Bloomberg Host (2:47)

All of that to come. We begin with the company seemingly at the epicenter of the tech world and I also has the world's largest market cap. We're talking about Nvidia at the company's big annual AI gathering. It's known as gtc. It was held this past week in San Jose, California. CEO Jensen Huang announced that the company is betting on a total AI factory takeover with its newly unveiled Vera Rubin platform. Central to that plan and what really caught our attention, the headline from the company that moved markets and moved its stock that its AI processors would generate $1 trillion in sales at Nvidia through the end of 2027.

Bloomberg Interviewer (3:26)

Jensen also said the $1 trillion projection for AI chip sales doesn't capture other product offerings and signaled that total revenue will surpass that level as the company pushes into new markets like autonomous vehicles. At the event, it secured deals with Uber and Lyft to power its fleet of robo taxis. And also a slew of other announcements with many other companies and their own AI offerings.

Bloomberg Host (3:47)

Mandeep Singh is Bloomberg Intelligence Global head of Technology research. He tells us Nvidia is becoming more than just a chips company.

Mandeep Singh (3:55)

They're trying to expand the ecosystem and they want to convey to the street that it's not just about the data centers, but also about autonomous vehicles with the Uber and Lyft partnership. So physical AI is a big theme for Nvidia. And their whole thing is we are a systems company. Don't treat us like a chip provider who's just supplying the GPUs. Okay, we do end to end systems,

Bloomberg Interviewer (4:22)

but how much do they make from just the chips versus how much they make from these other markets?

Mandeep Singh (4:26)

I mean, right now it's all data center driven.

Tarek Mansour (4:29)

Exactly.

Bloomberg Interviewer (4:30)

And the idea is that they want to, they want to show that there's this physical AI or these robots that are going to be folding our clothes and doing our dishes, and that's going to be powered by Nvidia. You cover Uber and Lyft, you cover ride sharing. Is there a future there for Nvidia inside these cars?

Mandeep Singh (4:45)

I mean, it's a moonshot for me. And all these hyperscalers have moonshots. In the case of Alphabet, we know Waymo has paid off, but it took more than 10 years, you know, for that to get to a certain point. So from that perspective, I think it's still ambitious in terms of revenue generating opportunity. But look, I think that's what you can do as a CEO is to say that you have technology that is pervasive, that is not too niche. And Nvidia has proven the fact that they're guiding to trillion dollars in revenue through 2027 is a testament to the fact that they have expanded the addressable market In a big way address that

Bloomberg Host (5:29)

number because we did see the stock pop in the aftermarket on it and then it pulled back again. And all of us were kind of searching through and reminding us about what they've said is, was that a big upgrade in terms of their forecast or not really?

Mandeep Singh (5:41)

It certainly is from a growth perspective. 2027 growth numbers, consensus numbers are at least 5% above. Their consensus was based on this 1 trillion guide. The reason why they are not getting the credit from investors right now is because it's all driven by Nvidia's supply agreements. They have locked in TSMC supply. I would argue if Google TPUs have more supply, they would be growing faster too. So right now, because the market is so supply constrained, if Nvidia is saying they have locked in 70% of TSMC's wafer capacity, well, guess what, Anyone else who wants to make a chip cannot make a chip because there is no supply of TSMC wafers.

Bloomberg Host (6:30)

That's amazing. 70%?

Mandeep Singh (6:32)

Yes.

Bloomberg Host (6:33)

Wow, that's amazing.

Mandeep Singh (6:34)

And they prepaid $95 billion. Nvidia did. If you look at their just recently reported quarter, they had $95 billion in prepaid commitments to their suppliers, notably TSMC and some of the memory guys.

Bloomberg Host (6:50)

So they own it and it's harder for everybody else.

Mandeep Singh (6:53)

I would argue Google TPU is a very close second to Nvidia. The problem is they cannot ramp up supply.

