the right, is the right thing to do, right? It's, I, I really think financial services, the long term winners are like, you know, measure twice, cut once, do it right.

43:56

It's one thing when it's Burrito Taxis, it's another when it's very different services. Huh?

44:05

It's very, very different. Right. Because in financial services when things go wrong, they go wrong in a bad way. And so you really need a regulator and you need a regulatory oversight. So it was hard last year was hard because you know, they were getting the mind share because they launched the market, they just did it. You know, there's a whole debate whether it was in the US or not. But you know, it was obviously a lot of people were in the U.S. but like that, you know, they scaled because they had the market and they had the offering. Obviously they scaled much ahead of us. They basically went ahead and before us. And that was a difficult period for the company because like that was I would say the most difficult period because we were kind of like hamstrung, like being told no by the government. And you know, we, and then you had a competitor that's sort of like doing it, you know, and you've seen it's kind of, I think Coinbase had their fair share of competitors that operate that way and that happened over and over. And it was tough because you just got to, you go to the regulators, like you're blocking us, but you're not blocking them. Like how is this fair? Right? Like, and that was I think the toughest part of the journey. But the beauty is like when we won the lawsuit last year, so we sued the government over the election market. Then we won that, and we were on the right side of the law. The market share obviously changed, but the mindshare, now, when we were looking at the metrics for this last quarter, like the fall, we're actually something like 55% of the Google searches in the US we've actually overtaken even in Mindshare. And so for a while, we've been leading on the core business metrics and the product and the team, but now we're also actually at least equivalent in terms of the mindshare. We've gained a lot of territory there. So it's just a matter of time. I think at the end of the day, everything will converge towards a better product, you know, and I feel pretty good about our product.

44:09

Do you think polymarket is doing things the right way?

45:40

I think that's on them to comment. I think that, like.

45:44

Oh, come on.

45:46

I mean, look, our view is like, we approached it differently. It's a we approach to sort of regulated in the US do it right as a US company. And, you know, they kind of did sort of offshore and the VPN thing and all of that. That was kind of the historical thing. And, and you know, I just mentioned, like, that was sort of like a. A source of difficulty for us because it's like we are carrying all the burden of legalizing the space, which was so tough, right? Like, we spent four years, and it was really like a very, very difficult journey to make this happen because, you know, you had the kind of battles of the government, and they were kind of pushing us, and they really wanted to sort of like this model not to exist without a lot of real basis. And then you had a bit of a sort of dynamic where the opponent or the competition had no restriction whatsoever, right? It's a bit like you're in a. In a boxing ring and then your hands are tied behind your back, and then you have to. You have to kind of go box, right? Whereas your opponent, like, doesn't have their hand tied. They may even have a knife, right? And. And you're just getting like, you know, you're just kind of in that ring. So that was tough. That was tough. And there's no secret about it. And like. And, you know, we had a history, our history between the two companies as, you know, like.

45:48

Yeah, it's a very fierce rivalry, I would say, you guys, it was a.

46:55

Very fierce rivalry because, like, because of that dynamic, right? It's like you're sitting There and we're getting bloodied here. And like, you go to. And people weren't realizing it. It's like, guys. And it's not like customers or others like, give you props to try to do things right way. That's the tough part about doing things the right way. It is hard, right? It's not the easy route. It's not like you do it and then people are like, great job, Congrats, you did things the right way. Actually, no one really cares until it matters. Like, no one cared about, you know, for example, like, FTX was sort of like the golden child for a while up until it sort of blew up. And then everybody cared overnight, right? And so that was the hard part. And like, look, I mean, we made some mistakes at the company. There were some incidents where, you know, we made some bad tweets about them and they made some mistakes. They made some bad tweets about us. And there was a lot of this sort of back and forth where, like, we would go to press, they would go to press, and so on and so forth. And we were just, at the time, at least in 2024, it's like we just go up to the press and the Raiders. Like, guys, do you not see this dynamic? Like, we are being blocked from doing anything? And then they are not, like, how is this fair? How is this happening? So that was, I think, deeply frustrating, I think, this year. Well, one, we learned from our mistakes in the past, but now we're also like a very different paradigm where, like, we did actually win that lawsuit and legalize the space. We did open up the space in a legitimate way, and there's a real way for the space to exist in a regulated, safe, responsible way. Now it could become legitimate. And I think that changes the dynamic because, well, one that was very advantageous to us. It was a huge kind of boost for us as a company, obviously, given the results, but it was also beneficial for them because now they have a path to come and do it the right way and do it regulated and legal. And I think it seems like this is the path that we're doing. They're trying to converge. They're pivoting towards our strategy. And I think that's a good thing. And I hope they stay committed to that because I think over time both of us will push the space. As long as they're sort of fair and reasonable competition between two of us. I think this is going to be great for the both of us.

