Let’s start from the beginning. There was a time when Luvana Lopes Lara’s entire world was confined to one dance floor. She was studying hard to become a professional ballet dancer at the Bolshoi Theater School in Brazil. His training was so strict that it gave goosebumps to the listeners. Practicing for hours, ignoring the pain and devoting himself to that perfect ‘Pirouette’, this was his life.
All this was there, but Luwana’s mind did not run only on music and rhythm. A different world of numbers and technology resided inside him. His father was an electrical engineer and mother a maths teacher, so he inherited the love of playing with numbers. She would go to school in the morning, and have grueling ballet training from 1 pm to 9 pm. But at night… when the world went to sleep, Luwana used to open her books. Forgetting the pain of ballet, she used to get entangled in maths puzzles. This dedication was such that he got a gold medal in the Brazilian Astronomy Olympiad and a bronze medal in the Santa Catarina Mathematics Olympiad.
Ballet gave her discipline, patience and the determination not to give up. But he knew that his real destination was somewhere else. One day he decided it was time to take off his shoes and pick up the calculator. She left ballet and went to study computer science at the Massachusetts Institute of Technology (MIT), America’s largest technological institute.
This is how they became part of those who control the movement of money.
The world there was completely new for him. It was a big change to come from the dance floors of Brazil and sit among the brightest minds in America. But Luwana left everyone behind with her hard work. During his studies, he did internships in big companies of the finance world, like Bridgewater Associates and Citadel Securities. These were the places where the world’s brightest minds controlled the movement of money. Here he came to know how difficult and how valuable it can be to predict the future.
During this time Luwana felt a strange thing. To reduce their risks and ensure profits, big companies used complex methods like ‘derivatives’ and ‘futures’, which meant that they used to bet on the outcome of some future event. But the common man did not have any such direct, easy and legal method. People used to bet on everyday things, like who will win the elections, whether inflation will increase or decrease, which film will win the Oscar. But it was not given the shape of a proper market.
Made a pot together with a classmate
Luwana felt there was an opportunity here. He found a similar mind in his classmate Tariq Mansoor at MIT, who dreamed of overcoming this deficiency. Both of them, sitting together one night in Cambridge, Massachusetts, gave a name to this idea – Kalshi. Kalshi, which means ‘everything’ in Arabic. His dream was to create an exchange where people could ‘trade’ on the outcome of any event in the world in a legal and safe manner.
This was not just a business idea, it was a dream of creating a whole new kind of financial market. A market where even common people can convert their understanding and predictions into money.
It was not easy to get approval
But, this journey was not easy. A good idea alone is not enough to bring anything new into the world, especially when it comes to finance and government. To run any financial exchange in America, it was necessary to obtain approval from the Commodity Futures Trading Commission (CFTC), a government agency. This process is so complex and lengthy that even good tech founders lose courage.
For Luwana and Tariq, getting this ‘regulatory approval’ was like climbing the Himalayas. He started Kalshi in 2018, but it took two and a half years to get his first regulatory approval. For two and a half years, he felt that he was walking in a desert with no trace of his destination. He had to repeatedly go before the CFTC, answer their questions, and explain that his platform was not a ‘speculation’ but a new and regulated ‘financial asset class’.
It was also difficult to raise funding in such a long fight. Initially he got support from investors taking small risks, but big investors were hesitant. They were afraid whether this platform would ever be able to run legally or not. But Luwana used her balletic determination and focus here. Just like a dancer practices again and again even when she makes mistakes, Luwana turned every ‘failure’ into a new attempt.
And then that historic day came. In 2020, Kalshi made history by becoming the first fully regulated exchange to allow trading on event contracts. They got a place with big and old exchanges like Chicago Mercantile Exchange (CME). This was not just a victory for one company, it was a victory for the idea that the common man could also bet directly on world events.
How does Kalshi work?
No stocks or bonds are bought on the Kalshi platform. Here trading is done only on ‘yes’ or ‘no’ upcoming events.
Question: Will the inflation rate in the US be above 3% this month?
Trader 1 (Yes): If you think yes, then you will buy the ‘Yes’ contract.
Trader 2 (No): If you think no, you will buy the ‘no’ contract.
The price of each contract ranges from 1 cent to 99 cents. This price shows how likely that event is to happen in the market. Suppose the price of the ‘Yes’ contract is 70 cents, it means that the market thinks there is a 70 percent chance that inflation will increase.
If you buy a ‘yes’ contract for 70 cents, and you are proven right, you get $1. That means a profit of 30 cents. If you are proved wrong, you get nothing and the money you invested is gone.
2024 elections and abundance of investors
Once the regulatory approval was received, Kalshi’s car started running rapidly. In 2024, he won another major battle, which also allowed him to trade on election results. This step proved to be a game changer. There was a crowd of investors. One after another, big names like Paradigm, Sequoia Capital, Andreessen Horowitz and Y Combinator started investing huge money in Kalshi.
Within a short time the valuation of the company reached from crores to billions of dollars. 2 billion dollars in June, 5 billion dollars in October… and then, the news came which shocked the whole world. Kalshi raised $1 billion in funding, taking the company’s valuation to $11 billion. This tremendous surge put both Luwana and his co-founder Tariq Mansoor into the ‘Billionaire Club’.
Today, Kalshi is a global platform. It is not just an app, but a new barometer of the world’s economic and social predictions.