Bloomberg Interviewer (7:01)

So explain how that constricts a company like Broadcom or AMD.

Mandeep Singh (7:05)

So Broadcom also guided $400 billion in revenue for 2027, which is why I think Nvidia gave that 2027 number is because.

Bloomberg Interviewer (7:14)

So Broadcom says $100 billion, Nvidia says

Mandeep Singh (7:16)

a trillion trillion through 2027. So if you kind of do the back of the envelope math, it equates to about $500 billion in revenue for 2027. So from a ratio perspective, Broadcom and Nvidia are currently at, you know, Broadcom has a 10 to 15% market share. Nvidia has almost 75%. And then you have AMD, that ratio is still more or less in line in 2027. And that's why they guided to the.

Bloomberg Interviewer (7:47)

But the $500 billion extra figure, does that imply no growth then in the industry that year or. Or for Nvidia that year? If they're bringing in $500 billion this year in that category and 500 billion.

Mandeep Singh (7:58)

No. So right now they're at a $215 billion run rate in data centers in 2026, it goes to 375 billion. So that's like a 70% and then for 2027 it gets to 500 billion which is another 35% growth. So the growth is still astronomical. When you think about a company of this scale growing at 70% and then 35%, that's phenomenal. So there's nothing to take away from what they are doing in terms of execution and how they're ramping up. But partly that has to do with how well they have managed the supply chain. It's like the Apple days when Apple was ramping up iPhones, they had a lock on the supply chain. Similarly, you see that with Nvidia they have managed the supply chain extremely well. In an environment where everyone is supply constrained, Nvidia did a great job of

Bloomberg Host (8:53)

managing that mandeep in terms of Nvidia putting that lock on the supply chain. Is that because the visibility and the actual orders, they're there. Like I keep wondering how much are they kind of locking in just to make sure they own it right and have it as the demand comes in, like how much are they guaranteed actually comes to fruition?

Mandeep Singh (9:13)

Well, they have the best performing chip and that's why, you know, I said it's really a tight race between Nvidia and Google GPUs. Everyone else is behind. And so from that perspective, the fact that Hyperscalers are still 60% of Nvidia's $500 billion revenue in 2027 just goes to show that there is no other place to go. If Meta wants to add AI infrastructure capacity, they have to get Nvidia chips. Same thing. Even Google with their TPUs is a big Nvidia customer. Why? Because that's the only way to add AI infrastructure capacity. Not with their own TPUs. They cannot make more TPU chips. So that's why all these hyperscalers are still such a big chunk of Nvidia.

Bloomberg Host (9:58)

It's pretty remarkable, right?

Bloomberg Interviewer (10:00)

Yeah, I'm looking.

Bloomberg Host (10:00)

I mean in terms of really no competition, right? Or at least not. They're not in the position of where Nvidia is at this point.

Mandeep Singh (10:07)

I think that supply factor is huge. If DSMC was to somehow raise their supply of chips, then I think Google TPU's has a shot at really ramping up faster. But until that happens, are they not

Bloomberg Host (10:21)

doing that or they can't do that.

Mandeep Singh (10:23)

You can see TSMC's capex for 2026 and all the capex, it takes about 18 months to ramp up a fab for it to be online. So this is, you know, the lead. Times are quite long when it comes to ramping up supply of TSMC's manufacturing capacity.

Bloomberg Interviewer (10:42)

Just a few of the headlines of partnerships Salesforce Teams with Nvidia on AI Agents Hyundai Kia Nvidia Expand Autonomous Driving Partnership IBM Announces Expanded Pack Within Video Salesforce. I mentioned stmi, ST Microelectronics to Partner with Nvidia. The headlines go on. HPE Unveils AI Factory Supercomputing Advancements with Nvidia. Does everybody want to work with Nvidia?

Mandeep Singh (11:06)

I mean that's if you have a 75% market share in one of the fastest growing areas in the enterprise market and everyone sees it's going to be a trillion dollar market, then yeah, you go with that 75%.

