“You can go on TV and say there's a recession tomorrow, and you're going to get a lot of clicks. Everyone's going to watch because you're doomsday and whatever. But it doesn't really matter if you're not right. But on markets, it really, really matters if you're right.”
Masters of Scale · Startups & Venture · October 2026
The host asked why prediction markets forecast as well as studies say they do. Lopes Lara had explained that money at stake gets people to do research and then compete on price. She is a co-founder of the prediction market Kalshi, so she is describing her own product.
Transcript
No, that's a good question. Because we're federally regulated, we don't allow markets on war, terrorism, assassination, and any of that. The reason we decided to extend market, same thing with the Maduro, is that actually there are a lot of different ways that a person can be out of power, right? And an example is Maduro, for example. He wasn't assassinated or anything like that. And you could see like the impact, the clear economic impact that had, for example, in like price of oil. So what we do for these markets is actually we let that market operate. But what we do is if there is an assassination or a terrorism or a case or something like that, what we do is we void every trade. So no one can profit from it. And we kind of like, that's kind of how we draw, we drew the line in this case. I think that the reason we did the reimbursement was actually not because we thought there was anything wrong, but I think that we didn't do a good enough job in the product to explain to users how that voiding would work. And I think that that's what got confused. Now, after this market, we actually have been way more selective with the markets that we list.
I've seen some Federal Reserve studies that say that prediction markets are more accurate than almost any forecasting method. When money's on the line, people are incentivized to tell the truth in a different way. Like, why do they work?
If I ask you right now, if you think it's going to rain tomorrow, you might say, oh, maybe it's going to rain. Yes, it's going to rain. But if I tell you, I'll give you $100 if it's going to rain tomorrow. The first thing you're going to do is you're going to open your phone and you're going to open the website like the weather.com. You're going to look outside. You're going to maybe call your, you know, your mom and ask, like, you know, do you think it's going to rain tomorrow? What do you think? And there is. Up their first layer, which is if you're incentivizing people that you will make money if you're right or lose money if you're wrong, they will go out and do research and get more information to bring to the market. So, that's layer number one. And also, why, like, yeah, they're layer number one. Layer number two is that you actually have now competition between these people, right? Like, I went and asked my mom and did all my research. You did the same. And now we are both going to try to compete on the market for the best price so that we're going to match with someone that's willing to trade against us. So, now there's price competition and that price competition, that trading of price competition, really makes the market get to the best forecasted value. That is, everyone in the market kind of agrees that that price is fair. Because if someone doesn't agree with it, they're going to trade and they're going to move the price, right? So, that combination of the incentives for people to bring like more information to the market incentive to make money and the price competition makes that number the best forecast that you can because it's basically everyone that did a lot of research is agreeing that that price is the best one. Um, and you can track it with time, right? Like, because the markets are open 24/7, every second there's some news, maybe that fair value change, and now there's an incentive for someone to come and move and trade to make money. And because of that, markets become kind of efficient and they become the best forecast and the real-time forecast of what's going to happen in the future. You can go on TV and say there's a recession tomorrow, and you know, you're going to get a lot of clicks. Everyone's going to watch because you're, you know, doomsday and whatever. But it doesn't really matter if you're not right. But on markets, it really, really matters if you're right. We actually put out our own calibration study. And what calibration really means is like if a market says there's a 70% chance of something happening, is it actually true that seven out of 10 times something will happen? And the results were very, very, very good. That calibration and prediction marks is very good. And as you get closer and closer to the date or the resolution date, they get even like high 90s on calibration and kind of accuracy.
Prediction accuracy in the high 90s is pretty darn good. One of the benefits of deploying market dynamics. So, what does Calci reveal about the upcoming U.S. midterm elections? And what about Timothy Chalamet's strange dentist chair ad for Calci? We'll talk about that and more after the break. Stay with us.
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Before the break, Kalchi's Luana Lopes Lara talked about what makes prediction markets better and broader than sports betting. Now she talks about election predictions as we near the midterm, plus insider trading surveillance, how Calci is like ballet, and Timothy Chalamet's strange dentist chair ad. Let's jump back in. Election polling has become kind of unreliable. What does Calci's current data say about the midterms? Is that 70% accuracy? Or like at what point does it start to move toward 90%?
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