This is an excerpt of Sources by Alex Heatha newsletter about AI and the tech industry, syndicated just for The Verge subscribers once a week.
At 8PM on election night in New York City, I arrived at an unmarked office building in the Meatpacking District.
Inside, a few dozen young Kalshi employees moved between clusters of desks, pizza boxes, and a large projector displaying live markets for the day’s key races. The vibe was quiet but focused. On the screen, numbers flickered as bets adjusted in real time.
Near the projector, co-founders Tarek Mansour and Luana Lopes Lara chatted with a CBS News crew filming a segment for the next morning. CBS had just called the Virginia governor’s race. Mansour pointed out that Kalshi’s market had predicted the result almost an hour earlier.
“We’re doing a billion dollars in transaction volume a week now.”
I expected a trading floor atmosphere. Instead, the office felt subdued. “I think it’s quieter than usual because there’s less volatility on this one,” Mansour told me later from a small conference room. The New York mayor’s race had long been priced as a landslide. Zohran Mamdani had held a roughly 95 percent chance of winning on Kalshi (and its rival Polymarket) even before polls closed. Still, about $100 million in trades on the New York race went through Kalshi that day.
In recent months, I’ve been tracking the rise of prediction markets and particularly Kalshi. Despite being federally licensed and much larger than Polymarket, it’s the latter that dominates the conversation in tech circles. Mansour wants to change that.
“Kalshi is arguably one of — maybe the — fastest-growing companies in America this year,” he told me. “We’re doing a billion dollars in transaction volume a week now.” Last year, the company saw just $300 million for the entire year. Mansour declined to share revenue figures, but even at a 1–2 percent fee per trade, the math suggests that business is booming.
Three factors have fueled that growth this year: securing a federal license to operate, expanding into sports betting, and striking a partnership with Robinhood to power prediction markets. While sports have been a major draw, Mansour’s ambitions go far beyond that.
“I think prediction markets are the next generation of the stock market,” he said. “They have media consequences. Everyone is an expert on something — everyone has opinions. These markets give those opinions a price.”
Kalshi called the New Jersey governor’s race 32 minutes before any news outlet
He hinted at new partnerships with media outlets and even entertainment event tie-ins. “We’re doing a lot with news networks in the coming months,” he said. “If the truth that comes out of these markets becomes mainstream, we’ve basically achieved our mission.”
Given how new prediction markets are, Kalshi and Polymarket still need to prove that they can remain reliable sources for predicting elections. Fox News took a reputational hit for accidentally calling Arizona for Joe Biden too early in 2020. Meanwhile, Kalshi and Polymarket brag about calling races even before results are in. If one of them gets a key race wrong, it could call into question the legitimacy of prediction markets.
With less than an hour left before polls closed, Mansour showed me Kalshi data from the New York mayoral race. Voters in the city were buying Andrew Cuomo contracts more heavily, but Mamdani dominated elsewhere. He was winning among women and younger traders; Cuomo’s support skewed older and male.
As we spoke, Kalshi called the New Jersey governor’s race at 8:20PM — 32 minutes before any news outlet. Mansour compared Kalshi’s role to that of financial markets: “Should the stock market replace bank analysts? No. Analysts provide input, and the market finds the real price. We’re doing the same thing for events.”
I asked whether people constantly text him for predictions, especially on an election night. He laughed. “Yeah. But I tell them: just look at the market. I don’t have any extra information.”
As 9PM neared, I assumed he’d stay in the office as polls closed. But as I stepped into my Uber, I saw him dart out and get into another car down the street.
He didn’t need to wait. Kalshi called the New York race for Mamdani one minute after polls closed and 36 minutes before any media outlet.
How do Kalshi’s political event contracts differ from traditional election polls or media predictions?
Inside Kalshi HQ: A Night of Anticipation and Action During the Election
The Core of Political Event Contracts
Kalshi, a regulated futures market, offers a unique vantage point during elections. Unlike traditional polling or media coverage, Kalshi allows users to trade on the outcomes of events – specifically, political event contracts. on election night, the headquarters in New York City becomes a hub of focused energy, a blend of traders, risk managers, and compliance professionals all monitoring the unfolding results. This isn’t about predicting who will win, but about the market accurately reflecting the probability of various outcomes as details becomes available. Understanding political futures, election trading, and Kalshi markets is key to grasping the atmosphere.
