Kalshi CEO Tarek Mansour on Raising $1BN, CNN and CNBC Deals & the Polymarket Feud

Kind of what happened with Kalshi in the election was a bit of a ChatGPT moment for our industry.

An industry truly becomes an industry when there's a rivalry. Without Polymarket, we wouldn't have pushed our marketing and pushed our product as hard.

Thanks for having me. Super excited.

That's a good question. But what we've realized in the last, I would say, six to nine months, given the sort of acceleration of what we've seen, is I think the opportunity ahead of us is maybe even bigger than we had all possibly imagined. There's a few symptoms of that. So, one, I don't know if you know this, Harry, but Kalshi this year is, at this scale at least, I think the fastest growing company in America outside of AI. I think Anthropic is growing faster, and I'm not sure about More and Cursor, but we're growing at that sort of pace, at that rate. And number two, what we're seeing, which is even more important — the qualitative thing that we're seeing — is there's a real and rare shift in consumer behavior. You know, people are kind of turning from passive watchers of events or news or sports or other things that they engage with in real life to active participants. You know, that natural behavior of wanting to predict the future or debating about something is turning into activity on Kalshi. That is rare. When you see this shift in consumer behavior, I mean, you've seen it in Airbnb with the hosts and in Uber with riders — when you know you're seeing a new class of people, in this case prediction market traders, becoming a thing, that's indicative of a very, very massive opportunity ahead of us. And you know, when you have a massive opportunity ahead of you, you want to go big. You want to bet big. And so we're really scaling up for that opportunity here.

I think, one — so, okay, we're at a point right now where we're growing incredibly fast. We are also profitable right now. So it's a good question. I think the next phase is: how do we build a global brand? How do we build a brand that people know, they talk about, they associate with? And how do we put the story of the company and the story of the brand out there? And so there's a lot of marketing that's coming, obviously scaling the team. So we're still 100 people. And number two is we're a financial market. We're a financial company. So as the volumes increase, as liquidity increases, as a regulated — we're a federally regulated financial exchange. It's a little bit like a bank or some of the kind of regulated clearing houses you hear about. You have reserve requirements and added capital on the balance sheet. Think of it a little bit as a safety cushion. It enables us to do things faster — more capital enables you to do things faster in financial services, and that's usually a good thing.

At least, maybe I'll respond to it in terms of Kalshi's strategy. At least for the Kalshi strategy, that's not how we think about it. Maybe I'll lean a little bit more on the other side, which is a better product will trump any day. And we've seen this a bit with DoorDash and Uber Eats, right? Like, Uber Eats had, I mean, infinite capital compared to DoorDash, but Tony built a better product and won, right? And so I don't feel too dogmatic, but maybe I'm a slight no on this one. What do you think?

Yeah, maybe — I'm not saying maybe with the if at the end, right? But the problem is the if is a big conditional, right? Like, oftentimes a lot of money can create inefficiency, and companies start making a bunch of unforced errors when a lot of money comes in. But if that if is true, I think yeah, capital tends to be equated with success if the company is an A-plus execution company.

It's pretty similar to what happened last year, actually. So last year, the question I was receiving is how much of the activity is elections, and obviously a lot, right? Like, that was the big talk. The way I would answer it is: well, how much of the attention right now is in the election, in terms of what people were talking about in October 2024? And if you think about it, out of 10 tweets I see on Twitter, 9.5 tweets were about the election, right? So maybe that will correlate with the volume on Kalshi, and it did. Right, it was exactly that. And you're seeing the same thing happen with sports. But per unit of time, it really is about what is most on top of people's minds. So yes, NFL Sunday is massive in America, and that's on top of people's minds. But when there's a Fed decision, that's on top of people's minds, and that's where the trading volume is. When there's a Mamdani election, that's when the trading volume is. So the volumes will basically ebb and flow with whatever is in the news, whatever is trending on X, whatever is top of people's minds.

And I think it's a matter of time until basically — we're seeing incredibly strong evidence or traction in the culture markets, for example. I actually think what's happening with Taylor Swift, movies and how successful they're going to be — anything around culture like that is massive unaddressed TAM right now. And it's a matter of time until we scale the number of markets, we scale the liquidity, and I think those one day will be very big. So sports is very big right now, but I don't think it's kind of like a — I think it's a moment in time.

