Kalshi (Prediction Market)

Quick Assessment

Key Links

Overview

Kalshi is the first federally regulated prediction market exchange in the United States, allowing users to trade binary yes/no contracts on real-world event outcomes.¹ Founded in 2018 by MIT graduates Tarek Mansour (CEO) and Luana Lopes Lara (COO), Kalshi operates as a peer-to-peer marketplace using a central limit order book (CLOB), in which users trade against each other rather than against the house.²

The platform's stated mission is to enable users to capitalize on their opinions, hedge personal risks, and trade on events across categories including inflation, Federal Reserve decisions, unemployment, elections, sports outcomes, climate events, and cultural trends.³ Kalshi positions itself as a neutral platform that generates predictive data without staking on outcomes.⁴

After obtaining CFTC approval in November 2020, Kalshi officially launched trading in July 2021.⁵ The platform expanded rapidly in 2024–2025, particularly after a federal court ruling in September 2024 that allowed it to offer election contracts, overcoming CFTC objections.⁶ By late 2025, Kalshi had reached an $11 billion valuation following a $1 billion Series E funding round, with trading volumes exceeding $1 billion weekly and users across 140+ countries.⁷

History and Development

Founding Story

Tarek Mansour and Luana Lopes Lara met as international undergraduate students at MIT, where they studied computer science, mathematics, and electrical engineering.⁸ Their shared interest in financial markets history led them to collaborate on classes, papers, and projects. Both shared internship experiences at several firms: Mansour held internships at Goldman Sachs, Palantir, Five Rings Capital, and Citadel while at MIT, and Lopes Lara interned at Bridgewater Associates, Citadel Securities, and Five Rings Capital.⁹ A shared summer 2018 internship at Five Rings Capital in New York City is cited as the key period that cemented the partnership and the genesis of the Kalshi concept.¹⁰

Lopes Lara earned a Bachelor's degree in Computer Science and Mathematics from MIT in 2018, followed by a Master of Engineering (MEng) in Computer Science from MIT in 2019.¹¹ She conducted research at the MIT Computational Cognitive Science Laboratory under Dr. Max Kleiman-Weiner and Prof. Josh Tenenbaum, and at the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL).¹² Mansour completed a BSc in Electrical Engineering, Computer Science, and Mathematics in 2018, after which he worked full-time as a quantitative trader at Citadel's global macro desk.¹³ He left after approximately five months to co-found Kalshi.¹⁴

The founders were motivated by gaps they identified in financial markets for hedging event outcomes such as elections or policy decisions, particularly after observing market shocks following events like Brexit.¹⁵ Kalshi's early years were largely devoted to regulatory compliance, requiring the team to build exchange, broker, and surveillance systems before acquiring any users.¹⁶

Key Milestones

• 2018: Company founded (initially under the name "Kownig"); Mansour leaves Citadel after approximately five months to co-found¹⁷
• 2019: Joined Y Combinator Winter batch; began multi-year regulatory engagement with CFTC¹⁸
• November 2020: CFTC approves Kalshi as first designated contract market (DCM) for event contracts¹⁹
• July 2021: Official platform launch enabling trades on economic events²⁰
• August 2022: CFTC begins examining political event contracts proposal²¹
• September 2023: CFTC rejects political contracts, citing gambling risks²²
• November 2023: Kalshi sues CFTC for regulatory overreach²³
• September 2024: Federal court rules in Kalshi's favor, allowing election contracts to resume²⁴
• November 2024: Robinhood launches prediction hub on Kalshi infrastructure²⁵
• October 22, 2025: NHL announces multiyear official prediction market partnership with Kalshi and Polymarket — the first such partnership between a major U.S. professional sports league and prediction market companies²⁶
• 2025: Sports betting launch generates over $1 billion traded in first five months²⁷
• December 23, 2025: Chicago Blackhawks partnership announced, marking the first brand partnership between a North American sports team and a prediction market platform²⁸

Funding and Growth

Kalshi has raised over $1.5 billion across multiple funding rounds:²⁹

• March 2020: $6.1 million seed round³⁰
• February 2021: $30 million Series A at approximately $120 million valuation, led by Sequoia Capital, with participation from Charles Schwab, Henry Kravis, and SV Angel³¹
• June 2025: $185 million Series C at $2 billion valuation, led by Paradigm, with participation from Sequoia, Multicoin, Neo, BOND Capital, and others³²
• October 2025: $300 million Series D at $5 billion valuation, led by Sequoia Capital and Andreessen Horowitz³³
• December 2025: $1 billion Series E at $11 billion valuation, led by Paradigm with participation from Sequoia, Andreessen Horowitz, Meritech Capital, IVP, ARK Invest, Anthos Capital, CapitalG, and Y Combinator³⁴

