The emergence of bad actors such as insiders is inevitable in the prediction markets, according to Tarek Mansour, founder and CEO of Kalshi. But the executive is not worried about such behavior polluting his business. “There will always be bad actors. The goal is to beat them,” Mansour said during an interview at Semafor World Economy in Washington, DC yesterday (April 15). He believes the charges will be dropped by Kalshi’s internal investigation and, eventually, federal prosecutors.
Mansour, 29, founded Kalshi in New York in 2018 alongside Luana Lopes Lara, whom he met while studying at MIT. The two, from Wall Street, used their backgrounds in finance to create a regulated platform for trading “event contracts.” Users can bet on results across politics, culture, and sports.
Kalshi – and its main rival, Polymarket – were shot in the arm during the 2024 US Presidential election and have grown rapidly. Last month, Kalshi doubled its net worth to $22 billion after raising a $1 billion round led by Coatue Management and has reportedly reached an annualized valuation of $1.5 billion. “We’re definitely the fastest growing company outside of AI in America,” Mansour said. The annual operating rate is a projection of future revenue.
Growing concern about insider trading
The growth of prediction markets has also brought scrutiny. The unusual trading, including correctly predicting the US capture of Venezuelan President Nicolas Maduro before it became public knowledge, has fueled suspicions of insider dealing. Earlier this year, Kalshi stopped a content editor working with YouTuber MrBeast after placing a series of surprisingly accurate bets on the promoter.
Such users “should be completely banned,” Mansour said. “No one wants to participate in an unfair system.”
Kalshi opened nearly 200 internal investigations last year. Mansour warned that such cases could soon have serious consequences. “If you’re doing insider trading in Kalshi, that can be — and will be — a specific offense,” he said. “I actually expect the DOJ to prosecute some of these cases.”
He added that insider trading is not unique to the prediction markets, noting its long history in traditional financial markets. Regulatory oversight, Mansour argued, is evolutionary: “The presence of bad actors in the system should not legitimize the system—it should ensure regulation.”
How are prediction markets regulated?
Who ultimately controls the prediction markets remains unsettled. Kalshi received approval from the Commodity Futures Trading Commission (CFTC) in 2020 to operate as a state-regulated exchange dealing in event contracts—different from the gambling scene. Mansour said federal oversight provides consistency compared to what he described as a “patchwork” of state laws. For example, among the more than 30 states that allow sports betting, only one prohibits advertising to problem gamblers, he noted.
The issue has drawn attention from the Trump administration, which recently filed lawsuits against Illinois, Connecticut and Arizona seeking to establish federal jurisdiction over prediction markets. Regulators say these platforms operate as financial markets and should fall under CFTC regulation, while some states say they are a form of gambling under state law.
Arizona escalated the controversy last month by becoming the first state to file criminal charges against Kalshi, accusing the company of running an illegal gambling operation.