Bloomberg Interviewer (11:22)

L' Oreal expands AI partnership with Nvidia

Bloomberg Host (11:25)

I think it's just L'.

Bloomberg Interviewer (11:26)

Oreal.

Bloomberg Host (11:27)

They're planning to use 50% of free cash flow for investor returns. Is that smart when they say they're going to do buybacks, dividends?

Mandeep Singh (11:33)

It is the Apple playbook to me. Apple did exactly that. In terms of being shareholder friendly with their buybacks and reducing the share count. You're seeing that.

Bloomberg Host (11:46)

Such great stuff. As always. Mandeep Singh of our Bloomberg Intelligence team from Nvidia to another company that is so important to the AI spend OpenAI this past week our Ed Ludlow reported that OpenAI is in advanced discussions to form a joint venture with private equity firms to bolster adoption of its AI software.

Bloomberg Interviewer (12:05)

For more on that story. Plus met his deal with the AI data center developer Nebias. They call it a NeoCloud. We caught up with Bloomberg Tech co host Ed Ludlow.

Bloomberg Analyst (12:14)

So $1 trillion which is a range between 2025 and the end of 2027. The prior figure was $500 billion which was stated on October 28th of last year over a period of five fiscal quarters through the end of calendar 2026. So what this new number is $1 trillion between 2025 and the end of 20 27. It doesn't represent an acceleration nor an expansion of the outlook that Nvidia had kind of given. It's not saying that growth is accelerating beyond the prior trend. What they are doing is making that outlook further out. They're telling us what they see through the end of next year. So 2027 and the market reaction represents, you know the line chart. Bring up your GP on the terminal of Nvidia shares. Massive spike when. When Jensen Huang said it on stage and then Wall street did the math

Bloomberg Interviewer (13:16)

and he Realized this is just the natural progression of how things would go if things stated what he announced in October.

Bloomberg Analyst (13:22)

Yeah, I mean, it's very, very complicated because you can't say this is what they're tracking out on a, on a quarter basis going forward. The original forecast was just Blackwell Rubin Systems. It was stated out loud by Jensen Huang on October 28. And then it was a mismatch between a forecast for five fiscal quarters against a date line of the end of this calendar year, 2026. There's another data point within it and I posted the slide on X. There's a pie chart that they shared with it. What's really interesting is that in video is saying that 60%, 6, 0% of that revenue opportunity is coming from the hyperscalers still just those four big cloud computing providers. And the reason that's important is that that with Nvidia has been something very closely tracked, how much they're reliant on the hyperscalers only and how diversified their customer base is. And it seems as if actually it swung back to being heavily a majority being around the hyperscalers.

Bloomberg Host (14:24)

You know, I did the same thing because I saw the number and I'm like trying to understand, like, where is that? I need some context. And I was looking at, was it the CES reporting that Ian and you guys all did reporting, and he at that point was talking about $500 billion right. In revenue by the end of 2026. And I think an opportunity that it could eclipse that. So. So we need to kind of, I don't know, is there a question you would ask Jensen at this point off of this number or off of this.

Bloomberg Analyst (14:54)

Yeah. Why didn't you guys file an 8k or put it in writing so the market could understand it? And actually, like, I don't know, I think that the market might sympathize with me on that question.

Bloomberg Interviewer (15:05)

But is that. Yeah, and is the reason is because he wants something flashy for this event that he holds twice a year in

Bloomberg Analyst (15:11)

the sequence, like, you know, the video will be available for people to watch back. Right. But in the sequence of presenting that number, what Jensen Huang was saying was, you know, I presented to you this $500 billion figure and then he kind of make a joke that no one gave them credit for it or no one was wowed by it. And he paused and he said, as I stand right here today, we now see $1 trillion through the end of 2027. And you know, for them it is a really big moment. What I would say is when that $500 billion came out after GTC DC, what happened was the sell side went away and baked it into what they modeled and then that started showing up in the estimates. And so at least we can say, oh, aren't we lucky that in the coming days maybe people you go on model on the Bloomberg and those numbers will be updated a little bit.

