WEBVTT - Kalshi CEO Tarek Mansour Talks Arizona Criminal Charges

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Arizona has filed criminal

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<v Speaker 1>charges against cal She, accusing the company of operating an

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<v Speaker 1>illegal gambling business. To Max Tim snowk joins us now

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<v Speaker 1>with Kaushi Kofouna and CEO Tim take it away. Hi,

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<v Speaker 1>We're joined by Tarak Monsieur. He's the CEO and co

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<v Speaker 1>founder of Call She. Tarak, good to see you. Thanks

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<v Speaker 1>for joining us on this.

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<v Speaker 2>Look.

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<v Speaker 1>Even though other state regulators have taken steps to crack

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<v Speaker 1>down on what they say is unlicensed betting on call

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<v Speaker 1>She's site, Arizona appears to be the first to escalate

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<v Speaker 1>to criminal charges. What is your response to these charges?

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<v Speaker 2>Look, I mean, these charges have nothing to do with

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<v Speaker 2>gambling or the merits. If it was about gammling or

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<v Speaker 2>remote they would let the judicial process fright its course

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<v Speaker 2>in the federal courts. You know, five days ago on Thursday,

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<v Speaker 2>CALCI filed suit against Arizona and federal courts on the

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<v Speaker 2>mets on whether Calshi is subject.

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<v Speaker 3>To exclusive jurisdiction of the CFTC.

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<v Speaker 2>And you know, we're gone from an opposition and wanted

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<v Speaker 2>to let the court process play out.

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<v Speaker 3>And instead of letting that happen.

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<v Speaker 2>The Arizona Attorney General decided to subvert the judicial process

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<v Speaker 2>and weaponize it and go to state court and file

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<v Speaker 2>these criminal charges, which you know, we view as merit

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<v Speaker 2>lists and basis. We see this as a total overstep

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<v Speaker 2>and we look forward to finding it in court.

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<v Speaker 1>Well, experts are saying this could be the first of

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<v Speaker 1>many charges such as these from other states too. How

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<v Speaker 1>does it change your legal strategy.

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<v Speaker 2>Well, this is the whole point of federal preemption. So

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<v Speaker 2>this is not about camera. The charges that the attorney

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<v Speaker 2>general filed are not about gambling, they're not even about

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<v Speaker 2>sports only. They're about prediction markets writ large. It's just,

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<v Speaker 2>you know, attacking the entire business model. And nothing prevents

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<v Speaker 2>from the same attorney general or others from fighting the

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<v Speaker 2>same criminal charges against derivatives markets writ large. They could

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<v Speaker 2>file the same exact charges under the same analysis against

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<v Speaker 2>CME or Ice or NASTAC. And that's the whole point

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<v Speaker 2>of federal regulation of these financial exchanges is to prevent

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<v Speaker 2>this sort of chaos and these sort of attacks on

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<v Speaker 2>these businesses that could be political in nature or or other.

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<v Speaker 3>And that's a very important distinction.

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<v Speaker 1>Well, I read the charging document from the Attorney General

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<v Speaker 1>as twenty charges. They're mostly about betting and wagering when

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<v Speaker 1>it comes to sports, there's some election stuff in there.

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<v Speaker 1>Would you ever consider limiting your business in Arizona or

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<v Speaker 1>other states to things that these ags don't seem to

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<v Speaker 1>have problems with, like economic data, the price of bitcoin,

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<v Speaker 1>what markets are going to do predictions around those things.

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<v Speaker 2>Look, I mean the AGE also claimed that we have

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<v Speaker 2>war markets, which is incorrect. It's either flat out to

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<v Speaker 2>lie or it's misinformed take which is unfortunate for someone's

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<v Speaker 2>you know, filing criminal charges against the company. What's more

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<v Speaker 2>important here, again is this is not about the merits.

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<v Speaker 2>If it's about the merits, let's let the judicial process

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<v Speaker 2>run its.

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<v Speaker 3>Course in federal courts.

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<v Speaker 2>This is about something other than the merits, which is

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<v Speaker 2>what I'm focused on. I don't know what the AG

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<v Speaker 2>is focused on, but you know she is off for reelection.

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<v Speaker 2>You know, it does, it did some press, It does

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<v Speaker 2>seem to be making some buzz. But what I'm really

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<v Speaker 2>focused on is building create product for URM lends of customers,

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<v Speaker 2>out of which close to four hundred thousand are in Arizona,

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<v Speaker 2>and fighting any of these basless cases in courts, which

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<v Speaker 2>was which we're going to continue doing.

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<v Speaker 1>So you're fighting the cases. As I mentioned, Arizona is

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<v Speaker 1>not the only state to take issue with your business.

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<v Speaker 1>What happens ultimately if courts do side with states, what

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<v Speaker 1>does it mean for the future of your company.

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<v Speaker 3>We believe in the rule of law.

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<v Speaker 2>Right, we will always abide by court decisions.

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<v Speaker 3>The law applies to us, but it also applies.

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<v Speaker 2>To the government, including state governments, and that's a very

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<v Speaker 2>important thing.

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<v Speaker 3>Right.

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<v Speaker 2>This is really not about our business model. Again, if

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<v Speaker 2>it was about our business model, we would be focused

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<v Speaker 2>on the federal courts and the lawsuit about the merits.