Note: Earlier wiki sources referenced a "Series B" in 2022 and a separate smaller round in June 2025, but available funding databases and press releases do not confirm a publicly announced Series B round. The $30 million figure associated with some Series B references appears to correspond to the February 2021 Series A.³⁵

Platform Operations

How Event Contracts Work

Kalshi offers binary yes/no contracts on verifiable real-world events.³⁶ Contract prices reflect market-determined probabilities: a "Yes" contract trading at $0.30 represents a 30% implied probability, and pays out $1 if the event occurs.³⁷ Users can take either side of any contract, enabling both speculation on beliefs and hedging against risks.

The platform operates using a central limit order book (CLOB) where users place limit and market orders. Unlike traditional prediction marketsApproachPrediction Markets (AI Forecasting)Prediction markets achieve Brier scores of 0.16-0.24 (15-25% better than polls) by aggregating dispersed information through financial incentives, with platforms handling \$1-3B annually. For AI sa...Quality: 56/100 or sportsbooks, Kalshi does not take positions against users but facilitates peer-to-peer trading.³⁸

Market Makers and Liquidity Provision

A distinct class of participants — market makers — plays a central role in maintaining liquidity on Kalshi's order book. Market makers continuously post resting buy and sell orders across contracts, narrowing bid-ask spreads and enabling other traders to execute immediately at fair prices. Without market maker participation, the CLOB model would produce wide spreads and low fill rates, particularly in less actively traded markets.

Kalshi's member agreement formalizes market maker relationships through separate agreements that provide financial compensation, which can include fee discounts, fee rebates, and revenue share from fees.³⁹ Market makers may also receive access to specialized risk management tools, such as order protections that automatically cancel orders if certain conditions are triggered — tools not available to regular members.⁴⁰ Because of these financial incentives, market makers may price their quotes in ways that differ materially from other members who are not eligible for such benefits, and this differential is disclosed in Kalshi's member agreement.⁴¹

Kalshi separately runs a Liquidity Incentive Program open to most regular U.S. members, which rewards participants for placing resting orders that improve market liquidity. This program explicitly excludes market makers with existing formal agreements, Kalshi employees, and Introducing Brokers or FCMs — confirming that formal market maker arrangements and the retail incentive program operate as distinct tracks.⁴² A Volume Incentive Program provides cashback rewards based on trading activity and similarly excludes formal market makers.⁴³

Fee Structure and Revenue Model

Kalshi generates revenue through transaction fees charged on the expected earnings of contracts.⁴⁴ The platform uses a maker-taker fee structure. Contrary to some descriptions, both makers and takers pay fees, but at different rates: taker fees are four times higher than maker fees, creating a strong incentive to post resting orders rather than accept existing ones.⁴⁵

The fee formula is based on contract probability rather than discrete tiers. For taker orders, the fee is calculated as: fee = round_up(0.07 × C × P × (1−P)), where C is the number of contracts and P is the price in dollars.⁴⁶ This produces a parabolic fee curve:

• The fee peaks at contracts priced near $0.50 (50% probability), where the maximum taker fee is approximately 1.75 cents per contract
• The fee approaches zero as contract prices approach $0.01 or $0.99, preventing prohibitively expensive trading at extremes
• The effective fee rate ranges from approximately 0.07% to 7% depending on contract probability

Maker orders follow the same formula but with a multiplier of 0.0175 instead of 0.07, producing fees approximately one-quarter the rate of taker fees.⁴⁷

For certain financial index markets, including S&P 500 and Nasdaq-100 contracts, Kalshi applies a halved taker fee multiplier of 0.035 rather than the standard 0.07, reducing trading costs by approximately 50% compared to standard contracts.⁴⁸

Traditional sportsbooks typically embed a "vigorish" or "juice" into offered odds, charging an implicit fee on both sides of a market. Kalshi's explicit maker-taker structure differs in that it creates asymmetric incentives by design, and its fee level at near-50% odds is broadly comparable to or lower than standard sportsbook juice, though the comparison is not direct because of structural differences between the platforms.⁴⁹

The company also has potential for data monetization, with real-time prediction market data valued by some institutional clients for forecasting applications.⁵⁰

