One afternoon sixteen years ago, in the dance studio of the Brazilian Grand Theater Ballet School, 14-year-old Luana Lopes Lara was training her flexibility by raising her leg to her ear. Her dance teacher lit a cigarette under her raised thigh. If she couldn’t hold on, the cigarette butt, with a core temperature of over 700 degrees, would instantly burn through her dance clothes and leave a scar on her leg that would never fade. At the same time, Lebanon experienced its most severe border conflict since the 2006 Lebanon War. Tarek Mansour, who was about the same age as Lara, was in middle school in Lebanon at the time. Years of war had not made Tarek Mansour afraid of war, but rather made him deeply aware of the unease brought about by “uncertainty.”

Three years later, fate brought the two, who were originally more than 10,000 kilometers apart, together at MIT in the United States. After five years of study and work practice, one evening in 2018, the two, who were interning at Five Rings Capital, had the idea of founding a company that provides “event contracts” on their way home from work. In late March of this year, Kalshi, a prediction market company, completed a $1.00B funding round led by Coatue Management at a valuation of $22.00B, becoming the world’s highest-valued prediction market company. As early as December 2025, when Kalshi completed a $1.00B funding round at a valuation of $11.00B, Lara surpassed Scale AI co-founder Lucy Guo and Taylor Swift to become the world’s youngest self-made female billionaire.

Before Kalshi was founded, internet companies, including Uber, believed in expanding their scale through barbaric growth and then using their scale to gamble with regulations. When this “madness” became the standard for internet entrepreneurs at the time, Kalshi’s two founders took the opposite extreme. In the two years after the company was founded, Kalshi had no product, no users, and no revenue. They bet on the life and death of this startup for only one thing: to get a license.

You can think of Kalshi’s almost crazy obsession with compliance as a kind of paranoia, but looking back now, it’s more like the “strategic focus” created by the two founders’ past experiences. Mansour, who sought “certainty” in the shadow of war, and Lara, who worked hard after dance school to win the Brazilian National Astronomy Olympiad gold medal, both chose computer science at MIT. At MIT, Lara sat in the front row of every class, a detail that caught the attention of the introverted Mansour, who had always stayed in the back row. He began to boldly sit next to Lara, and the two gradually became friends.

Two major events occurred in 2016: Brexit and Trump’s election as President of the United States. Mansour later said that he saw institutional investors frantically adjusting their positions, trying to hedge the risks brought about by these political events, but all the hedging tools were indirect. No one could directly bet on whether “Brexit would happen” or “Trump would win.” After countless discussions, the two decided to fill this long-standing gap.

The concept of prediction markets has existed in academia for decades, but these platforms were either too small or operated in a gray area, and ultimately failed to become mainstream. In 1988, a professor at the University of Iowa launched the Iowa Electronic Markets (IEM), laying the foundation for the early legal framework. Since then, platforms such as PredictIt have been launched, but most are limited by the size restrictions of “no-action letters.” Four years later, Kalshi was officially established. Following in the footsteps of its predecessors, Kalshi had only two paths in front of it: either challenge the CFTC to obtain a Designated Contract Market (DCM) license at the same level as the Chicago Mercantile Exchange (CME); or only be able to operate in the gray area with an offshore identity like Polymarket later did.

In 2019, Kalshi was selected for Y Combinator, and the roadmap was to “obtain a CFTC license within two years.” But soon the two encountered their first challenge: they couldn’t find a lawyer willing to take their case. The turning point came when they met former CFTC official Jeff Bandman. With Bandman’s guidance, Kalshi began a long and complex application process. To obtain a DCM license, Kalshi must prove that it has everything it needs to operate a compliant financial exchange, including a matching engine, clearing system, monitoring tools, and compliance processes.

Finally, in November 2020, the CFTC approved Kalshi’s DCM application with a 3-2 vote. This was a milestone in the history of prediction markets: for the first time, a regulatory agency officially recognized that event contracts are a legitimate financial derivative, not gambling. At the same time, this also made Kalshi the first prediction market in the world to successfully obtain a formal financial market license.

When Kalshi officially launched in July 2021, the competitive landscape it faced was completely different from two years earlier. Polymarket rose rapidly in 2020, but was fined by the CFTC in January 2022 and agreed to block American users. Kalshi became the only prediction market platform in the US market that can operate legally and on a large scale. Kalshi’s compliant status makes it the only prediction market platform that institutional investors can legally use, and institutions such as Bridgewater Associates have begun to use its data.

In November 2023, Kalshi officially sued the CFTC, demanding that restrictions on political prediction markets be lifted. In September 2024, the Federal Court of the District of Columbia made a historic ruling: overturning the CFTC’s ban. This is another milestone in the history of prediction markets: for the first time in more than a century, Americans can legally bet on election results on a regulated platform.

With the political market opened, the 2024 US presidential election became a highlight moment for prediction markets. In 2025, Polymarket spent $112.00M to acquire QCEX, an exchange with a CFTC compliance license, to re-enter the US market. Faced with Polymarket’s offensive, Kalshi chose to continue to deepen its compliance advantages and accelerate product innovation. By partnering with mainstream brokers such as Robinhood, Coinbase, and Webull, Kalshi’s monthly trading volume reached a record high of $4.40B in October 2025, once again surpassing Polymarket.

From the end of 2025 to the beginning of 2026, Kalshi’s market share has remained between 55% and 60%. Prediction markets are beginning to be taken seriously by mainstream media, academia, and policymakers. Although some states have recently issued cease and desist orders to Kalshi, the essence of this battle is a battle for jurisdiction. Finding certainty in uncertainty and finding order in chaos is the essence of prediction markets, and Kalshi’s path to compliance is the best embodiment of this philosophy.

[Foresight News]