Bloomberg Interviewer (16:02)

What about the the latest from Vera at Nvidia and you know how this changes the equation in hardware. Is this new to you?

Bloomberg Analyst (16:10)

Nvidia has been hinting for a few months that they're going to go harder after the CPU market. And you know, that was confirmed first with core weavers having access to it and then Meta as the CPU being sold as a standalone product. If you look at the market right now, in the moment that the headlines hit, there's no sharp reaction in AMD or Intel to the downside because the markets kind of baked that in that Nvidia would do this. CPUs are not as valuable to Nvidia as GPUs are. The cost per CPU and where the CPU fits in the server design, you know, it's a general purpose processor. It doesn't, it doesn't have the sort of AI workload specific use case that a GPU has, but it's an addressable market that Nvidia can go off over to boost the overall tam, you know, and do something different that they've not already done. And you know there are loads of use cases where you might have data center infrastructure built that Nvidia's GPUs are not not a part of the plans, but that that CPU would come in quite useful.

Bloomberg Interviewer (17:19)

Our thanks to Ed Ludlow, co host of Bloomberg Tech. We talked with Ed just after Nvidia CEO Jensen Huang predicted the company's flagship AI processors would generate $1 trillion in sales through 2027. You can catch that full conversation on our podcast feed.

Bloomberg Host (17:34)

Coming up, the war we're not talking about and how one company is surviving and keeping people digitally connected.

Bloomberg Interviewer (17:40)

The CEO of KeithStar joins us. You're listening to Bloomberg Businessweek. This is Bloomberg.

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Bloomberg Host (19:38)

While the US and Israeli war in Iran has dominated headlines since it began more than three weeks ago, let's not forget another multi year war rages on.

Bloomberg Interviewer (19:47)

We are now in the fifth year of the full scale war in Ukraine. Russia continues to target the nation's energy and communications hubs. Yet the Ukrainian digital ecosystem has proved remarkably resilient.

Bloomberg Host (19:58)

Helping lead the way on that is Kevstar. It is Ukraine's largest mobile operator and by integrating Starlink's direct to sell technology, the company says they have managed to connect over 5 million users directly to satellite networks, bypassing damaged towers and keeping its people online.

Bloomberg Interviewer (20:15)

For more on the war and how the company continues to operate and for a post earnings conversation, we made a call to Kyiv and spoke with the president and CEO of Kyivstar Group, Oleksandr Komarov.

Bloomberg Reporter (20:26)

Okay, it's almost normal war during the war. Okay, we adopted a lot. Okay, so I can give you only one example. So during the December February 30% of time our network was on the alternative sources of energy like batteries and generators, but at the same time network was fully operational across the country. So this is from my perspective a good reflection of where we are.

Bloomberg Interviewer (20:52)

Yeah, go ahead Carol.

Bloomberg Host (20:53)

How do you do that though? How do you. Are you constantly repairing and fixing things or how do you keep things operational?

Bloomberg Reporter (21:02)

Situation is relatively stable across the territories under Ukrainian control The only one threat is a shaheds drones or missile threats that are not so fundamental for the so well distributed infrastructure like telco operator. Of course we are suffering a lot in the areas that are close to the front line and we are doing our best in order to restore and recover as soon as possible. And this is very much because of the heroism of our people and preparation and actually certain experience that we were able to gain during these four years in a war. We are doing a lot in order to strengthen our resilience. We did a lot of investments into the redundancy. We did a lot of investments, almost 100 million into the energy resilience. So from our 16,000 sites right now we can run almost 6,000 sites on the generators and this number is increasing on the, on the batteries. We can run network literally for up to 10 hours without energy at all.

