AI Summary
5 min readKalshi's Long March: Building a Regulated Prediction Market
Tarek Mansour spent nearly six years walking through a regulatory desert with no certainty it would ever end. His company Kalshi, now a regulated exchange for event contracts, survived repeated near-death experiences—including suing its own regulator as a 20-person company with no real product. The story is less about prediction markets themselves and more about what it takes to build something that the existing system was not designed to accommodate.
The Problem with Traditional Markets
Mansour's insight came from his time at Goldman Sachs and Citadel, where he noticed a fundamental mismatch in how Wall Street trades on events. In 2016, traders wanted to hedge against a Trump victory. The standard trade was to short the S&P 500—if Trump wins, markets go down, right? Trump won, and the S&P had one of its biggest rallies in history. Traders were right about the prediction and lost money.
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What you'll learn
- 1 (00:00) **Origin Story: From Lebanon to Wall Street** - Tarek describes how growing up in volatile Lebanon led him to math as a refuge, then to MIT, and eventually to Goldman Sachs and Citadel.
- 2 (05:05) **The Unlikely Start: A Hackathon and Y Combinator** - Tarek shares the story of ditching a Citadel job offer after a hackathon prototype won a prize, leading to the company's acceptance into Y Combinator.
- 3 (08:25) **The Regulatory Desert: Two Years of Nothing** - The early years were defined by an all-consuming, non-linear battle for regulatory approval, with zero progress until the final moment.
- 4 (11:15) **False Summit and the First Launch** - Approval finally came in November 2020, but a new administration immediately paused it, forcing the company to launch with a tiny set of economic markets that had zero product-market fit.
- 5 (13:18) **The Second Regulatory Battle and Layoffs** - A year-long campaign to get the midterm election markets approved in 2022 failed, leading to a devastating round of layoffs and a crisis of confidence.
- 6 (15:07) **The Crucible: Suing the Regulator** - After the regulator blocked the election market again in 2023, the 20-person company made the "anti-pattern" decision to sue its own regulator.
- 7 (17:08) **The Legal Win: Redefining Gambling vs. Financial Markets** - The lawsuit victory redefined what constitutes a financial market, drawing a historical parallel to the 1905 Supreme Court case that legitimized grain futures.
+ Full timestamped outline available in the app
Show Notes
Tarek Mansour is the co-founder and CEO of Kalshi.
Kalshi is a regulated prediction market exchange valued at $22B in 2026 where people trade on the outcomes of real-world events – things like inflation prints, Fed decisions, elections, or weather events. Instead of betting against a house, users trade against each other in a market, and prices reflect the collective probability of an outcome happening.
Before starting Kalshi, Tarek worked as a quantitative trader at Goldman Sachs as a structured credit and equities analyst and at Citadel as a global macro trader. During his time at these firms, he realized a common thread: a lot of trading stemmed from an opinion on a future event.
We covered the idea behind prediction markets and how they offer a more direct way to trade on beliefs about the future. The conversation follows the long, difficult path to building a regulated exchange in the U.S., from early skepticism to ultimately winning a landmark legal battle. We also discuss how these markets can improve forecasting, enable new forms of hedging, and change how information gets priced.
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Timestamps:
(0:00) Intro
(0:23) Kalshi’s genesis
(5:05) Regulation-focused from inception
(11:06) Suing the government
(18:02) Gambling vs. financial markets
(20:58) Defining insider trading
(25:38) Incentive structure of the system
(32:40) Investing vs. trading
(35:31) Hedging use cases
(41:38) Scaling a lean team
(44:02) Defining Kalshi’s culture
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Links:
https://x.com/jaltma
https://x.com/mansourtarek_
https://kalshi.com/
https://uncappedpod.com/
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