Domer’s bloodshot eyes flit between three screens: an X thread, a breaking news feed and stacks of multicolored line graphs. The sun set hours ago, but he continues to refresh and scan his screens intensely, searching for an opportunity. Will Mike Waltz resign as National Security Advisor? Considering the backlash Waltz received after sharing classified attack plans with a journalist, Domer swiftly types in a dollar amount, betting “Yes.”
Domer, who only wishes to be identified by his pseudonym, is one of two million users on prediction market app Kalshi, a financial exchange that allows users to put money down on the outcome of events. Despite regulatory uncertainty around prediction markets, Domer says he has been political betting full-time since 2007 on various platforms, though he’s now most active on Kalshi, the first and only federally-regulated prediction market exchange in the United States since its official designation from the Commodities Futures Trading Commission (CFTC) in 2020.
Domer’s public Kalshi profile shows he has won more than $600,000 since joining as one of its first users, with nearly 20 percent of those gains coming from last year’s presidential election. In October, a federal appeals court ruled Kalshi could let users bet on that presidential election. The market drew in $1 billion and grew Kalshi’s user base tenfold in under a month.
For Kalshi co-founder Luana Lopes Lara, the billion-dollar presidential market was vindication. Years of regulatory combat had led here—and the exchange was suddenly at the center of a speculative empire where democracy meets derivatives. “Everything we believed in for five years and were pushing against to build and show—it was awesome to see it come true,” she says. Lopes Lara credits the company’s regulatory wins to her and co-founder Tarek Mansour’s persistence, as well as their legal team—formerly led by Eliezer Mishory, who was tapped to lead Trump’s Department of Government Efficiency in April after four years as Kalshi’s chief regulatory officer.
From the outside, Kalshi might resemble another scrappy fintech. But the company’s current trajectory suggests something closer to a new political institution. President Donald Trump’s eldest son, Donald Trump Jr., joined the company as a strategic advisor in January. Kalshi board member Brian Quintenz, a former CFTC commissioner, was tapped by Trump to lead the CFTC earlier this year. With its growing influence and proximity to political power, Kalshi is no longer just a tool for speculation. It’s becoming a tool of narrative management.
Prediction markets work on the premise that more people will weigh in with more realistic opinions when their own money is on the line, Dartmouth economics professor Eric Zitzewitz tells Observer. That logic held true during last year’s presidential election when prediction markets across PredictIt, Polymarket and Kalshi more accurately favored Trump’s win over traditional polls during the lead-up to the election.
Kalshi’s team expected a post-election slump. Instead, trading has held steady, fueled by the platform’s 1,200 active markets and a two-million-strong user base.
Nearly 60 active event markets totaling more than $22 million in volume on Kalshi are Trump-related. What are the odds President Trump will eliminate the Department of Education? Pardon Diddy? Release the Epstein files? According to Domer, volatility and chaos allow prediction markets to thrive. “You wake up and there’s some unhinged tweet about some random thing you weren’t even thinking about,” he says. “All of a sudden, the world is moving in a slightly different direction.”
Though political markets are the most visible, they account for less than half of the platform’s activity. Domer has won nearly $200,000 predicting winners of awards shows, $30,000 on the papal succession, and thousands more on topics ranging from economic indicators to natural disasters. It’s the evolving definition of a commodity—and how companies like Kalshi differentiate their “commodities” from traditional gambling—that remain an uphill battle for prediction markets, Peter Malyshev, a CFTC regulation expert and partner at Cadwalader, tells Observer.
No category has grown faster than sports. Since launching in January, Kalshi’s sports markets have surpassed all others, contributing $1 billion to trading volume in just five months, according to a company spokesperson.
This surge has not gone unnoticed. Seven states are pursuing legal action, claiming Kalshi is operating as an unlicensed sportsbook and evading state taxes. Kalshi is suing regulators in Nevada, New Jersey and Maryland, arguing that their markets are federally sanctioned under CFTC authority and thus preempt state laws.
“I think it’s just the beginning of states’ litigation,” Malyshev says. “States stand to lose a lot of revenue if everything becomes federally preempted.” The legal terrain is murky, especially since a 2018 Supreme Court decision gave states control over sports betting—a ruling that 40 states have acted on since.
Kalshi’s own relationship with the CFTC has been combative from the start. Lopes Lara says her team endured two years of “absolute hell” before receiving approval in 2020. “It was a fight—suing the government, getting no’s and people saying we were trying to destroy democracy,” she recalls.
That battle escalated when Kalshi moved into election markets. The CFTC appealed last year’s federal ruling in Kalshi’s favor, arguing that such markets were beyond its jurisdiction and potentially harmful to democratic integrity. But in May, the agency abruptly dropped its appeal and canceled a long-planned roundtable on sports betting regulation. No explanation was given.
That silence is now part of the story. Four of five CFTC commissioners announced their departures this year, while Quintenz—a Kalshi board member since 2021—awaits confirmation as Trump’s pick to chair the agency.
“The guardrails protecting people against doing blatantly wrong—they seem to be diminishing quite a bit,” Domer says. With Trump Jr. inside the company and CFTC leadership in flux, the question isn’t who’s watching the watchers—it’s whether anyone still wants to.
Zitzewitz notes that prediction markets are vulnerable to manipulation, particularly when a small number of users place massive bets to sway outcomes. DealBook reported that four Polymarket accounts, all traced to a single foreign national, put $28 million in pro-Trump bets during the last election. Polymarket, unlike Kalshi, remains unregulated, but its success has shown the scale of this emerging economy.
Skeptics argue these platforms are little more than gambling by another name, and should be subject to strict consumer protections. Zitzewitz warns that healthy regulation is necessary: too little leads to predatory behavior, while too much suppresses engagement. Either imbalance undermines the entire premise.
Yet Kalshi’s recent legal wins, paired with Quintenz’s ascent, signal a regulatory environment increasingly tolerant of speculation. “If you asked me a couple months ago, I would say it was unpredictable,” says Malyshev. “Now, it’s becoming increasingly more predictable: prediction markets will stay and continue developing.”
Domer hopes the space will grow—but acknowledges the paradox. More markets bring more opportunity. But novelty introduces chaos. When TIME named “Volodymyr Zelensky and the Spirit of Ukraine” Person of the Year, confusion reigned: how would the exchange resolve the market? Was “the Spirit of Ukraine” a separate entity? “It can be very arbitrary and financially damaging if you’re on the wrong side of it,” Domer says. “There are countless instances like this.”
It’s exactly this lack of precedence that excites seasoned traders like Domer, who have profited from chaos. It’s also this lack of precedence amid Kalshi’s favorable positionality in the tumultuous Trumpworld that may put Kalshi on the path to what Lopes Lara hopes will become “the biggest financial exchange in the world.”
