WEBVTT - Kalshi CEO Talks AI's Impact on Prediction Markets 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. Matt, We're talking about

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<v Speaker 1>it a little earlier that prediction market call She is

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<v Speaker 1>partnering with Elon Musk's XAI to bring rock to prediction markets.

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<v Speaker 1>According to a post by x AI, we're going to

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<v Speaker 1>bring in call She CEO Trek Montsur to talk a

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<v Speaker 1>little bit more about this change you're seeing in prediction markets. Tara,

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<v Speaker 1>good to see again. I'm wondering what AI is going

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<v Speaker 1>to do to prediction markets moving forward, particularly because you've

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<v Speaker 1>seen them taken off so much since the election and

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<v Speaker 1>then some.

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<v Speaker 2>Yeah, well thanks for having me. Really excited to be here. Well,

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<v Speaker 2>I think it is one of the things that may

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<v Speaker 2>be the only thing that's going fast on the prediction

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<v Speaker 2>markets today. So you know, we're obviously incorporated my ways.

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<v Speaker 2>As you see, we've done two, i would say, two

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<v Speaker 2>of the leading commercials that were sort of AI first

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<v Speaker 2>commercials over the last few months. You may have seen

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<v Speaker 2>or two of them, and I have seen sort of

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<v Speaker 2>an explosion of the use of AI cross marketing after

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<v Speaker 2>the Surffirt Calchhieri commercial. So we're very excited about, you know,

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<v Speaker 2>the use of the technology, what it could be into

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<v Speaker 2>marketing teams and how it could make sort of teams

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<v Speaker 2>more efficient across the board. Obviously, the prediction markets AI

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<v Speaker 2>intersects could be very interesting going forward in the future.

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<v Speaker 1>Prediction markets have certainly been interesting for retail investors who

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<v Speaker 1>are looking to put their money based on where their

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<v Speaker 1>expectations are. But I'm also hearing more and more from

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<v Speaker 1>Wall Street as well. A little bit earlier in the year,

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<v Speaker 1>as talking to Boaz Weinstein, who has been using prediction

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<v Speaker 1>markets to inform some of the ways he's thinking about

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<v Speaker 1>putting trades on. How much are you talking to institutional investors,

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<v Speaker 1>hedge funds and other large investors in terms of how

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<v Speaker 1>they're using your platform and maybe even putting much larger

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<v Speaker 1>dollars to work.

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<v Speaker 2>You know, it's funny because when I tell people about

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<v Speaker 2>the story of Caush, you know, the genesis of Calshi

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<v Speaker 2>is I was spent out my golden sacks. And at

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<v Speaker 2>the time, it was twenty sixteen that summer, and at

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<v Speaker 2>the time, most of the men that was coming from

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<v Speaker 2>institutional investors was actually, can we put a trade on

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<v Speaker 2>Brexit or hedge against Brexit, or can we take a

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<v Speaker 2>position on Trump or hedge against Trump? So it was

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<v Speaker 2>very simple, like it's Tritians like retail. They think in

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<v Speaker 2>normal human terms, like what will happen in the future,

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<v Speaker 2>and let me figure out how to make money off

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<v Speaker 2>of it or trade on it. But the problem is,

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<v Speaker 2>like you know, for example, we told people like you

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<v Speaker 2>should shore the SMP if Trump wins, and then you know,

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<v Speaker 2>they were right about Trump winning, but then the SMP rally,

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<v Speaker 2>so they lost money. So that was the idea when

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<v Speaker 2>we really created prediction markets six years ago. So we

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<v Speaker 2>started coming in twenty eighteen, and when we came up

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<v Speaker 2>with the idea, it was basically this idea of like, well,

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<v Speaker 2>there's a financial market for all these different things except

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<v Speaker 2>for the one thing that people care most about, which

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<v Speaker 2>is questions about the future. So how about we build

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<v Speaker 2>that financial market for them to take direct exposure to

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<v Speaker 2>all these different questions. And our approach has always been

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<v Speaker 2>like the most important thing to do first is to

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<v Speaker 2>legal lice friction market. So that so Calshi. What we

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<v Speaker 2>did is we created the category, then we legalize it

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<v Speaker 2>first and foremost, and you know, there's a long history

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<v Speaker 2>that we had with the government to you know, going

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<v Speaker 2>through the process for years and then soothing government to

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<v Speaker 2>open the asset class ope wide open, which has finally

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<v Speaker 2>enabled us to achieve division of being able to attract

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<v Speaker 2>institutions and for people to think discredibly and seriously, and

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<v Speaker 2>we're very very excited about that. We're seeing a ton

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<v Speaker 2>of demand going forward.

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<v Speaker 3>How do you pick trek the things that people can

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<v Speaker 3>bet on? You've had contracts on, well, the Pope obviously

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<v Speaker 3>was was an important one, but recently you've had I

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<v Speaker 3>guess a market in whether or not the CEO of

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<v Speaker 3>Astronomer would resign after the Coldplay kiss cam incident, Like

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<v Speaker 3>how do you find these things and choose to put

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<v Speaker 3>them up?