I think that maybe let me answer that question generally and then specifically. So in 2024 we won the fight against the government. We sued the government and then we won that fight on October 7, 2024. And I think that has accelerated prediction markets, that has really spearheaded them into the mainstream, and that has continued into this year. And when you see this type of success, I think what happened with Kalshi in the election was a bit of a ChatGPT moment for our industry. And what happened with ChatGPT and OpenAI is everybody flocked, right? Everyone was like, well, there's a gold mine here, we're going to go after it. And so that's happening in prediction markets. And I always think of it as: I think there's two markets — there's either small markets that not a lot of people will care about, or massive markets that a lot of people will care about, as long as you live in a free, open market in a free, open society. And obviously I'm running a free market, so I have to believe in competition, right? And so it's great — this competition you're seeing from CME, from obviously DraftKings, FanDuel, from some of the offshore players, some of the startups, some of the brokers, is a sign that I think the opportunity ahead is massive. It's a very big opportunity.

On specifically Robinhood: I mean, incredible company, amazing execution. I think Vlad has been able to move into new products pretty successfully, and they've been an incredible partner of ours on the prediction market front. So I think them pushing for more innovation in the space is a very positive thing. I think it's going to make all of us get better, and we're very excited about it.

There's a little bit of spectacle around these things. You know how, when I got asked this question, I think a little bit about boxing. You know, I always wonder: do these boxers actually hate each other, or are they doing it for the show, right? Like, do they go back and, you know, after they punch each other kind of in the weigh-in event or whatever, do they go back in the back room and sort of hang with each other and, I don't know, dap each other up and move on? I always wondered that, and probably there's some truth to that. And look, I think people like rivalries, and they sort of scale them and amplify them and grow them. And, you know, it's more fun to watch a Kalshi-Polymarket than to not watch a Polymarket.

I don't know if there's that. I mean, look, we've had our differences and we've had real conflicts. There's no question about that. And I think both companies have made mistakes in the past. Maybe fortunately neither of us have escalated to that level, to the Rippling-Deel level, but, you know, we made a mistake last year with the — we had, you know, both of us have been sort of playing games against each other for years now because we're competitors. And there was one last year that sort of, you know, they promoted, and there's like a whole backstory to it. That was a mistake. I made it clear to the team: don't ever do this again.

I think the way I think of it is: what I'm really learning over time is that an industry truly becomes an industry when there's a rivalry, because that rivalry will push you beyond the limits of what you thought you could get to. That's just how these rivalries work. Like Messi, Ronaldo, right? They're both considered potentially the greatest of all time. Well, I think Messi is the greatest of all time, but that's a debate for another day. But they live in the same era, and I think there's correlation in that. Or causation. I don't think they just happen to be born in the same time. You know, Tom Brady and Manning — when Tom Brady kind of reflected on that back in the day, he's like, you know, we were the most ferocious on the field and we fought each other. But then over time he became grateful for that, because he realized that without Manning being in there, and vice versa, he would have never achieved what he achieved.

And I think that's happening in prediction markets. I think that without Polymarket, we wouldn't have pushed our marketing and pushed our product as hard. And without us, they wouldn't have pushed their marketing and their product, and maybe also without us the regulatory piece that we've unlocked as hard. And so that sort of infighting, I think, is going to push both of us to scale this industry and reach heights that we honestly wouldn't have been able to otherwise, which long-term is actually net positive for the customer. Like, the net winner of all of this, the people that are happiest here, are these early evangelists of prediction markets that now have seen their market grow from this sort of weird corner of the internet to a massive industry, right? It's literally starting to look like a stock market.

I don't like relatives like that, you know what I mean? I think it depends on what you mean, right? There's a lot of really great companies in the space. Especially bigger companies, legacy companies. I respect CME a lot, even though they're an incumbent legacy. As a business, it's really an incredible business what they've built and the moats that they have. I think, you know, obviously some of the traditional players like DraftKings and FanDuel, they have really effective, I would say, marketing machines. They're some of the best spenders of dollars on the planet. So maybe in absolute terms — I mean, look, I think Polymarket has done an incredible job at marketing. They built a good brand, and we learned from that. And I think Kalshi has gotten really good this year on that front.

So this week we've announced — well, we announced the first and then the second large-scale news network partnership with prediction markets. So we announced the CNN exclusive partnership, and then CNBC the same thing the next day. And those have always been dream partnerships of ours, and there's more to come, because this idea of just embedding prediction markets in the news — you know, there's so much symbiosis here, which is the news can get better from prediction markets, because prediction markets are like this sort of, you know, think of it as the news covers what's happening now. Prediction markets can extend the news to cover what's about to happen next, which is kind of the next iteration of news. And then prediction markets can benefit from the news, because you can create that habit, which is like: I read a market, I read something about whether the Fed is going to raise interest rates or about the economy. I can maybe directly trade on it and put a position on it. And so they really gel really well together. There's obviously sports leagues, I think some authority figures and affiliates.

