Kalshi eyes Brazil as part of global expansion plans

Valor: How did the idea to start Kalshi come about?

Lara: We worked in finance for three years. I was at Bridgewater and Citadel; Tarek [Mansour, Kalshi’s co-founder] was at Goldman Sachs and Citadel. We realized that everything traded in financial markets reflects expectations about future events. If someone believed Brexit would happen, they’d short the pound or buy European stocks, building a portfolio based on that. But it was all an indirect way of expressing a view on an event.

Valor: Isn’t that how markets are supposed to work?

Lara: If you expect something to move, you position for it. But that’s not efficient. If a war breaks out at the same time as Brexit, for example, it’s hard to know which asset reacts to what. There are too many variables. What matters is the event itself. We wanted to create an exchange where people could directly buy or sell outcomes, instead of relying on proxies or indirect instruments.

Valor: Kalshi had to fight regulatory battles to launch and expand, especially on elections.

Lara: It was incredibly tough to start from scratch. Coming from finance, we were set on doing everything by the book because we wanted institutions like Goldman Sachs and Bridgewater to eventually use our products. That wouldn’t be possible without proper regulation.

We worked with U.S. regulators for three years to show them how this was similar to markets they already oversee. In other sectors, like Uber or Airbnb, the model has been “ask forgiveness later.” That doesn’t work in finance. There’s money involved, and you have to be right from day one. After launching, we faced another long battle for election-related markets, which took over two years, and we had to sue the government. That was a hard decision. Suing your regulator is extremely delicate; there’s always the risk of retaliation or delays. In that sense, the U.S. isn’t so different from Brazil.

Valor: A significant portion of Kalshi’s revenue now comes from sports. How is that different from betting?

Lara: Sports are a massive industry with real economic exposure. We’re especially focused on helping companies hedge against those risks. For example, there are markets about where the NBA Finals will be held. Depending on how many games the series goes, hotels can see huge swings in occupancy. That’s real financial exposure. Sports and entertainment face risks that historically haven’t had the same risk-management tools as sectors like agriculture.

Valor: But how does a single game outcome fit into this?

Lara: There’s also the “price discovery” aspect. Even if an event doesn’t have direct economic consequences, the information embedded in the market price is valuable. If a candidate is trading at 70% odds, that says something. Same with sports: publicly traded clubs, for example, see their stock prices move based on game results. That’s why we draw a clear line between what we do and traditional gaming. We focus on hedging, trading, risk, and price signals, none of which exist in poker or slot machines.

Valor: What about the risk of insider trading, like someone betting on the next Time cover?

Lara: It works like insider trading in equity markets. But since we’re regulated, we’re required to know who’s behind every transaction, where they work, who they are. Our compliance team monitors everything. If someone manipulates the market or breaks the law, they can be prosecuted, just like in equity markets.

Valor: Has that been enough to prevent abuse?

Lara: Of course, no system is perfect. Misconduct can happen, as it does in stock markets. But we have mechanisms to investigate and act. Notably, all known insider trading cases in prediction markets happened at Polymarket, which operates offshore. They don’t use KYC rules. One person can use multiple wallets. There’s no accountability.

Valor: Are there any records of insider trading at Kalshi?

Lara: There are no records of this type of case in regulated markets in the United States, such as Kalshi. In addition, all trades executed on Kalshi are reported to the government. Authorities independently analyze the data to ensure that we are fulfilling our role properly and to identify any potential irregularities.

Valor: After raising $1 billion, what’s next for Kalshi?

Lara: We’re just getting started. One of the first things we announced after the round was our plan to expand internationally. Brazil means a lot to me. I really want us to operate there. We’re still studying how to do it, but I hope we can announce something in early 2026. We also want to grow in other countries. We envision something similar to CME, where you can access U.S. products from Brazil. In addition, we want to gradually develop other structures, such as margin and leverage, though that’s more of a longer-term plan. It would help us move toward a more institutional trading profile.

Valor: How do you see your entry into the Brazilian market?

Lara: We’re just beginning to explore. There’s nothing like Kalshi in Brazil today, just betting platforms or derivative markets, which is where the U.S. was before Kalshi. We want to find a way to bring our model to Brazil, using what we’ve learned in the U.S. But it’ll depend on our lawyers and regulatory review. Nothing has been finalized yet.

Valor: Are institutions already using Kalshi?

Lara: Absolutely. On the market-making side, major funds like Susquehanna and Jump Trading are active. On the hedging side, there are funds, family offices, and companies buying contracts to manage risk. We even offer request-for-quote (RFQ) trading for large orders, say, someone wants to buy $10 million worth. That’s common in institutional environments and already works on our platform.

Valor: Any public examples?

Lara: Yes. Underdog, a fantasy sports company, publicly said they use Kalshi to hedge their exposure. Another is Arrived, in the mortgage sector. They used Kalshi to hedge against a possible U.S. government shutdown, buying over $1 million in contracts, essentially like buying insurance.

Valor: Any plans to go public?

Lara: Listing the company is important, but not now. We don’t know when. For now, the focus is on building the best product, growing as much as we can, both in the U.S. and globally, launching more products, and scaling on all fronts.

Valor: Was bringing Donald Trump Jr. on as a strategic advisor due to regulatory concerns?

Lara: Kalshi is highly regulated. Since we operate in elections and politics, we need to engage with Congress, the Senate, and the White House. That’s the nature of our business. We need people who understand how Washington works, how to explain our model to both sides of the aisle.

Valor: Isn’t Trump Jr. too politically charged?