Kalshi’s Strategy to Attract Cryptocurrency Traders to its Prediction Market

Targeting cryptocurrency enthusiasts, Kalshi is riding high on political enthusiasm as the U.S. election stirs up the betting community.

Starting Monday, the betting exchange opened its doors to USDC stablecoin transactions, inviting bets on presidential and congressional outcomes from U.S. investors. Kalshi’s strategy is meshing well with the marketplace, generating significant betting activity and setting the stage for a direct challenge to Polymarket, another player well-favored in the current election cycle.

Jack Such, Kalshi’s Market Research Lead, revealed to Decrypt that the platform saw an entry of over $20 million in USDC within just 36 hours of this feature’s launch, by approximately 21,000 users.

Such reported this to be the largest deposit spike in 36 hours for Kalshi, which concurrently experienced a surge in individual and institutional deposits from sectors including traditional finance brokerages active in crypto.

“The immediate on-ramping of USDC is a game-changer,” said Such. “Crypto-native individuals no longer resort to centralized platforms with ACH transfers for their transactions. Our focus right now is spreading awareness of our USDC deposit capabilities.”

Kalshi’s foray into cryptocurrency includes leveraging partnerships around its USDC deposit system, offered through the crypto infrastructure company Zero Hash. But it’s also looking to bring prediction market data on-chain by teaming up with decentralized data marketplace Stork. Looking beyond the current electoral cycle, the company plans to partner with more digital asset firms to attract crypto-savvy bettors, according to Such.

Beyond 2024

When probed about blockchain product possibilities, Such voiced the company’s receptiveness while noting the absence of immediate plans.

“Looking towards the farther future, harnessing anything that enhances our product certainly stands open for consideration. The blockchain boasts notable benefits in terms of settlement speed and other areas,” Such elucidated.

Once, CEO Tarek Mansour pondered structuring the betting platform on blockchain, yet decided it wasn’t conducive for securing institutional investors.

Increasing initiatives in crypto-services align with Kalshi’s clearance for hosting U.S. political bets post its legal triumph over the CFTC in October. It launched election-centric betting markets, summoning over $275 million in bets, the presidential race alone pulling in $142 million.

Despite the remarkable influx, Kalshi’s volumes are overshadowed by Polymarket’s reported $2.3 billion on election outcomes. Still, Kalshi remains unique as it’s the sole regulated prediction market in the U.S., clarifies Such.

“Our service is exclusive to U.S. clientele, hence we operate under different clientele spheres than other markets,” he added. Robinhood has also ventured into this domain with election prediction contracts for domestic users, on a selective participation basis only.

Kalshi, though predominantly U.S.-focused, eyes expansion beyond, eyeing foreign political betting markets post the current U.S. election cycle. Applications with U.S. federal regulators to offer bets on Canadian, Australian, and Ecuadorian elections are underway, as per CFTC filings.

Such withheld specific details about potential future contracts yet indicated a strategy aligned with the interests of U.S. bettors.

Edited by Sebastian Sinclair and Andrew Hayward