The co-founders of predictions market Kalshi said in the latest episode of "The Axios Show" that they're playing by the rules and benefiting society — even if a growing number of politicians and anti-gambling activists disagree.

Why it matters: Kalshi has become very big business, last month taking nearly $13 billion of bets on everything from sporting events to elections to where Taylor Swift and Travis Kelce will get married.

The WSJ recently reported that the New York-based company is raising new private funding at a $22 billion valuation, a figure its cofounders didn't dispute on the show.
"The Axios Show" is our series featuring top Axios reporters interviewing newsmakers shaping politics, business, tech, and culture.

What they're saying: "In a world nowadays with this amount of polarization ... it's very important to have an unbiased source of information that can help you see and decrease the uncertainty about so many events that's going to happen in the future," says Luana Lopes Lara, who serves as Kalshi's chief operating officer.

"This applies to people, but also businesses and institutions, even governments," adds CEO Tarek Mansour.

Zoom in: They argue that Kalshi operates more like a stock market or commodities exchange than a casino or sports betting app.

All of its prediction "contracts" are approved by the Commodity Futures Trading Commission, and Kalshi isn't on the other side of any trade. Instead, the company takes a cut of the wins and sells its data to institutions.
It also doesn't prevent big winners from continuing to bet, as some sports books are known to do, nor does it offer financial incentives for losers to keep betting.

Yes, but: Around 70% of Kalshi's volume in March was on sports, which has questionable value when it comes to actionable intelligence.

Kalshi's sports markets do, however, boost engagement, revenue and overall platform liquidity, the co-founders said.

The big picture: Kalshi has been sued by numerous states, but it has a growing track record of beating governments in court.

In 2023 it sued its own regulator, the CFTC, in order to legally offer bets on U.S. elections.
Just hours before sitting down with "The Axios Show," a U.S. appeals court ruled that New Jersey has no right to regulate predictions markets.
The only successful state lawsuit so far has been in Nevada, which won a temporary injunction, but many more cases are pending.

What to watch: The Supreme Court most likely will have final say.

A pro-Kalshi ruling would move the matter to Congress, where members seem worried about both betting additions and insider trading. Those criticisms are voiced most pointedly by Democrats — the party that Kalshi's market predicts will retake the House in the midterms this year (the Senate is a toss-up).
As for Republicans, Kalshi last year added Donald Trump Jr. as a paid advisor, but Lara insists that the company has never asked him to influence regulation.
"The most important thing we see resonate with politicians on both sides is ... consumer protection," Lara says.