Kalshi Investment Thesis

By Nicholas Grous

Associate Portfolio Manager

As Associate Portfolio Manager, Nick works with Cathie Wood and the investment team to drive ARK’s investment process and make investment decisions. Nick’s research focuses on digital media, streaming technology, and online gaming.

Kalshi is building a Commodity Futures Trading Commission (CFTC) regulated event contract exchange that ARK’s research suggests could become a foundational new asset class: probabilistic contracts on real-world outcomes. If options markets gave investors the ability to express views on price direction, event contracts give them the ability to express views on the economy, policy, and culture with defined risk and binary settlement. That represents a platform shift in how risk is priced and traded, in our view, an opportunity on par with derivatives and futures markets. While prediction markets span many categories, we expect financial, economic, and political contracts to be the most disruptive.

Kalshi's notable positioning is best grasped with respect to its structural context. US listed options volume reached 15.2 billion contracts in 2025,¹ an important data point signaling that retail investors are comfortable with probabilistic, leveraged instruments. Meanwhile, legal US sports betting handle exceeded $165 billion in 2025,² demonstrating, we believe, substantial consumer willingness to wager on discrete outcomes more than 10x the volume of traditional casino table games. Kalshi sits at the intersection of those two behavioral pools. It brings derivatives rigor to event-driven conviction yet operates in a category with virtually no incumbents. 

*Only states where DraftKings currently operates. Source: ARK Investment Management LLC, 2026, based on data from YipitData as of December 31, 2025. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. 

Moreover, Kalshi's regulatory foundation lends it structural differentiation. KalshiEX LLC received designation as a Designated Contract Market (DCM) from the Commodity Futures Trading Commission (CFTC) in 2020,³ and its clearing affiliate Kalshi Klear LLC was registered as a Derivatives Clearing Organization (DCO) in 2024.⁴ That dual licensure is rare among emerging platforms and enables lawful distribution through major retail brokers. We believe the CFTC license is both difficult to obtain and serves as a strong regulatory moat. Partners are taking note. Bloomberg has reported Webull's partnership with Kalshi in February 2025,⁵ and Axios has reported Robinhood's launch of a prediction markets hub with Kalshi access the following month.⁶ In our view, the shift from niche app to broker rails is the distribution inflection that could accelerate Kalshi’s exponential adoption. When event contracts appear alongside equities and options in the same brokerage interface, the addressable user base could expand from hundreds of thousands to tens of millions.

Importantly, the unit economics of an exchange model favor rapid scaling. Kalshi monetizes primarily through per-contract trading fees that are small in absolute terms, scalable with volume, and require no balance sheet risk.⁷ In our view, Kalshi can expand its revenue streams over time by layering on higher-margin products, such as margin trading and perpetuals for crypto and single stocks, pending CFTC approval. Contracts trade in penny increments between $0.01 and $0.99, settling to $1 or $0, which means prices map intuitively to probabilities.⁸

Such simplicity lowers the learning curve and creates product mechanics that are inherently accessible. Kalshi demonstrates robust user acquisition and retention across cohorts, its retention rates exceeding typical financial technology (fintech) benchmarks, and the company’s direct channels capture a customer acquisition cost (CAC) payback period of three to five months—unit economics that we believe could support significantly more aggressive growth spending.

Its recent milestones demonstrate Kalshi’s rapid execution. Axios has reported more than $86 million in trading volume on a single golf tournament in April 2025, with "hundreds of millions" on the NCAA basketball tournament in the weeks prior.⁹ TechCrunch has reported that Kalshi raised $1 billion at an $11 billion valuation in November 2025,¹⁰ following a $185 million Series C at $2 billion, just five months earlier.¹¹ Roughly, that is a fivefold valuation increase within months and reflects the pace at which the market is repricing Kalshi's opportunity as its distribution expands and volume compounds. The founding team reinforces our conviction: Tarek Mansour and Luana Lopes Lara co-founded Kalshi in 2018 after meeting at the Massachusetts Institute of Technology (MIT), bringing experience from Goldman Sachs, Citadel, and hedge fund environments. In our view, this combination of Wall Street fluency and entrepreneurial ambition is critical for navigating the regulatory complexity inherent in building a new financial exchange.

The asymmetric upside stems from platform dynamics. Event contract exchanges exhibit strong network effects: more participants create tighter spreads, which attract more participants. Kalshi has mitigated the liquidity cold-start problem through agreements with institutional market makers, including Susquehanna and Jump Trading. Kalshi's self-certification authority allows it to list new contract categories and begin trading the following business day,¹² giving it an iteration speed that legacy financial infrastructure cannot match. One Kalshi contract filing indicates that a position limit increased from $25,000 to $7 million, for example.¹³ International expansion represents an additional growth catalyst, as the exchange-model infrastructure Kalshi has built domestically can extend to global markets.

Kalshi presents an early-stage opportunity to invest in new financial market infrastructure, a platform enabling millions of people to trade on the outcomes that affect their lives, their businesses, and their worldviews. The convergence of regulatory licensure, broker distribution, intuitive product design, and adjacent spend pools exceeding $180 billion annually creates conditions for nonlinear growth. ARK maintains exposure to Kalshi through the ARK Venture Fund.

Important Information

We offer our view of Kalshi because it is part of the total ARK Venture Fund portfolio. To see the most updated portfolio, please click here. Holdings subject to change. Not a recommendation to buy, sell, or hold any specific security.

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