Kalshi's Influencer Tactics: A Double-Edged Sword

In the rapidly evolving world of event-betting markets, Kalshi's recent admission of enlisting influencers to discredit its arch-rival, Polymarket, has raised eyebrows and sparked conversations about the ethics and effectiveness of such strategies. As the CEO of Kalshi, Tarek Mansour, confirmed on a now-deleted podcast segment, the company asked influencers to promote memes about the FBI raid on Polymarket's CEO Shayne Coplan's home. This revelation begs the question: what are the potential implications of such tactics for Kalshi, Polymarket, and the broader market?



Firstly, Kalshi's influencer-driven campaign may have temporarily boosted its visibility, but it also risks eroding user trust in the long term. A survey by Edelman found that 67% of consumers believe that brands should address societal issues, and 64% will buy from or boycott a brand based on its stance on social and political issues (Edelman, 2021). Kalshi's underhanded tactics may alienate users who value transparency and authenticity. Meanwhile, Polymarket could benefit from increased user sympathy and scrutiny of Kalshi's actions.

To mitigate potential damage, both companies should focus on rebuilding trust through transparent communication and ethical business practices. Kalshi, in particular, must acknowledge and address the issue transparently to regain public trust. Polymarket, on the other hand, should capitalize on the opportunity to appear as the victim and address any concerns about its own influencer marketing tactics.

Secondly, the differing regulatory histories of Kalshi and Polymarket impact their ability to operate in the U.S. market. Kalshi, backed by Sequoia and Y Combinator, has been legally permitted to accept trades from U.S. residents since 2021, following a lawsuit win in September 2024 that allowed it to accept bets on election outcomes. In contrast, Polymarket, following a 2022 settlement with the Commodity and Exchange Commissions, is barred from allowing U.S. traders to place bets on its platform. This regulatory disparity impacts their ability to operate in the U.S. market, with Kalshi enjoying broader access and Polymarket facing restrictions.

Lastly, the regulatory environments in other jurisdictions significantly influence the competitive dynamics between Kalshi and Polymarket. While Kalshi has been legally permitted to accept trades from U.S. residents since 2021, Polymarket is barred from allowing U.S. traders to place bets on its platform following a 2022 settlement with the Commodity and Exchange Commissions. This regulatory disparity allows Kalshi to capture a larger share of the U.S. market, potentially giving it a competitive advantage. However, Polymarket's restriction on U.S. users may force it to focus on international markets, where regulatory environments may be more favorable or less restrictive. This could lead to a shift in competitive dynamics, with Polymarket targeting jurisdictions where it can operate more freely, potentially attracting users who are restricted from using Kalshi.

In conclusion, Kalshi's influencer-driven campaign to discredit Polymarket may have short-term benefits but risks long-term damage to user trust and engagement. Both companies must prioritize transparency and ethical business practices to rebuild trust. The regulatory environments in the U.S. and other jurisdictions significantly impact the competitive dynamics between Kalshi and Polymarket, with Kalshi enjoying broader access to the U.S. market and Polymarket focusing on international markets. As the event-betting market continues to evolve, companies like Kalshi and Polymarket must navigate these challenges and adapt to maintain their competitive edge.