Kalshi Soared From $5 Billion to $22 Billion — Now New York Wants $36 Billion

Kalshi's valuation jumped from $5 billion to $22 billion in under a year — even as New York's attorney general sues the prediction market platform for $36 billion. Luana Lopes Lara, the company's chief operating officer and co-founder, is not backing down.

"Prediction markets incentivize truth. Everything else incentivizes clickbait," Lara said in an interview on the Rapid Response podcast, hosted by former Fast Company editor-in-chief Robert Safian. "We are very confident in our legal analysis."

Her defense rests on a structural distinction: Kalshi is a federally regulated exchange, not a sportsbook. And she is making that case at a moment when 75% of the platform's trading volume comes from sports — the very category that has drawn state gambling regulators toward the company.

Why does Kalshi say it isn't DraftKings?

Lara draws a hard line between an exchange and a bookmaker. On Kalshi, users trade against each other.

• Kalshi does not set prices or odds.
• Kalshi does not trade against its users.
• Kalshi takes a transaction fee on each trade.
• Kalshi does not cap winners.

"A sportsbook is completely different. Their revenue is equal to customer losses. The more the customers lose, the more money they make," Lara said. "For us, it's not the same. The incentive is not to make people lose because we don't make money when people lose."

She argues winners are welcome on Kalshi precisely because they bring price competition. "If you go to a sportsbook or casino and start making money, they'll make sure you cannot participate anymore. We want winners," she said. "In a sportsbook, there's no price competition."

That structure, she argues, is why exchanges and sportsbooks are regulated differently under federal law.

What did the courts decide?

The legal picture is split. A federal appeals court ruled that Ohio and Tennessee can regulate Kalshi under their gambling laws. Kalshi won its case in the 3rd Circuit. Each lawsuit, Lara notes, rests on a different legal thesis.

The stakes go beyond fines. Liquidity is the core of her concern: fragmenting the market by state would break the product.

"Imagine if you had the New York Stock Exchange, but you could only buy stocks on the New York Stock Exchange if you were in New York," Lara said. "The prices would be significantly worse. It would not be a liquid market. It would just be worse for every participant, and the market wouldn't work well."

How did a startup get to $22 billion so fast?

Kalshi launched its product in 2021, but Lara dates the company's founding to 2018 — and says the real number is eight years of compounded work. The founders spent four years working with the federal government before they could launch anything or sign up a single user, because being legal and regulated from day one was a founding constraint.

The inflection point came when Kalshi won its lawsuit against the Commodity Futures Trading Commission, clearing the way to list far more markets. "When that happened, the product was ready to really grow," Lara said.

The growth numbers are stark. Two years ago, before the election, Kalshi was making less than $10 million a year. "Now, in a day, we transact way more than we used to in a year just two years ago," Lara said.

She frames the speed as protective rather than destabilizing. Rapid growth, she argues, has kept the team in an early-stage mentality — fewer people, faster decisions, less drift into the hiring bloat that slow-compounding companies fall into.

"We really try to keep the mentality that we're still underdogs, and we still have a lot to prove and a lot to grow," she said.

Can prediction markets beat the polls?

On the midterms, Lara positions Kalshi as the bottom-up alternative to top-down polling. A poll, she says, is an editorial product: someone aggregates data and announces a number. A prediction market aggregates the research of millions of participants putting real money behind their views.

"It's one of the first times that you really see information that's actually led by people versus the elites just coming and saying, 'This is what's going to happen,'" she said.

On Kalshi's biggest markets — control of the Senate and control of the House — she claims the prices are "as accurate as you're ever going to get." But she insists on a caveat that separates markets from polling: probabilities are not certainties.

"When something happens 1% of the time, it doesn't mean it will never happen. It means that one out of 100 times, it will happen," Lara said. "If I told you if you walk outside right now, there's a 40% chance you'll get hit by a bus, you're not going to walk outside because 40% is pretty high."

The translation problem is real. A poll showing a candidate 10 points ahead, she notes, would likely map to a market price above 90% — because polls and markets measure different things.

Kalshi's next test is twofold: whether its midterm prices outperform the pollsters, and whether its exchange-not-sportsbook argument holds in the state courts now lining up against it.