Kalshi executive calls election markets positive for democracy amid Michigan fight

Kalshi’s co-founder and chief operating officer, Luana Lopes Lara, has defended election contracts as a democratic tool, arguing that prices generated by trading offer voters real-time, unbiased information about races rather than gambling.

In a Q&A published by BND, Lopes Lara described Kalshi as “a federally regulated financial exchange” and said elections were central to the company’s intended purpose from its 2018 founding. She said the platform’s 2024 election market handled more than $2 billion in trades and added 2 million accounts, despite opening about three weeks before the election.

Kalshi lets users buy and sell contracts on future events, including elections, sports, economic indicators, weather, culture and gasoline prices. Lopes Lara said it matches buyers and sellers, takes transaction fees whether a customer wins or loses, and does not take the other side of trades. Deposits are held in segregated accounts through its clearinghouse, she said.

Her defence comes as the company remains in a dispute with Michigan over sports contracts. Attorney General Dana Nessel sued Kalshi in March under the Lawful Sports Betting Act, alleging it was offering unlicensed online sports betting under the guise of event-contract trading and without approval from the Michigan Gaming Control Board.

A Michigan court issued a preliminary injunction on Sept. 2 requiring Kalshi to geofence people in Michigan from its sports-betting contracts. The order followed a June temporary restraining order that stopped the company’s Michigan sports-betting operation and advertising; violations of the injunction can bring fines of $500,000 a day. Kalshi had sought to shift the case to federal court, but it returned to Ingham County Circuit Court after the state’s successful motion to remand. Its non-sports contracts remained available to Michigan residents at the time of the Q&A.

Lopes Lara said Kalshi rejects the premise that its products should be governed as gambling, arguing that speculation also occurs in stock and futures markets. She said the company spent four years working with the federal government before its U.S. launch, and that oversight should focus on insider trading, market manipulation and equal access instead of gambling-style regulation.

Federal regulators also reviewed KalshiEX’s proposed Congressional Control Contracts in September 2023. The Commodity Futures Trading Commission’s Division of Market Oversight recommended prohibiting them, saying they involved gaming, activity unlawful under state law and were contrary to the public interest. The commission later approved issuance of an order on the contracts.

Lopes Lara said Kalshi tries to guard against manipulation by barring employees from trading and by prohibiting candidates and other participants from making trades intended to move election-market prices. Users must provide identifying information, including their name, date of birth, Social Security number, address and identification documents, before depositing funds. The company also blocks people on politically exposed lists from attempting to trade.

She cited an apparent attempt to boost Spencer Pratt’s price in the Los Angeles mayoral market, saying the market corrected in less than nine seconds and the trader lost substantial money. Lopes Lara also said research from England, Ireland, Canada and Australia suggested election markets can reduce polarization and increase political engagement.

Other reporting has documented concerns about prediction platforms. Election officials told CNN that prediction platforms can foster disinformation and create insider-trading risks, while campaigns characterized them as a real-time gauge of sentiment that does not always predict results accurately. Kalshi and Polymarket had handled more than $750 million in combined 2026 election-market volume by Sept. 24, although more than 80% of prediction-market business still came from sports.

The risks have not been only theoretical. Kalshi fined and suspended three minor candidates in April for betting on their own races, and later disclosed that North Carolina Republican House nominee Laurie Buckhout had apologized for trading on her own race and paid a fine of about $2,600. Kalshi said it reviews public records for campaign staff and blocks them from relevant markets.

The platform’s probabilities have also sometimes been wrong. Wisconsin state Representative Francesca Hong traded at roughly a 95% chance of winning the Democratic gubernatorial primary before losing, while Michigan Democrat Abdul El-Sayed was given a 97% chance and won his primary by less than 1%. Lopes Lara’s response to the Wisconsin result was: “5% is not 0%.”