Tarek is co-founder and CEO of Kalshi, one of the 1st U.S.-based real-money prediction markets. Kalshi was founded in 2018 and raised a $30M Series A in 2021, led by Sequoia Capital.

1) How is Kalshi doing in terms of traction?

Actually, this year has been really great for growth. We’ve been growing very consistently and in a very robust way since January. We're coming in at significantly higher levels of volume, and liquidity on the exchange are the two top metrics that we track. And we're also closing the year with two little announcements that are coming up later this year that are going to contribute to even more growth. So, I think this year has been pretty phenomenal from a liquidity perspective.

2) Can you share numbers?

We're not very public about revenue or things like that right now. What I will say is that we grew approximately 30% month over month since January in terms of monthly volume.

3) We imagine you want to grow by orders of magnitude. How do you plan to involve hedge funds or proprietary trading players?

We've made quite a bit of progress in getting hedge funds and market makers, and that's one of the big announcements coming up later this year. The same goes for brokers—both retail and institutional. We're bringing them onto the exchange so they can offer events trading to their customers, alongside stocks, options, and crypto, in your typical brokerage account. That will be the main way we distribute over time because brokers have a large distribution network. Historically, exchanges focus on building products and liquidity and taking on regulatory functions, while brokers focus on acquiring customers. That's the model we're following.

4) Currently, you're handling everything [building products and acquiring customers, right?

Yes, currently we are, but over time, allowing brokers to offer our products will be the way to hit critical scale.

5) Could you explain the regulatory complexities? Do you need to get each event approved?

Sure. The difficulty is twofold. First, just getting the exchange and clearinghouse licenses is very difficult. There aren't many in the U.S., and it's a bit like acquiring a bank license. But the added complexity is with event contracts. Turning non-traditional commodities into financial assets was something the CFTC and the federal government were not keen on. It took three years to convince them to approve this model. We can list a broad range of events, as long as they're not associated with violence, terrorism, assassination, or sports. Most things we list, we can do by ourselves, but we're also constantly engaging with the regulator. This was an asset class that wasn't approved before.

6) We frequently cite Manifold Markets. They list a much wider range of events. Why don't you take that approach?

The reason is two-fold. One, we have more regulatory restrictions—we don't do war, terrorism, assassination, violence. These are events Manifold might do, but we avoid. Second, it's different when people have real money on the line. Forecasting what will happen in 15 years, for AI, for instance, might work with play money, but real dollars? That's less clear.

7) Can users earn interest on money left in margin, or is that a problem?

One of the big things we're working on now is unlocking interest on margin. Once that's in place, I think there'll be more interest in some of the longer-term stuff.

8) What about betting websites like Betfair? Do they operate outside of regulations?

Betfair is not in the U.S. I believe they have some presence in New Jersey, but they're in the realm of betting, which is different from our model. We're the only regulated one that can do real money trading today.

9) You already have some political contracts. What's permitted and what's not?

Historically, most things except specific elections have been permitted. It's just that this one is a hotly debated topic.

10) How are you planning to expand internationally?

Each country requires a separate license. It's complex. Companies like Interactive Brokers have been aggressive in international expansion, but it's a different process for us.

11) What's the plan moving forward?

Our focus is integrating more market makers and brokers, which helps us scale up and unlock more markets. It's a flywheel of getting more distribution, liquidity, and then more markets.

We recently launched a new casual trader app and it's been growing fast! It offers a simplified experience that allows anyone to trade on any topical events and engage with whatever news is trending every week. There's been a lot of coverage of the app - see Bill Ackman's tweet for example.

12) Are you planning to raise more funds?

We've raised quite a bit after our last round and aren't planning to raise more anytime soon. We're well-capitalized and focused on building the exchange and expanding the marketplace.

13) Any thoughts on conditional markets for policy impact analysis?

That's an interesting angle I hadn't considered. Conditional markets could validate or challenge policy positions. It's worth exploring further.

14) Any advice for young founders or investors in the FinTech space?