Real-Time Data Streams & Market Monitoring
The core of Kalshi’s election night operation revolves around a constant influx of data. Multiple data feeds from reputable sources – Associated Press, Reuters, major news networks – are integrated into their platform.
* Data Visualization: Large screens display real-time election results, contract prices, trading volume, and open interest. These visualizations aren’t just for show; they’re critical for risk management.
* Automated Systems: Refined algorithms monitor for anomalies and potential market manipulation.Kalshi’s systems are designed to halt trading in contracts if necessary, ensuring fair and orderly markets. This is a crucial aspect of regulatory compliance in the futures exchange space.
* Human Oversight: While automation is vital, experienced risk managers are constantly reviewing the data and algorithms, ready to intervene if needed. they focus on identifying and addressing any unusual trading patterns or discrepancies.
The Role of Market Makers & Liquidity Providers
A healthy market requires liquidity. Kalshi relies on market makers and liquidity providers to ensure that buyers and sellers can always find counterparties. These entities continuously quote bid and ask prices, narrowing the spread and facilitating trading.
* Incentive Programs: Kalshi incentivizes market makers to provide liquidity, especially during periods of high volatility like election night.
* Competitive Bidding: market makers compete with each other to offer the best prices, benefiting all traders.
* Order Book Dynamics: The team closely monitors the order book for each contract, analyzing depth and volume to assess market sentiment.
Risk Management Protocols in Action
Election nights are inherently volatile. Unexpected results or close races can lead to rapid price swings. Kalshi’s risk management team is prepared for this.
- Margin Requirements: Kalshi uses a margin system, requiring traders to deposit collateral to cover potential losses. Margin requirements may be increased during periods of high volatility.
- Circuit Breakers: Similar to traditional stock exchanges,Kalshi has circuit breakers in place to temporarily halt trading if prices move too quickly.
- Position Limits: Limits are set on the size of positions traders can hold in any given contract, preventing any single entity from unduly influencing the market.
- Real-time Monitoring: The risk team actively monitors positions and trading activity,looking for signs of excessive risk-taking or potential manipulation.
Interaction & collaboration – A Unified Front
Effective communication is paramount.Throughout the night,the Kalshi team maintains constant communication across departments.
* Dedicated Communication Channels: Slack channels and dedicated phone lines are used for rapid information sharing.
* Cross-Departmental Collaboration: Risk managers, compliance officers, and engineers work together to address any issues that arise.
* External Communication: Kalshi’s communications team monitors social media and news coverage, responding to inquiries and addressing any concerns.
The Impact of Real-World Events on Contract Prices
The beauty of Kalshi’s system is its responsiveness to real-world events. As results come in, contract prices adjust accordingly.
* early Returns: Initial results from early-reporting states can provide clues about the overall trajectory of the election.
* Swing States: The focus shifts to key swing states as the night progresses. Close races in these states can lead to notable price fluctuations.
* Unexpected Outcomes: Unexpected results – such as a major upset – can cause dramatic shifts in contract prices. This demonstrates the market’s ability to quickly incorporate new information.
Regulatory Oversight & compliance Procedures
Kalshi operates under the regulatory oversight of the commodity Futures Trading Commission (CFTC). Maintaining compliance is a top priority.
* Reporting Requirements: Kalshi is required to report trading data to the CFTC.
* Surveillance Systems: The CFTC monitors Kalshi’s markets for potential violations of the Commodity Exchange Act.
* Compliance Training: Kalshi employees undergo regular compliance training to ensure they understand their obligations. This is vital for maintaining the integrity of the regulated futures market.
Benefits of Trading Political events on Kalshi
* Real-time Price Finding: Gain insights into market sentiment as events unfold.
* Hedge Political Risk: Mitigate potential losses from unexpected election outcomes.
* Diversification: Add a unique asset class to your investment portfolio.
* Transparency: Kalshi’s platform provides transparent pricing and trading data.
Practical Tips for Election Trading
* Do Your Research: Understand the candidates, the issues, and the polling data.
* Manage Your Risk: Use
