As traders pour hundreds of millions of dollars into presidential betting markets, leading US prediction platform Kalshi launches crypto deposits, where users can fund their bets in the form of USDC stablecoin rather than cash, in the aim of competing with its main rival. , the offshore company Polymarket.
Starting today, Kalshi users will be able to top up their accounts with USDC, a popular cryptocurrency pegged to the US dollar. The move will allow Kalshi’s customers to transfer money faster and more cheaply and will help Kalshi challenge Polymarket’s crypto platform, which has exploded in popularity during the 2024 election cycle.
Betting race
Political prediction platforms, which allow users to bet on election outcomes, have been around for decades, but have been thrust into the spotlight during the 2024 elections, thanks in large part to Polymarket. The site, which recently hired polling guru Nate Silver as an advisor, has attracted a lot of chatter – and media coverage – related to its presidential betting market. According to the Polymarket website, users traded $2.6 billion in volume on whether Donald Trump or Kamala Harris would be elected, while Kalshi claims to have brought in just under $85 million in bets. on the presidential race.
Part of the trade gap is because the Kalshi market is much newer. Founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi first gained approval from the Commodity Futures Trading Commission (CFTC) to launch non-political betting markets in 2020 on contracts like the weather, before pursuing the The agency sued last year to also launch political contracts. After winning his case in the district court in early September, Kalshi launched political bets in early October, notably for the presidential race.
On the other hand, Polymarket ran afoul of the CFTC by launching political prediction markets without the agency’s authorization, earning it a $1.4 million penalty in early 2022 and forcing the platform to exit the United States. Its lack of regulation proved popular with users, who also flocked. to the platform due to its crypto-native design: Polymarket connects to clients’ crypto wallets and settles bets with USDC. Its blockchain design also opened the platform to scrutiny, including accusations of manipulation after Polymarket confirmed that four of the major accounts betting on Trump were controlled by a single French trader.
In an interview with Fortune Earlier in October, Mansour said he had initially considered building Kalshi on blockchain technology, but ultimately decided against it for regulatory reasons. “We didn’t really see a viable business that way if you wanted to attract institutional participation,” he said. He argued that USDC deposits would, however, be faster for users than relying on ACH (Automated Clearing House) and bank transfers, and would also result in lower fees.
Kalshi is working with crypto firm Zero Hash to enable USDC deposits, which the company says will enable near-instant funding 24/7/365, as opposed to bank transfers, which can take three to four days. Zero Hash handles the conversion and compliance aspects of the new feature.
Although Kalshi still lags behind Polymarket in terms of trading volume, Mansour said its regulated approach will prove more popular among users, especially with Polymarket cut off from U.S. traders. Kalshi is backed by investors including venture capital giant Sequoia, while Polymarket is backed by Founders Fund, which counts Peter Thiel as a partner. Robinhood also launched political gaming markets on Monday to select U.S. customers.
With Election Day fast approaching, Trump has split with Harris to take a sizable lead among Kalshi’s clients, going from a near deadlock on Oct. 10 to a 62 percent chance of winning at the time of the election. publication. Mainstream pollsters still predict elections as a toss-up.
