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Tarek Mansour opens up on Kalshi¡¯s legal fight and prediction markets
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Tarek Mansour, co-founder of Kalshi, is no stranger to controversy. At a recent panel at the Bitcoin Conference, he pulled back the curtain on the bruising regulatory fight that nearly killed his startup¡ªand what it means for the future of prediction markets, where users can legally bet on everything from inflation rates and football games to geopolitical conflict.
Kalshi¡¯s journey to legalise event-based trading reached a turning point on , when the U.S. Commodity Futures Trading Commission (CFTC) dropped its legal opposition to Kalshi¡¯s election markets.
This is the story of how a former Goldman Sachs trader helped build a legal, regulated marketplace for betting on reality.
From Goldman Sachs to prediction markets
Mansour¡¯s inspiration for Kalshi came from his experience on Wall Street. ¡°When I was at Goldman, people wanted to get exposure to things like Trump winning the election,¡± he said. ¡°We¡¯d build these complicated bundles¡ªstocks, options, derivatives. But they were all proxies. People would bet right on the outcome, but still lose money because the proxy didn¡¯t behave as expected.¡±
These structured financial products were also only accessible to wealthy clients. ¡°It felt very unusual to me,¡± Mansour continued. ¡°Brexit, elections¡ªthese things don¡¯t just impact the rich. They affect everyone. So we asked, what if we just build a financial market where people can trade the actual thing they care about?¡±
That question laid the groundwork for Kalshi: a federally regulated exchange where users can trade on real-world events, from elections, to inflation, to weather patterns. ¡°We spent three and a half years creating the regulatory framework for this thing to exist,¡± he explained.
Taking on the CFTC
Kalshi¡¯s journey, however, was far from smooth. The exchange received initial regulatory approval, but when the company proposed markets on U.S. election outcomes, the CFTC blocked them, citing fears of manipulation and threats to democratic integrity. Kalshi responded with an audacious move: they sued their own regulator.
¡°At the time, suing your regulator wasn¡¯t in vogue,¡± said Mansour. ¡°Now it¡¯s fun, everyone¡¯s doing it. But back then, it was dangerous. It was death by a thousand paper cuts¡ªthey attacked us personally, attacked the company.¡±
Why take such a risk? ¡°One, we believed these products should exist,¡± he said. ¡°Polls have been failing us. We don¡¯t know who to listen to. If you go to CNN and Fox, you get two different stories. But a market? It gives people a financial incentive to seek the truth.¡±
The court ultimately sided with Kalshi, setting a precedent that could reshape how Americans engage with political forecasting.
A global morality debate
Despite its regulatory victory, Kalshi¡ªalongside decentralised rivals like Polymarket¡ªhas faced mounting backlash, both ethical and legal.
In Europe, several countries have banned prediction markets altogether, fearing their impact on public discourse and democratic institutions. Even in the U.S., critics have raised concerns about prediction markets that let users wager on highly sensitive issues. Polymarket, for example, allows people to bet on military conflicts as casually as they would on a football game, effectively turning war into profit.
A new kind of data ecosystem
Prediction markets, Mansour argued, are not here to replace traditional forecasting tools but to complement them. ¡°It¡¯s like saying stock markets mean analysts should disappear. No, they still matter. But markets learn from analysts, and analysts learn from markets. The same applies to polls.¡±
Kalshi¡¯s internal data supports this claim. ¡°When Don Jr. announced he was joining the company as an advisor, he said his family was watching Kalshi on election night. He said we were more accurate than the polls.¡±
One of the platform¡¯s most successful markets? ¡°What will Trump say in a given speech,¡± said Mansour. ¡°Tens of millions of dollars traded on that. I could never have predicted that would be popular.¡±
Other seemingly niche markets, like daily weather bets, have also found surprising traction. Meanwhile, more traditional economic contracts¡ªlike forecasts on interest rate hikes¡ªremain less popular, even though Kalshi¡¯s pricing has proven more accurate than conventional instruments like interest rate swaps, according to its founder.
The liquidity challenge
Bringing institutional liquidity to a brand-new market isn¡¯t easy. ¡°Regulatory clarity is key,¡± Mansour said. ¡°Institutional players need strong assurances. Adoption takes time.¡±
Without that clarity, he added, ¡°you can¡¯t recruit talent, you can¡¯t fundraise, and you certainly can¡¯t invest or allocate resources to make this thing happen.¡±
Mansour believes prediction markets are now entering a new phase: ¡°Now that they¡¯re legal and regulated, we can actually build. The infrastructure is in place. The next step is discovering what people really want to bet on.¡±