46:58

If you would have told yourself 10 years ago that you were you would be suing the government and be on South park in 10 years. What do you think you would have said?

49:00

I mean, it's just like an absurd problem, you know, it's just, it's like, also, how do you kind of relate those two, right? It's like, I mean, I think you're.

49:09

Like, is this a good outcome or the world's worst outcome?

49:17

I think it's pretty good outcome. I think that, like, you know, the. Well, I would just sort of dissect that for a sec. Like, I think the suing of government and south park, they're both interesting and they talk to two different things. Like, suing the government is interesting because not many people do that, especially your own regulator. So that, you know, and, but the beauty about the US is like, you, you have that sort of system, right? Like the government has checks and balances. And that's, that's an amazing thing about our system. It's like none of the three powers that may be have full autonomy and full power. They kind of self check and check each other. We disagreed with the regulator's assessment. These markets, the law was clearing, clearly saying they were legal. And I always say this, I think the law applies to the industry, to participants and people, but it also applies to the government sometimes. This is kind of missed, right? The government is not the law. That is the law. And the law is something that we all have to apply, including the government. And we disagree with that decision. And I think we were bold enough. It was a very difficult decision. I think swinging government comes at a lot of cost and we were hurt pretty dramatically by that. But we won and we were right. And so I think that's number one. I think that's kind of like a beauty. I, I came from Lebanon, right? Like, that is something that would never happen in Lebanon. Like, just like the notion of, like, oh, you know, I disagree with the government, I'm going to go sue it. It's like, where do you even go? Like, I don't even know. Like, if you walk into the courthouse with a, with a lawsuit in hand, I don't even know. Like, I think they turn it into a cigarette. Maybe. I don't, you know, and, and the Southwark thing, I think is just a statement that, like, we built something that have gone, has gone mainstream. Like, I think that, like, people care about. And I think that's a, you know, that's, I think that's, it's been a wild ride to get there.

49:21

How do you think about Kalshi as a Part of everyday life. It seems like everywhere you turn there are billboards, Instagram ads, even on Apple sports app they've got betting lines. And I know you guys do a lot of advertising that certainly I'm seeing a lot of the advertising about sports betting on NFL and this and that. How does it feel to have this kind of a part of daily life? I think on the one hand it is very fun. On the other, I think, you know, I have seen some ads that talk about creating a side hustle or passive income. Whether it's from you guys or others. How does it feel to be a part of that reshaping of kind of how people interact with the financial markets?

50:59

I, I'll. The way I'll answer this question is I'll sort of go back to kind of the core of how like kind of why we started the company. So I, I spent time in financial markets like at Goldman and at Citadel. At Goldman, the thing that struck me is sort of the large institutions. What I was there in 2016, there were two big events in 2016, Brexit and then the US election. So the first Trump election, all the kind of big guys, what they were focused on is essentially, you know, I want to get exposure to Brexit or hedge against it and then I want to get exposure to Trump or hedge against that. And then we would create these financial bundles and all of that. And there were three issues. Like one, it was a, we gave them the wrong products. Like the traditional financial markets don't get you the exact sort of yes, no is strong going to win exposure that they were looking for. So one of the big things we sold is the S and P if they wanted to go long, Trump. So people write about Trump and then they lost money. So it's a horrible. You know, the second thing is there wasn't an open, fair market for people to price this question. It was just like the bank deciding and we would charge crazy fees. It was, it was exorbitant. And the third that like irked me the most is like a lot of people have views on this, like, and also a lot of people are impacted by Brexit. It's like this notion that like you are only impacted by Brexit if you're big enough to get a seat at the Goldman Sachs table. Like was a bit weird to me. It was like kind of like, you know, but this is where the idea was like you have a financial market to price companies, commodities. What if you built one to price simple questions about the future and if you did something like this. The beauty of this is areas of expertise. Everyone is an expert on something. Areas of knowledge and expertise and passion lie much in a much broader set than just Wall Street. There's a lot more people out there outside of Wall street that have views and have knowledge about politics, have knowledge about the economy. They read the news every day and they love it. And they love interacting with the news. It could be the culture, it could be sports, it could be any of these sort of categories. But right now it's kind of this, this, you know, the set of instruments is very Wall street specific. Like an average person is not to look at an interest rate swap and be like, I'm going to participate in that. It's just, you know, too complicated, very unrelatable. And I think the thing that's changed and that's, that's great. I mean, there's, for example, like, there's this account on Twitter, it's like only grounded 10 or something. Like the, you know, this person basically has made $70,000 trading on culture, culture markets. So how successful movies are going to be, what Taylor Swift is going to release or not release. And they paid off their student loans with that. And it's just kind of like their favorite company. Like, they love the company so much because they're like, I have spent like hours and days and weeks and months learning about this, and up until now it was kind of like, it was like a fun side thing. Now I can like, actually, you know, actually exercise my skills and it could become a hobby and I could sort of try to make money off of it. And I see this very similar. It's kind of like Uber's value proposition with these types of marketplace, new category kind of creators. Like Uber was sort of like, you have a lot of free time, how about you ride a little bit and make some money? I think in our case, like, you have a lot of knowledge, sometimes very niche, weird knowledge, like maybe even your family doesn't even want to hear about it at Thanksgiving. But how about you kind of try to make some money off of that? And from the beginning, it's like, if we can build a financial market in a regulated, safe way, like where you put the right set of customer protection and you let people kind of openly in, transparently trade against each other, that could be very interesting things because you can have this sort of like social, crowdsourced. Let's figure out the truth together. Let's figure out the price the same way that markets figure out the price.

