Humans will never be able to accurately predict the future. But they will soon be able to win or lose a ton of money based on what they think will happen.
With $30 million in funding from big-name venture capitalists, trading platform Kalshi will soon allow users to place bets on yes-or-no questions that predict future events, The Wall Street Journal reports. For example, Kalshi could’ve asked last year if a COVID-19 vaccine would’ve been approved by the end of 2020, paying out $1 to any user who bought a single contract guessing “yes,” and nothing to those who’d picked “no.”
One of Kalshi’s founders, Tarek Mansour, told the Journal he drew inspiration from working at Goldman Sachs, when, in 2016, “some clients asked the bank to help them hedge against the risk that the U.K. would vote to leave the European Union,” the Journal writes. Instead of arranging complex contracts based on how markets would react to Brexit, Mansour thought it would be easier to just have the banks bet on departure, and receive a payout if they were right.
Kalshi wants to bring in users who are similarly trying to mitigate losses from a potential future event by betting the thing they don’t want to happen actually will — gambling, essentially. War, terrorism, assassinations, and gaming are off limits thanks to federal law, and it’s unlikely political outcomes will be allowed on the platform either.
Kalshi’s launch comes after the skyrocketing popularity and self-induced downfall of the free trading app Robinhood. The app angered its small-trading users as it blocked them from trading GameStop and other so-called meme stocks in an attempt to bankrupt hedge funds that shorted the stocks. Read more at The Wall Street Journal. Kathryn Krawczyk