Kalshi hopes to reverse the Brazilian government’s decision to ban the operation of so-called prediction markets in the country, according to its co-founder, Brazilian Luana Lopes Lara, 29. “Let’s try to explain what we do, because it was more of an educational gap than anything else.”
At the end of April, the Treasury ordered the blocking of websites such as Kalshi, which are part of the so-called prediction market. These companies offer bets on elections, games, reality shows and celebrities. The understanding was that they offer sports predictions without respecting the rules imposed on bets, such as the payment of a R$30 million license and rules against money laundering.
“Kalshi doesn’t make money when people lose — that’s a very big difference,” said Luana in an interview with Sheet during the opening day of the Web Summit technology event in Rio de Janeiro.
The businesswoman, who has lived in the USA since studying at MIT (Massachusetts Institute of Technology), stated that her company charges a brokerage fee. “If people lose everything, it’s bad for us. We need people to buy more.”
“It will be faster than it was in the United States, where we have been working since 2019,” she said about the 2024 legal victory that allowed the company to sell contracts on the elections that led Donald Trump to the American presidency. The decision boosted the value of Kalshi to US$22 billion and made Luana the youngest woman to gain the first US$1 billion in equity.
When asked about the possibility of suing the Brazilian government, she disagrees. “We want to work in a constructive way,” he said.
How does Kalshi’s business model work and where does the company’s revenue come from?
We make money when one person wants to buy a contract — for example, betting on a “yes” or “no” outcome — and another person, the counterparty, wants to sell it. We remove a brokerage fee on this transaction. Adding the amount invested by both parties, we charge a fee of approximately 1%, or a little less. It is the same monetization mechanics used by stock exchanges and traditional futures markets.
When Kalshi presented its initial proposal to the CFTC (derivatives regulatory agency in the USA), the project was rejected on the grounds that it was gambling. How did the company reverse this?
We are not a betting house. Users do not play against Kalshi. The company does not profit when the customer loses. In a traditional casino or betting house, the profit comes from the participants’ losses. Their incentive is for winners to stop and losers to keep playing. We operate like the stock market. We want users to earn, evolve and trade more.
Critics point out in CFTC public consultations that entertainment or sporting events do not follow an economic rationale because they involve imponderable criteria.
We strongly disagree. It is in the face of imponderable and uncontrollable risks that access to protection mechanisms is most necessary. When someone takes out home insurance against flooding, there is no way to predict exactly when or if the event will occur; Still, protection is essential.
How do non-strictly financial sectors fit into this?
The mayor of New York, the city where I live, declared that the New York Knicks’ arrival in the NBA Finals had an impact of US$220 million on the local economy. Numerous bars and businesses need to protect themselves financially against the fluctuations resulting from an elimination series of up to seven games. It is a huge industry that needs efficient risk management mechanisms.
Has obtaining the right in American courts to sell contracts on electoral disputes changed the company’s status?
There is a Kalshi before and another after this decision. Electoral markets are the most important within the predictive segment, it is notoriously difficult to obtain reliable data on voting trends.
Around 70% of users who access Kalshi do not carry out financial transactions; they look to the platform as a source of information to understand future trends. This informational gain attracted the attention of the international media and the financial sector, leveraging investments.
The National Monetary Council (CMN) restricted the settlement of futures contracts to events directly linked to macroeconomic indicators. Does Kalshi plan to work to reverse this decision?
We are working with the government. Predictive markets are inevitable, they are growing a lot. It is very important for us to continue doing things in a legal and regulated way. We will work with the government to try to explain what we do, because I think it is more of an educational gap than anything else. In the United States, we started working with the government in 2019. We spent many years explaining what we do.
Do plans to open a local operation in Brazil remain active even after the CMN’s regulatory restriction?
Yes, the plans continue. It’s a matter of timing, prioritization and regulatory compliance. Being Brazilian, I consider it essential to bring the operation to the country; It wouldn’t make sense for us to expand globally and stay away from the Brazilian market. I believe that regulatory maturation here will be faster than the four years required in the United States.
Is taking action to Brazilian justice, along the lines of the litigation that took place in the USA, on the company’s horizon?
There is no definition on this. Our focus is on reaching a constructive relationship with Brazilian authorities.
Market data shows that around 70% of users who deposit on predictive platforms record financial losses. Does this index generate internal concern about people’s debt?
This number needs to be contextualized. In traditional options, futures and retail financial day trading markets, the rate of investors losing money often exceeds the 90% mark. As predictive markets operate with more intuitive logic, the loss rate tends to be lower than in the short-term stock market.
Kalshi operates under a full margin regime: the user can only lose the amount they previously deposited into the account. We implement strict security locks such as programmable deposit limits and the suspension of certain markets. If we detect recurring losses, we require proof of financial capacity.
Episodes of alleged use of privileged information by public agents covered the international press. Does Kalshi have a sufficient technological structure to monitor and prevent manipulations on a global scale?
The publicized case involving a US military officer occurred on Polymarket, a platform that operates without regulation in the US. Kalshi is a regulated institution.
Because we are regulated, the practice of manipulation or “insider trading”“ constitutes a federal crime. Suspected cases are reported to the US Department of Justice (DoJ) for criminal prosecution.
Our systems preventively bar users with obvious conflicts of interest: professional athletes are blocked from related sports markets, and Democratic or Republican Party officials cannot transact specific electoral contracts.
Are there limits on the topics of contracts created on the platform or can any real-world topic be priced?
There are severe restrictions. We do not authorize the opening of markets linked to wars, murders, terrorist acts or any activity of an immoral nature. Although violent events have an impact on the shares of large companies listed on the stock exchange, we have established an uncompromising ethical line: the platform must not generate direct financial incentives for the occurrence of tragedies.
Her participation in Kalshi made her the youngest woman to earn her first US$1 billion. Is there room to make this part of the company worth more?
We are thinking about how we will reach a company between US$ 100 billion and US$ 1 trillion. We want to make this company as big as possible.
There were those on social media who said that his success was due to his family background and access to resources. Was that enough or did it require hard work?
I was very lucky with everything I did and a lot of support from my family, my teachers, a lot of support from a lot of people to get where I am. But I worked very hard and studied very hard. I’m in the office 14 to 16 hours a day. It’s always both sides. And I will continue working to reach US$100 billion.
X-RAY – LUANA LOPES LARA, 29
She is the founder of Kalshi, a financial platform that allows you to bet on anything. A graduate of MIT, she was a dancer at the Bolshoi Theater School, in Joinville (SC).