Market Categories and Scale

As of late 2025, Kalshi offers contracts across multiple categories:⁵¹

• Politics: Election outcomes, legislative actions, policy decisions
• Sports: NFL, NBA, MLB, NHL, college sports, including prop bets and parlays ("combos")
• Economics: Inflation rates, Federal Reserve decisions, unemployment figures, GDP growth
• Climate: Temperature records, extreme weather events, climate policy
• Finance & Crypto: Market indices, cryptocurrency prices, financial regulations
• Culture: Entertainment awards, pop culture events, Time Person of the Year
• Technology & Science: Research breakthroughs, product launches, AI developments

Sports betting emerged as the dominant category in 2024–2025, accounting for approximately 90% of trading volume by December 2025.⁵²

Strategic Partnerships

Kalshi has developed partnerships across sports, data, finance, and media sectors:

Sports Partnerships

NHL Agreement: On October 22, 2025, the NHL announced multiyear official prediction market partnerships with both Kalshi and PolymarketOrganizationPolymarketThis is a comprehensive overview of Polymarket as a prediction market platform, covering its history, mechanics, and accuracy, but has minimal relevance to AI safety beyond brief mentions in the EA...Quality: 33/100, making it the first major U.S. professional sports league to partner with prediction market companies.⁵³ The agreement provides Kalshi and Polymarket access to official NHL proprietary data and rights to use NHL marks, logos, and official designations on their platforms.⁵⁴ Brand exposure includes Digitally Enhanced Dasherboards and virtual signage during national broadcasts, covering regular season games, the Stanley Cup Playoffs, the NHL Winter Classic, and the NHL Stadium Series.⁵⁵ The NBA, MLB, and NFL had not announced comparable partnerships at the time of the NHL announcement.⁵⁶

Chicago Blackhawks: On December 23, 2025, Kalshi announced a partnership with the Chicago Blackhawks, described as the first brand partnership between a North American sports team and a prediction market platform.⁵⁷ The agreement, beginning during the Blackhawks' Centennial season, includes IP and marks sharing for co-marketing, social media engagement, Kalshi signage at United Center, and integration into Blackhawks broadcasts in the Chicago market.⁵⁸

Data and Technology Partnerships

STATSCORE: A three-year strategic partnership provides Kalshi with premium sports data integration, enhancing sports contracts with live data and analytics for football, tennis, basketball, ice hockey, baseball, Formula 1, and American football.⁵⁹

StockX: Announced in November 2025, this partnership enables Kalshi to power event contracts using aggregated, anonymized StockX market data for high-demand sneakers, apparel, accessories, and collectibles from brands including Jordan, Nike, Supreme, and LEGO.⁶⁰

Barchart: Formally announced in November 2025, this partnership integrates Kalshi prediction market data feeds into Barchart's platform, providing access to electoral outcomes and economic indicator forecasts for Barchart's institutional and retail user base.⁶¹

Coinbase Custody: Partnership for USDC-powered event trading, providing custody services for platform assets.⁶²

Financial Platform Integrations

Robinhood Integration: Launched in November 2024, the Robinhood prediction hub built on Kalshi infrastructure reportedly accounted for over half of Kalshi's betting volume and extended access to Robinhood's retail trader base.⁶³

Additional Integrations: In late 2025, Kalshi announced integration with the TRON network, the Phantom crypto wallet, and a role as in-house prediction market for Coinbase.⁶⁴

Media Partnerships

CNN: Launched integration of Kalshi data across programming with a real-time news ticker in late 2025.⁶⁵

CNBC: Announced a 2026 partnership to incorporate real-time prediction data into editorial coverage across TV, digital, and subscription channels.⁶⁶

AI Safety Markets

Kalshi hosts a small number of markets directly related to AI safety, alignment, and existential risk. These markets allow traders to express views on AI research pauses and regulation:⁶⁷

• AI Research Pause Market (KXAI PAUSE-27): Resolves YES if xAI, Google DeepMindOrganizationGoogle DeepMindComprehensive overview of DeepMind's history, achievements (AlphaGo, AlphaFold with 200M+ protein structures), and 2023 merger with Google Brain. Documents racing dynamics with OpenAI and new Front...Quality: 37/100, AnthropicOrganizationAnthropicComprehensive reference page on Anthropic covering financials (\$380B valuation, \$19B ARR), safety research (Constitutional AI, mechanistic interpretability, model welfare), governance (LTBT struc...Quality: 74/100, or OpenAIOrganizationOpenAIComprehensive organizational profile of OpenAI documenting evolution from 2015 non-profit to Public Benefit Corporation, with detailed analysis of governance crisis, 2024-2025 ownership restructuri...Quality: 62/100 pauses AI research training/development for safety reasons before January 1, 2027. As of available data, the market assigns a 12% probability to this outcome.⁶⁸

