Kalshi’s CEO is bullish on the future of prediction market betting to solve disagreements for people, or at least make him very, very rich. What if every outcome in your life could be turned into a way to win or lose money? Imagine your very existence has been gamified into a gambling roguelike. “The long-term vision is to financialize everything and create a tradable asset out of any difference in opinion,” Tarek Mansour said at last month’s Citadel Securities conference.
What sounds like a loading screen from Cyberpunk 2077 was enough to make investors jump at the opportunity to turn angry Reddit threads into stock tickers you can gamble on. Kalshi recently raised $1 billion in its latest funding round this week, leading to an $11 billion valuation. What are investors so pumped about? Here’s the pitch Mansour gave in November on stage with co-founder Luana Lopes Lara:
[Prediction markets are] pretty much already close to a $100 billion a year asset class. It’s pretty easy to imagine it 10x from here. We haven’t even started. It’s been a year. I think a very large number of people care, much larger than traditional markets, and I think retail as a pie has just been growing in the U.S. and I think it’s going to keep growing–it’s growing in the stock market, it’s growing outside the stock market.
The long term vision is to financialize everything and create a tradable asset out of any difference of opinion. And I think if you do build a general purpose exchange that can resolve differences of opinions on anything the [total addressable market] is quite massive, quite a bit bigger than the current TAM of the stock market.
Putting aside the retail trading and the institutional trading product there’s sort of this separate product which is we are living in a world where we have an abundance of information but there’s a lot of noise and we don’t really understand what’s real from what’s not and prediction markets are an antidote to that, they do a very good job of surfacing information and distilling truth to people.
Mansour’s prediction market, i.e. opinion polls turned into casinos, was established back in 2018. Like rivals such as Polymarket, It’s pitched as a sophisticated tool for hedging risk. Picture some big world event like a war or an election. No one knows the outcome or what it might mean for their business so they trade bets to reduce the chance of losing a ton of money.
I’m not going to weigh in on whether that makes any sense because that’s not what Mansour is saying is going to make Kalshi go 10X. The real moonshot is being able to take the popularity of betting on stocks with apps like Robinhood or sports with Draft Kings, and apply it to the totality of life. Every outcome, not just one in the market or a football game, will be an opportunity for people to gamble, ahem, I mean hedge risk.
It all feels very Sam Bankman-Fried-coded. Remember that big FTX crypto debacle from the wunderkind that was also making grand pronouncements on stage at conferences just before it all went belly up? Headlines like this about Kalshi and Polymarket don’t drive confidence. Where’s the prediction market for betting against prediction markets?
If the post-covid era has taught us anything about the current state of the distraction economy, it’s that we love finding new ways to waste time and money on our phones. I don’t actually think most people want to treat break room debates or dinner table arguments like betting on horse racing. Maybe if it was more like Umamusume: Pretty Derby.
But I think Mansour does and the people prepared to give his company billions do and that’s all it takes for bad things to happen.
