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Comment by SpicyLemonZest | Hacker News Reader

> She went on: "If you ask our millions of traders, they would emphatically tell you that an exchange model is significantly healthier than a sportsbook model: our profits aren't tied to trader losses, so we don't have the same predatory incentives."

Really wish the author had pushed back more on this. They have different predatory incentives, benefitting from encouraging people to make a large number of slightly stupid bets rather than a smaller number of very stupid ones. I would love to hear Kalshi explain what non-predatory value the 15 minute crypto markets have.

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You are mistaken. For every person making a "slightly stupid bet" there's another person who is making a "slightly smart bet". With Kalshi, they aren't the casino who encourage people to make a bunch of bets with negative EV. They are a marketplace that allows one smart person to make a bet with one dumb person (according to your parlance). As long as the markets are fair with no manipulation, things should balance out.

It's like the stock market, where there's always one buyer and one seller. The marketplace, ie. NYSE or Nasdaq for example, don't bias in any particular direction they just being one side together with the other.

They don't care whether the bets are stupid or informed. They don't make more money out of losers than they do out of winners, unlike traditional gambling platforms. (Though this in no way means that you have to like kalshi)

Maybe Kalshi doesn’t care about this, but if the goal is accurate predictions, prediction markets need someone to lose money to fund the sharps, or the markets won’t be big enough to be worthwhile.

In some traditional markets, a source of funding is investors who are hedging, essentially buying insurance.

KalshiEX, the platform, makes a bit more money from losers because they subsidize sophisticated winners through their market maker program.

Kalshi Trading LLC, the market maker which is fully owned by KalshiEX and has no independent online presence, makes money from losers in the same way as traditional gambling platforms. Kalshi's claims that this is an independent company are obviously absurd. (It's fair, I think, to say that the structure of the market limits their ability to make windfalls from severe mispricing.)

I guarantee that Kalshi or someone associated with Kalshi is making the other side of some of these orders. Perhaps accounts flagged as consistent losers.

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