Kalshi’s CEO says the scrutiny his company is facing is just part of a cycle that most disruptive startups must go through.
Tarek Mansour, the prediction market’s cofounder, spoke on CNBC on Monday about the lawsuits Kalshi is facing from multiple states.
“I think the more interesting thing that’s at play here is that you have an industry, the prediction market industry, that is disruptive, that is growing fast, consumers are adopting it, and it’s threatening a legacy incumbent industry that is unhappy about that,” Mansour said.
“That has played out over and over. It’s played out with taxis and Uber. It’s played out with hotels and Airbnb,” Mansour said.
He added that these industries have “large lobbies” that are “effective at getting actions” filed against new market players.
“The playbook is very simple. It’s: Litigate. Then you try to legislate. And then finally, when you realize that consumer demand is not going to go away, you try to compete and innovate,” Mansour said. “That’s the cycle that we’re going through right now.”
Uber was hit with lawsuits from taxi companies and regulators in dozens of cities worldwide. Some early lawsuits included allegations that the company was operating an illegal, unlicensed taxi business.
Airbnb also faced regulatory crackdowns in cities including New York, Paris, and San Francisco. Some imposed fines for illegal listings, while others introduced registration or licensing requirements.
Representatives for Kalshi, Airbnb, and Uber did not respond to a request for comment from Business Insider.
State-level oversight
Multiple states have initiated legal or regulatory enforcement — ranging from charges to cease-and-desist orders — against Kalshi, the US’s key prediction market, in an attempt to restrict its operations. New York joined the list last week with a lawsuit alleging that the company’s offerings are a form of gambling.
“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” said New York Attorney General Letitia James on Friday. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
Prediction markets like Kalshi say they operate differently from traditional gambling platforms and abide by the Commodity Futures Trading Commission (CFTC) regulations.
In the New York case, the CFTC has sought a temporary restraining order to block state-level regulation of prediction markets.
“Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented, sudden shutdown of prediction markets nationwide. The CFTC has already sued to stop this and will continue to defend its jurisdiction,” CFTC chief Michael Selig wrote in an X post on Friday.
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