But I actually think the bigger thing for us, that we're learning over time that we have to do, that we're starting to do a better job at, is you just got to tell the story of the company. And we haven't done as much of that, because what I realized is the story actually resonates — it resonates with our customers, it resonates with partners, but it also resonates with aspiring entrepreneurs that are starting whatever they're starting. Because when you look back at the story of Kalshi, the one thing I always tell people that I think is the thing that spiked for us — and look, I think we're competent, I think we're smart, I think we have great strategy, we work hard — but I think it's resilience. I think we were so deeply committed to making this thing work. And in some ways, even for me, the beautiful outcome here — maybe the outcome is giving us a beautiful lesson — which is: you truly can will something into existence. You really can. And it's kind of amazing to see that play out. I mean, I've had my doubts over the years, obviously, but it really did work out. And I think we got to get that story out there.

It's really hard. I've had so many low days throughout the last —

Yes.

So look, I think one of the harshest moments in the history of the company was: so, you know, we spent three years to get regulated up front, then we got legalization — the markets finally could launch — then we got blocked on the launch. And then at the end of 2021 we started working on doing the election market to get it in time for the 2022 midterm election. And, you know, we had a team, we bet an entire two years on that, and then the government pocket vetoed — they delayed their approval till past the midterms to not give it to us in time. I think that was, you know, the day that happened, you could feel — there's a sort of feeling in the room that something has changed, or kind of people just lose confidence in you. You know, because when things like that happen, people oftentimes question the strategy, and they question the decisions. And so we lost a lot of the team over it. I could feel that the trust and the faith in the company had kind of plummeted. It was zero at that point.

So, very similar actually. It's one of those moments where you kind of walk out of the office and you actually feel physical pain in your stomach. You know what I'm talking about? Like there's this feeling of hopelessness, that it is done, that this is it. And I also called my mom, you know, and I was like, I honestly think this is it. Like, you know, this is the end of the road. And then, you know, she's religious, and she's like, well, don't worry, I asked one of the saints that is, you know, popular in Lebanon. Like, don't worry at all. I asked the saint — I got the signs that I need. This company is going to be massive. And, you know, obviously it's a very hard thing for me to kind of stand on, but the one thing that's always been very good about LA and I is we have gotten so gut punched so many times in the history of the company — really hard gut punches — and we stood back up. Like that one.

So, we took a day to kind of recover. The next day we came back and we were like, we're going to try again for the 2024 election. And then we tried another year, till the end of 2023. Then the government blocked it again. And so that's the second time, and then got punched, same exact deal. Lost another big chunk of the team. You know, horrible kind of situation. You know, this was the moment where we're like, we're going to try a third time, and this time we're going to sue the government over the election market. So, three years just kind of going through that absolutely intolerable pain until, you know, obviously we got rewarded at the end of 2024 where we actually won. But it took three different trials and three different years.

The answer is yes, right? So at times, even today, I mean, you always doubt — because as you know, when you're building a company that's going after a large market, first it's not working, or then it starts working, and then it goes back to not working, and then you do that 10 times, and then it works really, really well, but then everything starts breaking — and this is maybe the phase we're in — and then you start fixing some of the things, but then more things start breaking. You have to continuously shift yourself as founder and then CEO, and evolve yourself. And there's always questions like, am I going to be able to do this next phase right?

I think that for us, it's the time at a company where we need to evolve into a more structured organization, and build the right set of processes and systems in the company. And we haven't done that before. And, you know, will that's kind of the next big challenge: am I going to scale to the occasion and be able to do it while keeping accelerating the growth of the company, and not compromising the growth? And that's a hard problem. And the reason why these problems are hard is there's no answer, right? There's no recipe, there's no book. It really depends on you, your company, the circumstances. You have to kind of go through it, and you have to make a bunch of mistakes as you go through it. And you never know if it's going to work out exactly the way that you want it to work out.

That's a good question. And I think marketing in the beginning of the year was kind of a lot of where I spent my time. I think it's less about some specific department lacking, but more about consistency now. How do we move that into a scaled, consistent set of habits in the company, rather than a series of sprints?