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<v Speaker 2>This is a broader attack, and you know many states

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<v Speaker 2>have sided with us and have granted us a preliminary

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<v Speaker 2>in junction agreeing with our legal analysis. We have spent

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<v Speaker 2>four years getting regulated by the federal government, and we

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<v Speaker 2>have a federal government in the CFTC that is come

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<v Speaker 2>strongly in favor of our position. Following these charges is

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<v Speaker 2>a total total overstep and an overreach from an ag

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<v Speaker 2>that's up for reelection, and we find that unfortunate. But

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<v Speaker 2>we will stay focused on what we do best, which

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<v Speaker 2>is building a great product.

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<v Speaker 1>So certainly the CFTC. We know where the CFTC stands,

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<v Speaker 1>and we know where Michael Mike Selig stands on this.

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<v Speaker 1>We don't know where courts stand on this. And I'm

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<v Speaker 1>wondering if if we see a state like Nevada, for example,

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<v Speaker 1>block access to your business, what will you do? Will

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<v Speaker 1>you continue to operate or will you will you say, Okay,

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<v Speaker 1>we're not going to operate in Nevada.

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<v Speaker 2>Well, first of all, let's let's get to that point,

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<v Speaker 2>and you know, we'll have to make a decision as

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<v Speaker 2>the company what we do. What I can reiterate is

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<v Speaker 2>we will one hundred percent abye by the law.

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<v Speaker 3>That's what we will do as a company. It's always

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<v Speaker 3>been our position.

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<v Speaker 2>That's why we spend four years getting regulated upfront, regulatory

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<v Speaker 2>first as a company and.

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<v Speaker 3>Always abide by the law.

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<v Speaker 2>But what I always say, the law applies to us

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<v Speaker 2>as much as it applies to the government. And government

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<v Speaker 2>oversteps the law and goes out of bound, We're going

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<v Speaker 2>to fight that in court, which we look forward to.

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<v Speaker 1>How long does that process take? Because it seems like

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<v Speaker 1>there's a regulatory limbo happening. You're you're it's almost like

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<v Speaker 1>your legal team is going to have to play whack

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<v Speaker 1>the moll with all these states that are that are

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<v Speaker 1>filing suit or bring in criminal charges. How long is

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<v Speaker 1>this going to take?

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<v Speaker 2>And gladly we have a legal team to handle these

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<v Speaker 2>types of things and they're going to be focused on

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<v Speaker 2>and you know, maybe it's a question for them. I mean, look,

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<v Speaker 2>whatever long it takes, we're going to fight for prediction markets.

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<v Speaker 2>I spent eight years building this company, four out of

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<v Speaker 2>which I have a which are getting regulated upfront.

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<v Speaker 3>I really believe in this marketplace.

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<v Speaker 2>I'm very excited about the growth that we're seeing some

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<v Speaker 2>of the fast growing company companies in America right now.

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<v Speaker 2>And so what I'm going to be focused on is

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<v Speaker 2>keep building a great product, and that's what's sort of

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<v Speaker 2>most important for me. The more important sort of question is,

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<v Speaker 2>you know, when it comes to this is not really

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<v Speaker 2>about you know, whether this is gambling or not. This

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<v Speaker 2>is not really about state versus federal which are both

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<v Speaker 2>co existing and both growing both models. This really is

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<v Speaker 2>turning into sort of some special interests that like the

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<v Speaker 2>status quo.

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<v Speaker 3>The status always worked.

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<v Speaker 2>Very well for monopolies, but not for the consumers that

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<v Speaker 2>are flocking to prediction markets right now.

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<v Speaker 3>Which we're going to keep plighting for Tark.

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<v Speaker 1>There is this perception though that people think this is gambling.

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<v Speaker 1>An IPSOS survey from just a few weeks ago, for example,

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<v Speaker 1>show sixty one percent of adults safe prediction market trading

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<v Speaker 1>is closer to gambling. Eight percent say it's closer to investing.

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<v Speaker 1>So there is this public perception that doesn't necessarily match

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<v Speaker 1>with what you say. The platform is how do you

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<v Speaker 1>respond to that and how do you battle that? Like,

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<v Speaker 1>how is this not gambling?

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<v Speaker 2>I haven't really looked at these polls, you know. The

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<v Speaker 2>thing I will say is there's always been a battle

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<v Speaker 2>of whether financial derivatives are gambling. Great features were called

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<v Speaker 2>gambling and the eighteen hundreds, and there was a Supreme

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<v Speaker 2>Court decision that you know, said even though there's speculation,

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<v Speaker 2>these you know, products have financial our structures the financial markets,

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<v Speaker 2>and thus are going to fall under financial market jurisdiction.

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<v Speaker 2>So I always say this, you know, whether it's something

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<v Speaker 2>feels and looks like gambling doesn't necessarily make it gambling.

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<v Speaker 2>Speculation exists in all financial markets. If we're going to

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<v Speaker 2>take a line that speculation is gambling, then the stock

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<v Speaker 2>market with retail participation is gambling, then buying options for retail,

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<v Speaker 2>or is your data to expire options is gammling, then

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<v Speaker 2>retail buying crypto is gambling. The more important line in

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<v Speaker 2>the historical line that we've been taking under the law,

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<v Speaker 2>but also as you think about it societally. Is the

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<v Speaker 2>business model a gambling business model, which is a model

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<v Speaker 2>where the revenue of the business and the profits are

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<v Speaker 2>equal to the customer's losses, in which case the incentive

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<v Speaker 2>is to promote more losses and blog the winners. Or

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<v Speaker 2>is it an open, free and fair marketplace where people

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<v Speaker 2>can enter in and out freely and transparently, which is

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<v Speaker 2>a financial exchange, in which Calci falls under.

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<v Speaker 1>Tark Monsieur Calci co founder and CEO. Tark always good

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<v Speaker 1>to speak with you. Thanks so much for joining us.