• AI Regulation Markets: Kalshi offers contracts on whether AI regulation will become federal law, including KXAI LEGISLATION-27, which resolves YES if a bill regulating AI becomes law by January 1, 2027, verified via the Library of Congress, imposing restrictions such as compute limits, transparency requirements, or mandatory safety testing.⁶⁹

The 12% probability on the research pause market reflects aggregate trader positioning at a given point in time; market probabilities incorporate a range of factors beyond participant views on AI safety, including event base rates and trader composition.⁷⁰

Market Competition

Kalshi and PolymarketOrganizationPolymarketThis is a comprehensive overview of Polymarket as a prediction market platform, covering its history, mechanics, and accuracy, but has minimal relevance to AI safety beyond brief mentions in the EA...Quality: 33/100 have been described by analysts as a duopoly in the prediction market space, collectively generating over $44 billion in trading volume during 2025.⁷¹ Polymarket operates primarily using cryptocurrency and has faced restrictions on U.S. users; Kalshi operates with direct USD trading under federal regulatory approval.⁷²

By mid-January 2026, combined volumes for both platforms totaled nearly $4 billion, with January 17, 2026 marking a daily record of $799 million across both platforms.⁷³ Kalshi's regulatory status enables features including segregated customer funds, deposit insurance eligibility, and institutional partnerships that are not available to platforms operating outside U.S. regulatory frameworks. Users who prefer cryptocurrency-native platforms or are outside the U.S. may favor Polymarket's structure.⁷⁴

Regulatory Challenges and Legal Disputes

Despite achieving CFTC approval, Kalshi faces regulatory challenges from state gaming authorities and tribal gaming commissions who argue that event contracts — particularly sports betting markets — fall under state gambling jurisdiction rather than federal commodity futures regulation.

State Gaming Authority Challenges

The New York State Gaming Commission issued Kalshi a cease and desist letter, claiming the company offers sports betting without a state license.⁷⁵ In November 2025, U.S. District Judge Andrew Gordon dissolved a preliminary injunction that had allowed Kalshi to continue operating in Nevada, ruling that event contracts based on sporting outcomes "do not fall within the CFTC's exclusive jurisdiction" and writing that "everyone including Kalshi could see that their sports event contracts are clearly sports betting."⁷⁶ The preliminary injunction had been in place for approximately seven months prior to dissolution.⁷⁷

Following the November 2025 ruling, Kalshi stated it was "evaluating the decision and anticipate[d] making an appeal to the Ninth Circuit."⁷⁸ On January 14, 2026, a federal judge partially stayed the Nevada case to allow the Ninth Circuit to consider Kalshi's appeal while refusing to pause discovery.⁷⁹ The Ninth Circuit denied Kalshi's emergency motion for an administrative stay on February 17, 2026, after which the Nevada Gaming Control Board filed a civil enforcement action in Carson City District Court seeking an injunction to stop Kalshi from offering unlicensed sports betting in the state.⁸⁰ Kalshi's main appeal (Case No. 25-7516) remains pending at the Ninth Circuit as of early 2026, and analysts have noted the U.S. Supreme Court may ultimately need to settle tensions between federal commodities law and state gambling regulation.⁸¹

As of early 2026, approximately 20 states that offer gambling have taken legal action against Kalshi, Polymarket, and Crypto.com.⁸² The CFTC filed an amicus brief in support of Kalshi with the Ninth Circuit, though it was filed after the deadline for the stay ruling.⁸³

Tribal Gaming Opposition

Native American gaming tribes have filed legal briefs opposing Kalshi, characterizing its activities as "brazenly illegal."⁸⁴ Tribes argue that gaming "is not merely a 'commercial' endeavor, but an existential one," with gaming revenue central to tribal economic sustainability.⁸⁵

Class Action Litigation

In 2025, Kalshi faced a class action lawsuit claiming that the platform's market maker arrangements place other customers at a disadvantage, a characterization Kalshi disputes.⁸⁶ A separate New York class action lawsuit alleges illegal sports betting and deceptive practices, which Kalshi's COO Luana Lopes Lara described as "baseless."⁸⁷

Operational and Safety Concerns

Market Grading Errors

Kalshi has faced criticism for operational failures in market resolution. The platform incorrectly graded multiple NFL win totals markets, affecting numerous traders.⁸⁸ The company's response — refunding original trade amounts without paying out winnings to winning traders — drew criticism both as an operational error and as a communications failure.⁸⁹

