Two 20-something New Yorkers have brought a whole new dimension to the 2024 presidential election: legal betting.

The new Kalshi platform offers the first legal election betting in the US in over a century. The founders believe it will give voters more transparency and make them feel more involved in the process.

“It's actually the best mechanism to get more truth about who will actually win,” said Tarek Mansour, 28, who founded Kalshi with Luana Lopes Lara, also 28. “We let the market speak and not experts, pollsters and people, political figures, people with biases or conflicts of interest, people who may or may not have had incentives.”

In recent weeks, the popularity of the innovative company has exploded. Users have staked more than $100 million on Kalshi's election bet and the site has been name-checked by JD Vance, Elon Musk and comedian Theo Von.

“Kalshi is a place I look to,” Vonn said on a recent podcast. “It’s a good tracker, it actually shows how people invest their money.”

The platform operates like a futures exchange, where a marketplace allows trading on what could happen. Conventional exchanges such as the Chicago Mercantile Exchange process bets on oil or livestock prices. Kalshi does the same thing – only for current events.

Someone who believes in the probability of an event – like Trump's victory – will place a bet, and Kalshi compares her to someone who is willing to take the other side of the bet.

The site is also currently taking bets on everything from the number of rocket launches SpaceX will conduct this year to the score “Gladiator 2” will receive on Rotten Tomatoes.

One reason for the initial excitement – particularly among Republicans – is that the betting markets suggest Trump has a much better chance of winning than the polls. As of this writing, a bet on Trump will cost you 63 cents with the possibility of a $1 return, while a bet that Harris will win will only cost you 37 cents.

But it's not just about betting; It's about offering people a new way to participate in the democratic process.

“People felt like, 'I have no control over who wins and I'm just going to accept the repercussions and consequences, whatever they may be,'” Mansour said. “People can now participate and gain a little bit more meaning from voting.”

While Kalshi has been offering bets on inflation and labor market numbers since 2021, the exchange only received the green light to launch an election betting service in October after a long and hard-fought legal battle.

Mansour first began thinking about the importance of an election betting market while working in the trading department at Goldman Sachs in 2016.

When Trump won this year, his team was inundated with desperate calls to make trades and buy hedges in response to the surprise.

“People want a financial stake in the election,” he explained. “Trading activity…is actually based on an opinion about a future event – ​​why do we (only) use stocks, bonds and options to do that?”

“This is a more direct and precise path … than traditional financial instruments,” he added. “What you’re buying is the event – ​​Trump will win, Kamala will win, Brexit will happen, Brexit won’t happen – that was the origin of the idea.”

While some people use the market to have fun or gauge public opinion about a candidate, Mansour originally envisioned that individuals or institutions could hedge risks before an event.

For example, someone heavily invested in fossil fuels might bet money on a Harris win as a way to balance their portfolio if Harris wins and subsidizes green companies.

Mansour, who grew up in Lebanon, and Lopes Laura — a classmate of his from MIT who worked in Bridgewater and is from Brazil — founded the company in 2018 with investments from heavyweights like Sequoia Capital, Henry Kravis and Charles Schwab.

Their headquarters are in Soho, and they say they couldn't imagine being based anywhere other than the Big Apple.

“New York is the financial capital of the world,” Mansour said. “We felt it was the right place to build what we believe will be the next evolution of financial markets.”

However, they did not anticipate the regulatory hurdles they would face. They initially applied for permission to accept bets on the 2021 presidential election, but the Commodity Futures Trading Commission denied them.

While the CFTC allowed betting on other events — such as when inflation would fall or whether TikTok would be banned — regulators deemed the presidential election too sensitive.

They believe a handful of individuals could raise the price, which could make it appear that a candidate is more likely to win – potentially causing more people to vote or feel pressured to support a candidate.

Realizing that the CFTC would probably never give them the green light, Mansour and Lopes Laura took the matter to court. Last September, after a three-year battle, a judge finally ruled in her favor.

None of them could have imagined how difficult it would be to get approval, but Lopes Laura believes their ignorance might have given them an advantage.

They were so naive that they dared to try something that other companies thought was impossible.

And they say they have established themselves as a safe and trustworthy product by navigating the legal mess to get regulatory approval.

Other election betting markets such as Polymarket and PredictIt have also caused a stir. However, Polymarket is not open to US residents and PredictIt has only been granted the ability to operate on a temporary basis.

“Many startups choose the easy route. But we really think long-term,” said Lopes Laura. “If prediction markets have a chance of becoming this big in ten or 20 years, it will be because we started off right.”

This story is part of NYNext, a new editorial series highlighting cross-industry innovation in New York City and its leaders.