Why Does Kalshi Grow a Lot by Running a Federally Regulated Exchange Rather Than a Sports Book?

Kalshi grows a lot because an exchange provides a fairer more accessible and more transparent way to trade than a sports book. Users on Kalshi trade against each other while Kalshi collects a transaction fee. Sports books make money equal to customer losses so their incentives differ completely from Kalshi.

Kalshi needs national liquidity for the market to work well. Trading only in one state like the New York Stock Exchange limited to New York would create significantly worse prices and low liquidity. Kalshi does not trade against users or make money when people lose so the company wants winners to increase price competition. Sports books cap winners and hold a monopoly on pricing so they can adjust margins after a bad month. Federal regulation for exchanges developed separately because the mechanics differ so much from gambling operations.

Users see all prices and the order book in real time on Kalshi. Consumers choose what serves them better.