Bloomberg Interviewer (22:09)

Alexander? I mean it's, it's. I don't want it to sound crass how I'm asking this because it's a business question but, but that's kind of how you've presented the challenge here. When you run a network in a, in a way that has to be resilient during wartime and you talk about using generators or other sources of backup power that costs a lot more money and hits the bottom line in a different way than if you didn't have to rely on those resiliency measures. How much more is it costing you?

Bloomberg Reporter (22:39)

Actually we see a certain decline of our marginality since the beginning of the war. But this is from the position that Kestar used to be the best by marginality telco across the globe with a record high 67% EBITDA margin. We are right now at the level of 56% EBITDA margin. The biggest challenge for us is how to let's say combine this resilience necessity to be extremely focused on our daily operations with the development. And this is I think what we are doing in a really well, I will say very well organized and a good format. You know, being able to achieve a quite significant diversification of our business from a pure telco in a mobile and fixed market leader in a mobile and fixed business to the digital service provider with a telco license. We finished this year with almost 16% digital revenue that is partially related to the telco but produced by the services like digital health, entertainment, ride hailing big data.

Bloomberg Interviewer (23:42)

Well, well on, on the cost side, does the new war in, in Iran and the higher energy prices associated with that hit margins in this current quarter?

Bloomberg Reporter (23:55)

To some extent we adopted since the beginning of the war. Ukrainian market was characterized by a relatively low energy prices before the war. Okay. But because of the shortage, because of the destroyment of the production facilities by the Russians. Okay, so. And necessity to import energy from the neighboring countries. Right now Ukrainian business is working on the Eastern European and sometimes even Western European tariffs. Okay. And from this perspective, I think that we are quite. Okay, okay. We adopted this growing cost, okay. And we are doing some proactive steps how to hedge, how to this cost in the future. Maybe you saw, but we did our first small investments into the solar power plant. And this is the way how we can increase resilience and redundancy of the energy supply. But from another perspective, this is the way how we can hatch electricity cost on the consolidation level of the Kiev Star Group.

Bloomberg Host (24:58)

You know, Alexander, that was one of the things I was curious about. Like you mentioned, you're combining resilience with development and you know, how much you can do of just keeping the company, you know, running day to day and your employees safe and meeting what your customers need amid a war versus thinking about strategy longer term and how you want to, you know, commit funds, capex, what have you to build out the business longer term. It sounds like you're able to do that.

Bloomberg Reporter (25:29)

Yes, yes. The reality company is performing quite good. We have support of the shareholders. And I can give you probably the best example how we see the combination of the, let's say growing resilience and redundancy with the development. We were and we are actually the first European operator to launch direct to cell services provided by Starlink. Okay. So we see this as a development because we are big. We believe that actually the future is in cooperation between terrestrial and non terrestrial networks. That's why we are doing this proactive tab. But at the same time we provide this service to our customers for free, taking into account the current circumstances and major fundamental humanitarian need to stay online within very difficult circumstances. Sometimes circumstances that are dangerous to your life.

Bloomberg Host (26:25)

Yeah. Hey, one of the things I'm curious about when you say Starlink, do you think at some point like that is what kind of replaces some of the traditional telecom mobile service companies? Is that kind of where things are going?

Bloomberg Reporter (26:41)

I don't think so. I think that the future in cooperation rather than competition, okay. Every country is quite unique. It's a difficult regulatory framework and somehow satellite networks have a fundamental disadvantage. Okay, this fundamental disadvantage is open sky necessity to have open sky when you are using satellite services. So moreover, it's a major issue with capacity and it will be extremely difficult to service high density cities like Kyiv, New York, London with satellite technologies if the number of customers will increase. But at the same time, we see a number of fundamental use cases where we can satellite technology in order to expand our geographical coverage, to optimize our investments into the geographical coverage to ensure emergency communication for every customer. Okay. Independent from the terrestrial network that is actually under daily attacks from the Russian side.