Consumer Protection Issues

Consumer advocates and harm-reduction researchers have raised several concerns about Kalshi's platform design and practices.⁹⁰ These concerns come primarily from gambling harm advocacy perspectives and are disputed by Kalshi:

Inadequate Age Verification: Consumer reports indicate the platform has limited age verification mechanisms, which some critics argue could allow underage users to access the platform.⁹¹

Responsible Gambling Measures: Critics have characterized the platform as showing "disregard for responsible gambling," with safety resources described as difficult to find.⁹² The peer-to-peer trading format and derivatives-style contract rules may create informational asymmetries that disadvantage users unfamiliar with this type of trading.⁹³

Habit-Forming Design: Some researchers argue the platform's design may produce habit-forming patterns similar to traditional gambling applications, citing intermittent reinforcement mechanics.⁹⁴

Marketing Representations: Some consumer advocates argue that Kalshi's marketing slogans overstate the likelihood of long-term user profitability.⁹⁵

Insider Trading Concerns

Prediction markets generally have faced scrutiny following instances where traders profited significantly using confidential information.⁹⁶ A notable example involved a $30,000 bet on Venezuelan leader Nicolás Maduro's capture on Polymarket — a different platform from Kalshi — that yielded $436,760 in profits, with the account holders remaining unidentified.⁹⁷ Kalshi's CEO has stated the company prohibits insider trading; however, such violations do not currently carry criminal penalties on regulated event contract platforms, raising questions about enforcement.⁹⁸

Reception in EA and Forecasting Communities

Kalshi receives generally positive but cautious discussion in Effective Altruism (EA) Forum communities, with recognition of its legal milestones and forecasting potential, though concerns exist about attention costs, platform maturity, and limited coverage of social impact questions.⁹⁹

Positive Reception

EA Forum participants have noted that prediction markets such as Kalshi can provide forecasting accuracy advantages over traditional polling, citing examples such as CPI futures markets.¹⁰⁰ The platform's legal status following its October 2024 court victory against the CFTC is viewed by some as opening new possibilities for real-money forecasting on important questions.¹⁰¹

EA Forum members have discussed Kalshi's founding and considered launching similar platforms for impactful forecasting, though such efforts were paused after Kalshi secured CFTC approval.¹⁰²

Concerns and Limitations

Attention Externalities: EA Forum discussions note that active trading on prediction markets demands constant vigilance, which may represent a significant attention cost for participants focused on high-impact work.¹⁰³

Platform Maturity: Users have noted interface limitations and adoption challenges, with the platform not yet streamlined for organizational or corporate workflows.¹⁰⁴

Limited Scope for EA Priorities: Kalshi may not offer markets on many social impact questions relevant to EA priorities, limiting its utility for certain forecasting applications despite its legal real-money status.¹⁰⁵

Black Swan Events: Drawing on work by Nassim Taleb and Philip TetlockPersonPhilip Tetlock (Forecasting Pioneer)Philip Tetlock is a psychologist who revolutionized forecasting research by demonstrating that expert predictions often perform no better than chance, while identifying systematic methods and 'supe...Quality: 73/100, EA Forum discussions note that prediction markets can underperform on fat-tailed, low-probability events such as political discontinuities or structural changes.¹⁰⁶

Key Uncertainties

Several major uncertainties surround Kalshi's future trajectory:

1. Regulatory Resolution: Will courts ultimately side with Kalshi's position that it operates under exclusive CFTC jurisdiction, or will states successfully assert gambling law authority over event contracts? The outcome will determine which markets Kalshi can offer and in which jurisdictions.

2. Sports Market Sustainability: With sports betting accounting for approximately 90% of volume by late 2025, can Kalshi maintain growth if state lawsuits successfully restrict sports contracts? What alternative high-volume markets could fill this gap?

3. Market Manipulation and Integrity: As volumes grow, can Kalshi effectively prevent insider trading and market manipulation without criminal penalties for violators? Will new legislation or regulation address these concerns?

4. Institutional Adoption: Can Kalshi successfully expand from retail-dominated use to significant institutional usage for data and hedging, creating sustainable revenue beyond transaction fees?

5. International Expansion: With users in 140+ countries but U.S. legal challenges ongoing, should Kalshi prioritize international growth over resolving domestic regulatory issues?

6. Competition from Traditional Finance: Will established exchanges or financial institutions launch competing CFTC-regulated event contract platforms, affecting Kalshi's first-mover position?

7. Public Perception: As prediction markets become more mainstream, will they be broadly accepted as legitimate forecasting tools, or will gambling associations limit adoption and invite stricter regulation?