Founding
and Inspiration (2018)
Kalshi was founded in 2018 by Tarek Mansour and Luana Lopes Lara, who met while studying
at the Massachusetts Institute of Technology (MIT). During their early careers at
financial institutions like Goldman Sachs, Citadel, and Bridgewater, Tarek and Luana
observed that many financial decisions were driven by predictions about future events.
However, they noticed a gap in the market: there was no straightforward way for people
to trade directly on event outcomes.
Existing financial products typically relied on complex structures to approximate event
exposure, which were often cumbersome and costly. Recognizing this inefficiency, Tarek
and Luana were inspired to create a simpler, more direct exchange where people could
trade on the outcome of specific events.
Joining
Y Combinator and Early Development (2019)
In 2019, Kalshi was accepted into Y Combinator’s
Winter batch, where the team further developed the platform. Later that year, they
launched a Beta version of Kalshi, inviting early users to participate and provide
feedback. This phase was crucial in refining the platform in preparation for formal regulatory approval.
A
Milestone in Regulation (2020)
Achieving regulatory approval was a core goal for Kalshi from the outset. In 2020, Kalshi
made history by becoming the first fully regulated financial exchange in the U.S.
specifically for event contracts, officially designated as a Designated
Contract Market (DCM) by the Commodity Futures Trading Commission (CFTC). This approval
placed Kalshi alongside established exchanges like the Chicago Mercantile Exchange (CME) and
Intercontinental Exchange (ICE), cementing its position as a pioneer in event trading and
offering a secure, compliant
platform for both retail and institutional participants.
Growth
and Investment (2021-2023)
Kalshi’s innovative approach attracted significant investment from leading entities. The
company secured funding from prominent backers, including Sequoia
Capital, SV Angel,
and notable figures such as Charles “Chuck” Schwab and Henry Kravis.
This financial support enabled Kalshi to expand its offerings and enhance its platform
to serve a growing community of traders. During this period, Kalshi gained extensive
media coverage from major outlets such as The Wall Street Journal, CNBC, and The Boston Globe.
2024
In 2024, Kalshi achieved a historic milestone by becoming the first fully regulated
platform in over a century to offer legal election trading in the United States. This
development followed a federal appeals court ruling that upheld Kalshi's right to list
contracts on political outcomes, including congressional control and presidential
elections. The court determined that the Commodity Futures Trading Commission (CFTC) had
not provided sufficient evidence that such contracts would harm public interest or the
agency. Consequently, Kalshi's election markets operate in strict compliance with U.S. laws and regulatory standards, offering a legal avenue for
Americans to trade on election outcomes.
The approval process involved extensive regulatory review and legal deliberations. Kalshi
initially sought permission from the CFTC to offer election-based event contracts. The
CFTC expressed concerns about potential manipulation and impacts on election integrity,
leading to a denial of Kalshi's proposal. In response, Kalshi filed a lawsuit challenging the CFTC's decision. The
federal court ruled in favor of Kalshi, stating that the CFTC had exceeded its statutory
authority and had not provided sufficient evidence to justify the ban. Following the court's decision, Kalshi launched its election markets,
allowing users to trade on various political outcomes, including the presidential race and control of
Congress.
With its commitment to regulatory compliance and innovation, Kalshi is the leading
platform for event-based trading. Kalshi envisions a future where individuals can hedge
against everyday risks and a marketplace that provides insights into public expectations
on key societal and economic issues.