51:38

Of when you talk about expert knowledge. I know there's this idea, you know, from Warren Buffett and others, that when it comes to the stock market, nobody knows anything, you know, that isn't already priced in. Do you feel like that's different? Maybe? Could you call it like a long tail of topics or is it. You feel like that dynamic's different if you're making that proposition to people?

55:22

That's a great question. I actually think so. You know, it's interesting, like, I think that because like, let's think about it in simple terms, right? Like the, the if, if you go to the stock market and try to buy an option on Tesla, like, how could you know more than like the market makers, right? I mean, I actually worked at like at some of these. Like, how could you. Right. Like it's kind of rigged there. It's like there's asymmetric information. The large institutions. Wall street has more information about where options and stocks are going to move than the average person. It's kind of a truth, right? And no matter what you do, you can do all the research in the world on the stock. You're not going to have the vast data sets and pools of data that like the big hedge funds have. So they will always have an advantage over you. And to me, it's that imbalance of advantage that make it sort of like it's very hard to actually gain an edge if you put in, like, if you put effort into. The stock market on Kalshi is different because like I. There's a team of traders, for example, on the weather that like scrape satellite data and they create correlation patterns and they have meteorologists in the team, et cetera, and they figure out like, you know, all these sort of like sophisticated data science models to predict the weather next day. And they are making money of it. They're pretty successful. And the beauty of it is like, I don't think the hedge funds have any more information than they do, right.

55:41

Like if these people go that like creating the fundamentals, if you were. Or like doing the work of understanding the fundamentals.

57:03

The fundamentals. That's.

57:09

Yeah, that's where the truth side comes in.

57:10

I have studied Timothee Chalamet's eyes more than anyone. And therefore I know that he is skd, right? That's like, that's what you're saying is like, there's, there's people who are success about things. That's got to be a prediction market, right? Chalamet skd. Do you know about this?

57:12

I don't know about it. What is it?

57:27

There's like a rapper who is in disguise and people think it might be Timothy Shalom.

57:29

Oh, I don't know. That's interesting.

57:34

People like claim to know his eyes because, you know, and say that it's him.

57:36

These markets reward people to go out and do research and then bring it into the open market. Right. It's a. And over time we get holistically. So think about, for example, the, okay, whether tariffs are net good or not bad for society or whether there's going to be a recession this year or not. Right. Like one way to do this is like you go and do this Bloomberg Economist survey and you ask a bunch of experts, hey, what do you think? And then they give an answer. And that's our forecast. Right. That's historically been. This is what we believe to be true, but it doesn't work that well. If you compare that to the Cauchy economic forecast over the last few years, we have been much, much more accurate. It's just much better kind of gauge of what's going to happen. And the reason is because it's a very different mechanism, which is now I'm giving an incentive. I'm rewarding people to actually go out and do research and then come and trade on it, bring it to, to the market. And if you give that, think of it, that incentive at scale, it's holistically making us smarter about, for example, the economy. It's making us smart about COVID and whether it's going to come back. Like maybe this whole Covid episode of whether, hey, covet is done. Covet is not done. If they were listening to the markets, we were saying Omicron is going to come back. There's an Omicron wave. And it was going to come back because some traders were doing research and they spent copious amount of times. You know, they're not necessarily, by the way, like doctors or like people that you would imagine to be the COVID experts, the people that maybe love the topics and spend so much time in quarantine reading about it. And then they brought that information to market, which is very useful. And if we had listened to the markets, maybe we would have put like kept the mask on for a little bit longer and we might have avoided the second second wave.

