Thank you, Adam. So, Kalshi was the most downloaded app on the App Store this week. I think the World Cup had something to do with that. How do you maintain the momentum after that?
Well, thanks for having me. Excited to be here. You know, it's funny — I think I get asked this question pretty much every month since the election. You know, in November it was like, well, that was the election, how do you maintain the momentum after that? Then we got a massive surge in January 25 with crypto, and it was like, well, you know, this is a crypto summer, what do you do after that? Then we launched sports, it was the Super Bowl, same thing. I mean, the whole point is like there's going to be something topical at every point in time that people care about and are very engaged with, and Kalshi will be there to serve markets related to that. And that has been sort of the force factor in the company that we saw.
What's really happening in the prediction market industry, I'd say there's sort of two factors that are contributing to the growth. Outside of, you know, there's spiky things that happen with events, but overall volume, if you look at it, is not really spiky. We are compounding 30, 40% month-over-month growth like any sort of compounding company.
And the two factors, I think, one is, you know, there is this sort of general wave of people coming to prediction markets to check what's happening outside of trading. You know, 80% of our users don't trade — they actually are looking at the data. And if you look at the top three apps on the App Store today, they're Fox, Telemundo, and then Kalshi. All three ways of engaging with the event, or watching it, observing it, etc. And the second thing is, it's a marketplace. Liquidity begets liquidity. It has the attributes of exponential growth when, you know, you get more supply, you get more demand, which contributes to more supply, which contributes to more demand, and that sort of flywheel has been going on for a year, year and a half. So we feel confident it's going to keep going for some time.
So you're in Washington. I imagine you're spending a lot of time here right now. You do have a favorable regulatory regime at this point with the CFTC. But at some point the White House could change, politics in Washington could change. Is this business durable if you have a major change in Washington?
I think so. I mean, I think that at the end of the day the things that we're focused on is like, you know, what are the sort of like basics? What are the principles? And I think those are the things that sort of like guide things long term. Prediction markets are here to stay. Like there is no sort of, you know, way around that, because people are speaking very loudly what they want to participate in, what they want to trade.
And the reason our prediction markets are here to stay is I think there's this general feeling that the traditional system, whether the financial system, the news, a variety of other systems, are not working for people. You know, if you ask 90% of our traders that are really active on the product if they trade options or trade the S&P or some other traditional assets, they say no because they feel like the game is rigged against them.
And they're mostly right. There's no way for them to get an edge in a lot of these markets, but a lot of these people — I mean, you know, some people now are making, have a full-time job out of forecasting the inflation every month. I mean, our best inflation forecaster is this random guy in Kansas. Blue collar job, never really had a college degree, never traded financial markets. The dude just has a knack for, you know, feeling the economy, and it's pretty amazing. There is a way for him to basically monetize that and have a full-time job out of that.
And I think that sort of use case is too prevalent. You know, it's just too prevalent, and the size has been so big. And, you know, what we've seen in the 2024 election is it's not a choice about whether we should have prediction markets or not. It's a choice about whether we should have them offshore and unregulated, like some of the stuff in all the recent reporting we've seen about Polymarket, or onshore regulated as an American company, which is sort of the model that we've taken. Our model is really take something that has a massive amount of demand that is proven and bring it into the regulated realm and add the right set levels of sort of customer protections and guardrails to bring it into America. And when you actually do that, the volumes actually go one-to-one. So you take the volumes from offshore, you bring them onshore. And in a place where it's transparent, you can see it, you can observe it, you can learn from the data over time, and make sure you have the right guardrails, which is what we're doing.
You talked about fairness and the idea that if someone is betting against the house with a sports book, the sports book is trying to defeat you, trying to take your money. You're not trying to do that. But Kalshi has acknowledged that most of the retail traders on the platform are losing money. So would you say to your sibling, 'You know what? I think that Kalshi is a good place to make...'
What is it — what does that mean, the point about losing money? I mean, this point has always been like a very interesting — I find this sort of point funny, right? So, so what is the expectation? That 50/50 people win, lose? If that were the case, then let's just flip a coin and just like, you know, decide the outcome. This is a game of skill. It's a highly competitive market. People are competing. What percentage of hedge funds outperform the S&P every year? Is it 50/50? No, it's not. It's like 20%. 20%. What percentage of teams win the NBA finals every year? One. So that's how many go... I mean, the point is, the point is I've always found this point funny.
It's a highly competitive, highly dynamic marketplace. It is hard. You have to do an extensive amount of research to be good. There are people that spend a copious amount of money, time, resources, energy — they hire people if they want, or they're good at it themselves. They've dedicated their lives to basically becoming good at this, and some people didn't, and they're spending time, whether they do it on the side as a hobby or not. There's a variety — there's a very drastic sort of range of skill and experiences that people are doing this. And yes, 2/3 of people on Kalshi lose money over, let's say, a year of them participating.
That number actually compares extremely well towards the alternatives. On the sports books it's 96%. Why? Because they ban any winners. It's a completely different model. You ask the chair about the difference between this and gambling, we can get into that. The core difference is that you have an open marketplace that is fair and transparent versus, you know, a structure that is designed for people to lose. But the more interesting thing is that those numbers are 75 to 80% in active day trading of stocks and options. Which goes back to the point that actually, if you look at these numbers relative to other industries, those numbers look quite good. And it's all about just a leveling of the playing field for people to basically have the opportunity, if they wanted to do research and they wanted to get good at something, to be able to do it — whether it's sports or economics or politics or anything.
So we're already starting to get close to running out of time. So I want to ask you about a big thing this year: midterms coming up. Election integrity is going to be significant when it comes to Kalshi. How are you ensuring that your markets aren't being manipulated for political purposes during this election season?
