Tarek Mansour on Kalshi's Plan to Create Markets in Everything

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:18)

Hello, Odd Lots listeners and viewers. You're about to get a conversation with Tarek Mansour, CEO of Kalshi. This was recorded live on stage at Chicago's Untitled Supper Club. We had a blast and we hope you enjoyed the show. You're definitely having a moment. The South Park episode last night was all about prediction markets.

Tracy Alloway (0:37)

Did you watch it live?

Tarek Mansour (0:38)

I try to avoid watching or reading anything about us without kind of getting the third party reaction before.

So we didn't know because we saw the thing, like the announcement a few days ago that they're doing an episode of prediction markets. And we started kind of imagining all the types of things they're going to do. It was crazy. I mean, the highlight I think is like they copied the app. Like exactly. That was, I mean, they even had the referral button. They even had some of the bugs we have in the app. It was unbelievable. So, but you know, it was, it was pretty cool. I mean, there's a few parts that I disagree with, but the other, for the rest, I mean, we enjoyed it. Yeah, I watched it this morning.

Joe Weisenthal (1:14)

Why do you think prediction markets are having this moment now? After they've been around for decades, literally, why now?

Tarek Mansour (1:22)

Yeah, I mean, I think there's like path dependence to these things, right? Like, it's not sort of like, I'm a strong believer that sort of like, you know, in history, you have to have a few agents that sort of like push and, you know, push the boundary of certain things and somebody's got to do it type thing. But my view on this, and this is why we started the company is the fundamentals are there. Like, this should be a very large market. And we could talk a little bit about the history, but when we first started the company, this idea of sort of like a financial market that prices questions about the future, sort of, we were very drawn to it because, you know, one, if you could build such a financial market, it could be the largest of them all, because the largest number of people will care. And the number two is could be the most important because, you know, yes, pricing the share of Tesla is important, but pricing, whether Brexit is going to happen or Trump is going to win an election or what's, you know, sort of the next national disaster is going to be, I think that's at least as important, if not more. At least from my perspective, I mean, when I looked at the history, and you were chatting a little about the history, like the elephant in the room was regulatory. It was, I mean, there's a very simple kind of like first order factor here. Well, it was illegal. Like, you know, that's pretty good reason. Yeah, I mean, it's a pretty good reason for something not to, you know, generally kind of go mainstream and exist. And the legality has been sort of the thing that has weighed on all prior prediction markets. I don't know if you ever encountered Intrade.

Joe Weisenthal (2:40)

Yeah, I traded on there.

Tarek Mansour (2:42)

Well, you know, so here you go, right? I mean, Intrade was, you know how that story kind of ended? How familiar are you?

Joe Weisenthal (2:50)

I don't know how it ended.

Tarek Mansour (2:51)

So John Delaney was this was the sort of founder of Intrade and he's kind of visionary. I mean, like Don in many ways, I mean, he really believed in that. He was on CNBC back in 2000, sort of like talking about the forecast for the election and stuff. But he sort of ran offshore from Dublin. And it was kind of like a VPN type set up. And then the company got shut down in 2012 by the government and two weeks later, John Delaney died and he died climbing Mount Everest. And there was a kind of whole controversy of like what happened. I mean, is there some sort of causation there? But for us, when we got really obsessed by doing this and realized like, actually, the only way for this to go big is you got to legalize it. Like there was no other way. And no matter how big the company would get, no matter how much culture there was going to be around the company, it didn't really matter because the government could shut it down and they will after a certain level of scale. And so this was sort of like we spent three years and a half when we started after starting Kalshi. Like all we did was basically regulatory work. It was like, how do we fight? Exactly. The fight was actually like more like five years and a half, like three years and a half to get to legalize prediction markets. And there was sort of the whole thing with the prior administration around the election market, which we were completely uncompromising on. We had to do that. And that was kind of a whole two year long process that ended without suing the government, our own regulator. And then I think that lawsuit, I view it as sort of the probably what the turning point is for these markets. Like this is when we want that the institution, like this is when everything changed.