57:41

Before we let you go, Tarek, you recently made a comment that went kind of viral. I think you got a lot of heat for it because people rightfully have concerns about the Gamblification of society where you said gamble. You were. Yeah, trademark. You said you Want to financialize everything. What did you actually mean by that? Do you, do you really mean that?

59:12

Why'd you scare my grandma with that comment?

59:34

Interesting. I think that, yeah, I saw that. I mean it was taken out of context and people sort of like, you know, took in all sorts of directions. But, but really what it means is this notion of if you believe that markets work, what they do is they discover prices. They're a very good mechanism for discovering fundamentals. I think as you said it in a great way, fundamentals behind something and so, and then uncovering as much truth as possible behind that thing. And so what we're saying is like, sure, applying that to companies is very important. Applying that to commodities or currencies is very important. But what if we applied it to some of the most important pressing questions about our future, right? Like could we apply it to a much broader set of things? And like, look, from first principles, like we live in a world where the ratio of noise to signal has gone up a lot. Misinformation is everywhere. Polarization is kind of at an all time high. People say different things about everything. And you, you don't know what to like, you go to Twitter. If you go to my Twitter feed versus yours, we might see literally two entirely different versions of the word. To us, like this is kind of a bit of an antidote, is like how about we apply some of the things that we discussed, like this mechanism for truth, this incentive to be truthful, to be unbiased, to be objective to a lot of these questions, right? Is there going to be an earthquake in California? Where is hurricane is going to hit in Florida? Covid is going to be a recession. These questions that do actually impact people in their day to day, but today there's just like, it's like social media where like the, the incentive is engagement, whereas prediction market, the incentive is truth. And so that's really what I meant by that. But I think that that clip was taken out of context, out of a kind of broader conversation, like kind of a broader explanation that I was giving.

59:36

Do you guys have a mission or vision or document for your own team to like steer people toward whatever type of truths you think are important or is it just kind of going to be driven by engagement, culture, excitement? Because I feel like that's potentially a pretty big question for you guys and in what type of role you want to play in the world?

1:01:15

That's a great question. So yes, the answer is yes, definitely. And I think that the way that I sort of describe it is like you have to have a balance. And you know, there are certain things that, for example, may be more engaging but less useful from a truth seeking perspective. But that help kind of like the things that are like, less engaging but more truth seeking from a kind of forecast perspective. Right? So. And you have to balance out between those two. It's a bit like, and the example is like, you can look at a lot of marketplaces, right? Like for example, maybe where Ubers are most needed are like in urban areas, but that's where it's harder to get riders and they're less needed in like, sorry, by rural areas. But it's nestled in urban areas. But you still have to build a critical mass in urban area to get to the rule. And I think it's a little bit similar here. Like you have to get enough of a critical mass in certain places to basically get, for example, I, you know, for example, personally, I'm always interested in more longer term forecasts. The things are sort of like, will I overtake? Will we get another when the McRib.

1:01:35

Is coming back this year?

1:02:33

What is McRib? Is it the burger?

1:02:35

Good for you. Good for you, man. Well, who exactly is making the, who exactly is making these calls about what goes live on the site?

1:02:39

So a lot, I mean, and then the second point, I was going to say, so a lot of it comes from our team that like are figuring out what's trending on Twitter and like what's double people's mind, like, what's in the news. But the other thing, it's like, this is the other thing. Look, I believe in markets, right? Like, I'm a believer in markets. And like, it's like, look at what customers want and like what they're interested in, what they're asking about and like have them suggest markets. The one thing, the one cover is like, that doesn't mean you just do everything, anything. I mean we, again, we're regulated. Everything goes to a regulated pipeline. And there's a number of things that we don't touch, like war ties and assassination, violence, things that could create a bad incentive. We never touch those. One, because it would be illegal. And two, even if it wasn't, like, I think those would not necessarily even though there could be interest from the forecast. Like, for example, if you have a war market, I think it could create a perverse incentive, it could create a bad incentive and we basically shy away and do not touch those. So I think you have to have a, like, you have to have a balance. And I think, I think we've gotten fairly good at that balance.

1:02:47

All right, Tarek, well, we'll let you go research the McRib and SKD. And yeah, we appreciate you being on the show.

1:03:42

Thanks so much guys. Appreciate you having me.

1:03:50

Take care, man. Thanks to Tarek for coming on the show.

1:03:52

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1:03:58

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1:04:08

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1:04:14

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1:04:20

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1:04:23

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1:04:27