I think there's two very important dimensions here. So the answer is unequivocally yes. More free markets generally tend to more positive outcomes, always. But the thing that struck me is the current financial markets don't relate to a lot of people. You know, trading stocks or options or futures — people don't really understand them, and the game is sort of rigged. It's rigged on behalf of Wall Street against Main Street, against the average person, because you never can win against Wall Street on where a stock is going to go or where an option is going to go, because they have all the asymmetric information. The thing that got me excited about building this is actually there's an opportunity to build a financial market for a market that relates to anyone, that anyone can relate to. And one of my core beliefs is everyone is an expert on something. Everyone reads the news about certain things or has passion about specific things — really, the vast majority of people have specific passions or are really excited about a specific vertical. And Kalshi is really a way to kind of get them to participate in a financial market on that vertical that is their home turf, where they are not facing somebody who has more information than them — a hedge fund or... you know, I'm sure you've seen pro sports traders.

I think that's part of it. I mean, I don't think that Citadel and Wall Street has asymmetric information on, for example, our political process. And you saw with the election — the best traders in politics, what bills is going to pass, who's going to win an election, they're people that love politics. They're not Wall Street. Wall Street is good, and they can get smarter over time. But where Wall Street is really good is seeing what hedge fund and mutual fund and whatever is buying which stock, and they can know where a stock is going to go better than the average person. But a lot of people have a lot of insight about politics. Why? Because they've been following politics for a decade or two, and you see in the numbers these are some of the most successful traders on Kalshi.

But there's another kind of facet to this, which is very, very important: the prediction market user is not just a trader. Actually, if out of every 100 prediction market users, maybe there's one or two traders that are actually trading on the market, but the rest of the users are getting informed about the world. It's really a form of news, it's a form of media. It's a way to basically come and get truth about what's going to happen next in a world where it's getting really hard to figure out what's happening. And you see this at every election, big election — people flock to Kalshi because you go on the traditional news networks and you don't know who won until 5, 6, 7 hours after Kalshi, right? And that's extremely...

Valuable if you can see and get a little bit smarter about the future, we can make better decisions over time, allocate resources better, and manage risks better. And I think that's a very positive thing.

I think they're not mutually exclusive. And I think that's a fair question. I just think that right now we're so early that it's hard to think about cannibalism or think about any of this as a zero-sum question, right? We're just so early. The percentage of people that deeply understand prediction markets is still so small. There's so much education to do. And I think the news and partners like CNN and CNBC are really an incredible way to get people to understand what these markets are about. And at the end of the day, the mission of the company is: we want to bring more truth to a lot of these processes — whether it's the election process, right now we're using polls and pundits and people say whatever they want, or weather, or climate, or the economy and how we make decisions about the economy. And the best way to do that is to put it in the places where people go and get that information. So imagine a world where election night coverage is informed by prediction markets, which actually work better than what we're doing today. That is actually net positive, and the best way to do that as well — you know, let's go to the place where people are going to get information about the election. And I think news networks are an amazing way to do that.

I think we can. They're not mutually exclusive. Like, I think we can do both. And over time there's different — I mean, even today, right, there's not a single news network that owns all the audience, and there's some news networks like CNBC for finance and business, CNN is for politics. And so I think they're not mutually exclusive.

It's a great question, and we think about this a lot. And the unfortunate truth is the answer is kind of a nuance in between. You know, you cannot go fully vertical because then your product offering is not diverse and interesting enough, and you cannot go fully wide because then you don't concentrate enough liquidity in specific events. That's what makes it an interesting marketplace problem. It's not an easy problem, but my mental model for this is you have to have breadth — like product diversity — and making sure that people have enough content to engage with, and markets that are related to the news or the things that they read on X, is important, right? And it's a bit similar to X: if you go on X and read about one specific thing all the time, that doesn't make a very interesting experience. You have to have diversity even if there are specific topics that are the vast majority of the eyeballs. So it's just really a constant balancing act between the two.

Oh, I see. I see. I see. That's interesting. My mental model for this: we're playing a long-term, iterated, infinite game, and it's sort of like there's a lot of rounds to that game, and every decision is a round. And I think it's very important that throughout the game and throughout the rounds you build a reputation where people can trust you, and can trust that when you have a trade-off ahead of you, you will not be quick to basically prioritize yourself, and you're trying to do right by people to the extent you can. And it's the same thing with the people that believed us early, right? Even though maybe we don't need them as much right now, my mental model is you need them in terms of a reputation and doing right by them, because that compounds. And if you're somebody that does right by people around you, over time people are going to want to work with you. And I think the best people — whether it's investors, partners, team members — want to work with people that do right by them.

Alfred Lin is incredible. Yes. Yes.