Hello, and welcome back to Inc.'s 1 Smart Business Story. Luana Lopes Lara co-founded Kalshi, a platform where people trade on real-world outcomes like inflation, weather, and economic data. When she tried to add elections to that list, letting users bet on who would win, regulators blocked her for three years. Investors urge her to move on. She refused and sued the Still, Kalshi faces legal challenges that argue the company is simply running illegal sports gambling under a different name. Courts are split, and the outcome will determine whether Kalshi's model survives. Lara is betting on yes. 

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BY LEILA SHERIDAN, NEWS WRITER

Luana Lopes Lara spent years training as a ballet dancer before she ever started a company. And the discipline remained long after she left the studio. She embraced waking up early, waking early, repeating the same movements for hours, and trusting that progress would come long after the work was done.

That mindset would become essential when Lara co-founded the prediction-market startup Kalshi, a company that would spend years fighting regulators before it could fully realize its vision.

Kalshi operates a federally regulated marketplace where users trade contracts based on the outcomes of real-world events. Traders can buy “yes” or “no” positions on questions ranging from inflation rates to weather patterns, with prices fluctuating according to the crowd’s belief about the likelihood of an outcome.

By late 2023, the platform had roughly 1.3 million users across the U.S., who traded about $21 million in notional volume in a single month. But the company’s most ambitious goal went far beyond markets for economic data or weather forecasts.

“The biggest dream of ours was having election markets legal in the U.S.,” Lara said during a talk at Citadel Securities’ Future of Global Markets conference.

For Lara, the fascination with prediction markets began during internships at quantitative trading firms including Bridgewater Associates, Five Rings Capital, and Citadel Securities. The experience exposed her to sophisticated financial markets, but it also raised a deeper question about her own career.

“When I’m 50, am I going to be happy?” she recalled asking herself. Her answer was no.

Instead, Lara became fascinated with prediction markets, believing they could create a more democratic financial system where anyone could trade on what they believed about the future.

She and cofounder Tarek Mansour built an early prototype of their product in two days, then spent months immersing themselves in the law, studying Supreme Court rulings, consulting more than 60 lawyers in a single day, and developing arguments for why their platform should be legal.

Their persistence paid off in November 2020, when the Commodity Futures Trading Commission granted Kalshi designation as a regulated exchange, the first federally approved market for event contracts. Kalshi officially launched in July 2021 with markets on topics like housing prices, weather, inflation, and COVID-era disruptions. But Lara and Mansour quickly turned their focus to elections.

For nearly two years, Kalshi lobbied regulators to approve political event contracts, meeting with the commission roughly 36 times and repeatedly revising its proposals. Each time, the answer was the same: no.

Some of Kalshi’s own investors and board members urged the founders to abandon election markets and pivot to something safer. Lara refused. Instead, in late 2023, Kalshi took an extraordinary step, suing its regulator. 

The company argued that election contracts were fundamentally different from sports betting or gambling. Unlike games, it said, elections carry significant economic consequences and legitimate hedging value. If Kalshi lost, the ruling could have given regulators sweeping authority to block similar products in the future. If it won, it could create the first federally regulated U.S. market for election betting.

Ultimately, the court sided with Kalshi. The judge agreed that election contracts “do not involve unlawful activity or gaming. They involve elections, which are neither.”

For Lara, the years leading up to the ruling felt familiar. Kalshi spent what she calls “three years of pain” seeking regulation before it even had a product in the market. But the routine never changed: show up, do the work, and wait for the payoff. It was the same lesson she learned in ballet, long before she ever stepped into a courtroom.

Read Inc.’s feature on Luana Lopes Lara, “This 29‑Year‑Old Founder Took On a Federal Regulator to Scale Her Company—and Built an $11 Billion Giant”