Kalshi rolled out transparency features for its election contracts. The features include tags that tell users which markets have low volume. This is like labeling the clearance bin at a store that only sells clearance items.
The platform decided traders needed help identifying which political betting markets are completely f*cking dead. Imagine needing a warning label to know that the "Will the Comptroller of Wisconsin Be a Libra" market has three participants. Two of them are the same guy who forgot he already placed a bet.
This arrives ahead of midterms. Kalshi apparently watched retail traders throw money at illiquid contracts and thought the problem was insufficient signage. Not that people are betting on elections using a platform most Americans still confuse with a yoga studio. Not that election betting attracts the exact type of person who thinks they understand politics because they listen to podcasts at 1.5x speed.
The transparency features will surely help. Now when Brad from Phoenix puts his rent money on a State Senate race in Delaware, he'll see a little tag that says "low volume." He will read this tag. He will understand what it means. He will carefully reconsider his position sizing. He will not do any of those things.
Kalshi is essentially admitting that chunks of their election markets are ghost towns while simultaneously asking people to trade them. It's the financial equivalent of a restaurant putting up a sign that says "Our kitchen barely passes inspection" and expecting more customers.
The real innovation would be a tag that says "You Are The Liquidity."
Photo by on Unsplash
Leave a Comment