I think it was like most of the day was on something called Kalshi. Yeah, something called. And not just the past week, even leading up to it, but prediction markets were right on the money. This election, Kalshi markets had a 98% accuracy rate, as some people might say, unfortunately. But as trading volume exceeded $2.5 billion. Joining us now, Tarek Mansour, Kalshi co-founder and CEO. We should mention that CNBC has a commercial relationship with Kalshi that includes customer acquisition and minority investment. And we're friends. You've been on before, and you walked in, you were scared of me because I said, I'm not, I'm not going to shoot the messenger. I'm not going to kill you. But last week and leading up to the election, I kept saying, either this is the end of the prediction markets, or they're going to be completely right.
And you were, I mean, I don't know about polls. I don't know how much polls go into the final, you know, the way people bet or whatever it is. But everything, you were very early on this, and even your power index, which you were on, I think six months ago, showing which party is going to be in power, that was favoring Republicans. How long ago was that? Was that six months ago? And then it really... You told me to watch that, which I did. That totally flipped three months ago, big time, and then got worse and worse and worse leading into it. Andrew, the most incredible thing. Yeah, I'll tell you one more thing as I build up, Tarek, was I saw a person come on and say the first thing, Ari Fleischer, first thing that we're going to know is one county in Indiana, north of Indianapolis. I think we'll know it's, it will close at 6 p.m. and we will know right then what's happening in every single county. The 6:01 is when everything shifted, and you could tell it was going to be a blue tsunami. I knew at 6:01 it was going to be a blue tsunami. So it works. Congratulations.
I don't know where to go from here now. Now we can go to, you know, be careful what you wish for. It worked. Democrats are now going to regulate the hell out of the prediction markets.
Maybe if I can comment. I mean, you know, we were, so the markets were saying there's over 50% chance of a blue tsunami back in April, April, April, right? And, you know, this has been an interesting cycle for us because, you know, I've been engaging with people in DC, operatives, the people that are sort of the experts, like the people that have been in politics, you know, like, wow, I've been in politics for 10 years, 20 years. And the consensus was like, the markets are wrong. Like they were just looking at the markets and they were saying, how could the Democrats have such a high probability of taking the Senate? There's no way. And here's all the reasons. And there was a bit of a sentiment, well, these people on the markets, these people, they don't, they don't know. They don't, they don't know anything. How do they know there was a sentiment, right? And, you know, I, to the point where I even started doubting the markets, like, I don't know, maybe, maybe. I mean, I was like, maybe the market...
You live with the polls, you die with the polls. If the polls were wrong, you could have been wrong.
That's what I want to know about the polls. I want to know whether you think somehow the polling has gotten materially better.
I don't think it's the... you know, here's how I put it.
People have been asking me, and there were some debates on Twitter yesterday, like, do the prediction markets react to the polls? Right. And to me, for sure, there's no question about it. It's like asking, does Apple stock react to the quarterly earnings of Apple? Right. The markets are not creating information. They're weighing all the information that's out there. But what's unique about the markets is that they're weighing information from a much broader set of people. It's not like we have, okay, these are the four polls that we listened to and the four pundits that we listened to. You listen to both of those, but you listen to pretty much millions of Americans are on top of it.
But I guess the question is, the polls seem to be more accurate this time too. And so do you look and say to yourself that the pollsters have somehow figured out all of their mistakes that they made in the past? Was this a one-off? Is there a technology or an approach that you see the pollsters taking that is creating better information that might be therefore creating some better feedback loops for people who are therefore trading, which of course then creates its own feedback loop?
I mean, that is an incredible point and one that I've made a lot. I think what's happening is like, you know, okay, we have a stock market. What the stock market does is it brings an incredible amount of rigor to figuring out what's going to happen to the price of Apple or the price of Tesla. Why? We have the quants, we have Wall Street, we have the analysts, we have people. Now, you have such a big incentive to go out and do research on the topic. And then, you know, you can make money off of that research if you're right. That's the same thing that's happening in politics, right? You're bringing an incredible amount of rigor, like financial markets level rigor, to the process. So before that, like, okay, if you do a poll and you write, some people pat you on the back and you know, that's that. But now if you do research on the topic, you can actually make money. You can actually make millions of dollars like some of our customers. And if you're right, there's an incentive to go out and do all that. So I think what's happening is you're going to have an ecosystem build out where the availability of data, the quality of that data, the polls, you know, how people think, the analysts about the political process and the markets are all going to be sort of the self-fulfilling flywheel that is going to make us smarter about this process, which is a good thing. That's exactly what we want.
The other thing I kept coming back to was, you know, when you can spend a half a billion in Texas, if you have money like that, I saw so many ads that they weren't working at all anywhere. And I was like, why would you spend money on ads when you can throw some money at Kalshi and try and make it look a lot better for a prospective candidate than it actually is? I thought that would reverse itself because no one's going to sit there if they know that it's a fake, it's a fake. They're not going to just... I guess they could. Yeah, could. How do you prevent that from happening? Or do you? Do.
I mean, in some ways it's interesting. So maybe I'll say two things: like, how do you prevent manipulation, and like, what is it actually the broader implication? Like, yes, people can try to manipulate markets, right? Onions. You know, I don't know if you've been reading, onion futures are bad because people manipulate the onion markets back in the day. And the Congress decided that the problem is onions, not people. Yeah. People are going to try to manipulate any type of market. And they do try to do it in prediction markets. You know, in the mayor race in LA, you know, people, someone basically dumped, I think close to 2 million, a million and a half, $2 million to move the price from 25% to 40%. They moved it. But guess how long that lasted? Nine seconds. So nine seconds later it went back to 25%.
People that are in the know say, this is easy money.
It's easy money. It's like you're offering, if you know Apple stock is worth $100 and somebody is offering it to you at $70, what are you going to do? You're going to buy it.