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<v Speaker 2>Well, you know, the interesting thing, the way I think

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<v Speaker 2>about it is, you know, prediction markets are a financial

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<v Speaker 2>market for any questions about the future, right, And if

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<v Speaker 2>you think about it that way, you just have to

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<v Speaker 2>figure out, like, what are the most pressing, interesting, important

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<v Speaker 2>questions about the future that we have today, this week,

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<v Speaker 2>this month, And that's really kind of how we generate

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<v Speaker 2>these questions. So, you know, on that day, obviously the

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<v Speaker 2>Astronomer's CEO went absolutely viral, and the number one question

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<v Speaker 2>that people were asking on social was is he going

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<v Speaker 2>to stick around? Or is he going to get fired,

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<v Speaker 2>and so we sprinted and we listed it, and that

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<v Speaker 2>market was absolutely explosive. We've seen something like fifty million

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<v Speaker 2>impressions on that market and a lot of people made

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<v Speaker 2>a lot of money, you know, trading and forecasting whether

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<v Speaker 2>he was going to get ousted and this is important

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<v Speaker 2>for washing or like whether he was going to stick

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<v Speaker 2>around or be gone. That's you know, going to have

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<v Speaker 2>a huge impact on the valuation of the company, and

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<v Speaker 2>a lot of people are positioned in that company. So

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<v Speaker 2>it really is about what our customers want, what our

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<v Speaker 2>users are suggesting, and what's viral and trending on any

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<v Speaker 2>given week.

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<v Speaker 3>What are some of the most surprising, big volume bets

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<v Speaker 3>that you've seen, Trek. I mean, it's such a wide

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<v Speaker 3>range of issues, right, tell us about the volumes of

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<v Speaker 3>some of these things, like how much were people betting

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<v Speaker 3>on the astronomer CEO's resignation, and what are some of

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<v Speaker 3>the ones that have surprised you.

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<v Speaker 2>You know, it's funny because you know the history sort

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<v Speaker 2>of We won the lawsuit in October and then we

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<v Speaker 2>launched the election market. So it was the first time

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<v Speaker 2>that prediction markets were fully legalized in the US, including elections,

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<v Speaker 2>and then you know, you may remember our numbers completely

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<v Speaker 2>skyrocketed during the election month, right so October November we

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<v Speaker 2>were number one on the app store, we had five

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<v Speaker 2>hundred million unique side visitors. We're pretty much kind of

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<v Speaker 2>the largest website on the planet. For a few hours

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<v Speaker 2>on election night, and then people have the questions like

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<v Speaker 2>is this done? You know, is this going to kind

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<v Speaker 2>of go away after the election, And you know, we're

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<v Speaker 2>extremely proud to announced that this June actually last month,

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<v Speaker 2>we had more volume than the election month. And so

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<v Speaker 2>I think something CALC did something here, which is, you know,

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<v Speaker 2>after we've legalized and opened the space, but then we've

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<v Speaker 2>also taken it mainstream where the average Americans have the

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<v Speaker 2>Calci app in their hand and they're trading on things

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<v Speaker 2>and debating with their friends. Now there's a shift in

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<v Speaker 2>mentality and shift in behavior that we've enacted with the

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<v Speaker 2>American people where now every time they see a headline,

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<v Speaker 2>they see the news, they want to take action on it.

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<v Speaker 2>They want to get informed about the market and see

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<v Speaker 2>what's happening, the same way they did with the election.

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<v Speaker 2>And so we see across the board. You know, I

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<v Speaker 2>mentioned the Pope, the astronomer's CEO is a very interesting market.

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<v Speaker 2>Whether TikTok is going to get banned, that saga is

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<v Speaker 2>not done. Sports has been an extremely fast growing category

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<v Speaker 2>on Calshi. We're actually the fastest growing thing that happened

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<v Speaker 2>to sport in a decade.

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<v Speaker 1>At the same time, you're watching a lot of other

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<v Speaker 1>companies get really interested in the space and other contenders

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<v Speaker 1>able to get a little bigger. You see polymarket for example,

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<v Speaker 1>the Department of Justice ending their probe, them striking the

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<v Speaker 1>deal to buy a derivative exchange in clearinghouse in the

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<v Speaker 1>US market, Robinhood looking at prediction contracts as well. What

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<v Speaker 1>does this mean for you to see that much more competition?

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<v Speaker 1>Does it make you want to bring on more investors,

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<v Speaker 1>do acquisitions on your own, or even sell a company

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<v Speaker 1>at some point?

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<v Speaker 2>Well, it's actually very simple, right, Like you know, whenever

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<v Speaker 2>you see it, this is not not utilian industry. Like

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<v Speaker 2>we've had an incredible amount of success. If you look

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<v Speaker 2>at our volumes, if you look at our revenue trajectory,

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<v Speaker 2>if you look at our customer base on how it's grown,

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<v Speaker 2>it's super normal for competition to basically want to follow,

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<v Speaker 2>you know, and we're excited about that competition. That's amazing.

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<v Speaker 2>It's a validation of the business model, it's a validation

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<v Speaker 2>of the market is going to be very large and

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<v Speaker 2>it's growing, and we have you know, we're squarely in

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<v Speaker 2>the lead position with a very very strong headstart because

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<v Speaker 2>of our unwaivering commitment to build it legally, build it

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<v Speaker 2>credibly in the US, and now a lot of people

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<v Speaker 2>sort of are, you know, trying to replicate the setup

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<v Speaker 2>and do the same exact things that we've done over

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<v Speaker 2>the last few years. So we're super excited about that,

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<v Speaker 2>and we see the marketplace going exponentially over the next

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<v Speaker 2>few years, and we're going to keep being in the

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<v Speaker 2>lead position.

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<v Speaker 1>Turk, what are the odds that you go public?

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<v Speaker 2>I beg, Yeah, you know, I can't bet or trade

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<v Speaker 2>on prediction markets because I run one, but you know

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<v Speaker 2>I like that side of the trade, is what I'll say.

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<v Speaker 3>All Right, Trek, great having you on the program. Please

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<v Speaker 3>come in and sit at the desk with us next

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<v Speaker 3>time you're in New York City. CEO of Klshi there,

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<v Speaker 3>Tarek Mansour