The emergence of bad actors such as insider traders is inevitable on prediction markets, according to Tarek Mansour, the co-founder and CEO of Kalshi. But the executive isn’t worried about such behavior sullying his business. “There’s always going to be bad actors. The goal is to just squash them,” Mansour said during an onstage interview at Semafor World Economy in Washington, D.C. yesterday (April 15). He believes cases will be weeded out by Kalshi’s internal investigations and, eventually, by federal prosecutors.
Mansour, 29, co-founded Kalshi in New York in 2018 alongside Luana Lopes Lara, whom he met while studying at MIT. The duo, both from Wall Street, used their backgrounds in finance to build a regulated platform for trading “event contracts.” Users can wager on outcomes across politics, culture, and sports.
Kalshi—and its primary rival, Polymarket—shot into the mainstream during the 2024 U.S. Presidential election and have since grown rapidly. Last month, Kalshi doubled its valuation to $22 billion after raising a $1 billion round led by Coatue Management and reportedly reached an annual run rate of $1.5 billion. “We are definitely the fastest-growing company outside of A.I. in America,” said Mansour. Annual run rate is a projection of future revenue.
Rising concern over insider trading
The boom in prediction markets has also brought scrutiny. Unusual trades, including one that correctly forecast the U.S. capture of the Venezuelan President Nicolas Maduro before it was public knowledge, have fueled suspicions of insider activity. Earlier this year, Kalshi suspended a content editor affiliated with YouTuber MrBeast after he placed a series of strikingly accurate bets on the influencer.
Such users “should absolutely be banned,” said Mansour. “No one wants to participate in a system that is not intrinsically fair.”
Kalshi has opened around 200 insider trading investigations in the past year. Mansour warned that such cases could soon carry heavy consequences. “If you commit insider trading on Kalshi, that can—and will at some point—be a federal crime,” he said. “I actually do expect the DOJ to prosecute some of these cases.”
He added that insider trading is not unique to prediction markets, noting its long history in traditional financial markets. Regulatory oversight, Mansour argued, is a natural evolution: “The existence of bad actors in a system should not invalidate the system—it should validate regulation.”
How are prediction markets regulated?
Who ultimately governs prediction markets remains unsettled. Kalshi received approval from the Commodity Futures Trading Commission (CFTC) in 2020 to operate as a federally regulated exchange for event contracts—distinct from a gambling platform. Mansour said that federal oversight provides consistency compared to what he described as a “patchwork” of state laws. For example, among 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 authority over prediction markets. The administration argues these platforms function as financial markets and should therefore fall under CFTC regulation, while some states claim they’re a form of gambling subject to state law.
Arizona escalated the conflict last month by becoming the first state to file criminal charges against Kalshi, accusing the company of operating an illegal gambling operation.