Bloomberg Interviewer (27:43)

So to, to. In other words, it can, that technology can supplement traditional terrestrial cell if cellular technology, but because it doesn't necessarily have the same coverage indoors or in homes, it won't replace it in your view ever?

Bloomberg Reporter (27:58)

Yeah. Yes, I think so.

Bloomberg Interviewer (28:01)

So, Alexander, I'm curious about the Ukrainian customer right now and how spending has shifted in recent years as this economy has entered a wartime economy, as different members of, of the economy have gone off to fight, come back from fighting, gone off to fight again and that sort of thing. What does your customer base look like specifically in Ukraine? Right now

Bloomberg Reporter (28:24)

the biggest issue is demographic crisis and immigration crisis that we are facing in Ukraine. So we have right now, according to different sources, around 30, 32 million Ukrainians in Ukraine. Okay? And unfortunately it is slowly decreasing because of the war, because of the migration. As an example, we have on a monthly base around 2 million customers being serviced abroad. These are Ukrainian migrants out, who are still connected to the Ukraine through Keystone services, with their relatives, with their services in Ukraine, with their state provided services, banking services in Ukraine. Okay. So somehow it's a quite, I would say difficult situation as a result of the constant air attacks, shelling. Okay? We see the growing number of double simmers in the country and every blackout is actually driving people to buy extra SIM card in order to stay online and to ensure a certain redundancy from the potential problems. Okay. So somehow it's quite specific market that might be normalized after the war. We expect that share of the Ukrainian migrants will be back. Okay. And this will be a huge economic, I will say, trigger for the future recovery.

Bloomberg Host (29:50)

Hey, one thing we wanted to ask you just have about a minute or so left here, Aleksandr, is that our understanding is you also serve customers in Ukraine, of course, as we've been talking about, but also the uae, the United Arab Emirates, is that right? And if so, what can you tell us about what's going on there and what exposure you and your company and

Tarek Mansour (30:09)

really your employees have as a Kefstar group?

Bloomberg Reporter (30:12)

We have a very, very, very small exposure as we have a very small office in Dubai. Okay. So this is very much driven by substance and we have just few employees there that are helping us with investment, relationship, corporate affairs and reporting. Okay, okay. So of course you know, people's safety is our number one priority. Everyone is in a remote mode. Okay. But somehow we are partially affected even without operations overseas. So all our operations is concentrated in Ukraine and we have right hailing business in Uzbekistan.

Bloomberg Host (30:49)

All right. We wish you well and look forward to hopefully catching up again with you in the future. Good luck with everything. Oleksandr Komarov, he's the President CEO of keystar Group, joining us from Kyiv, Ukraine on this Friday.

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Bloomberg Interviewer (33:14)

In an exclusive interview with Bloomberg Call, she co founder Tariq Mansour vowed to fight criminal charges against the prediction market Exchange, calling Arizona's recent movie quote total overstep as legal battles with states escalate beyond civil enforcement.

Bloomberg Host (33:27)

Arizona filed criminal charges against Kalshee for operating an illegal gambling business, citing misdemeanors that carry less serious penalties than felonies. Arizona's criminal complaint follows Kalshee's move last week to block the state, state's gaming department from taking enforcement action against the company.

Bloomberg Interviewer (33:44)

I spoke with Kalshi co founder and CEO Tarek Mansoor on Bloomberg radio and TV about the charges.

Tarek Mansour (33:51)

Look, I mean, these charges have nothing to do with gambling or the merits. If it was about gambling or the merits, that would let the judicial process run its course in the federal courts. You know, five days ago on Thursday, Kalshee filed suit against Arizona in federal courts on the merits on whether Kalshee is subject to exclusive jurisdiction of the cftc. And you know, we're confident opposition and wanted to let the court process play out. And instead of letting that happen, the Arizona Attorney General decided to subvert the judicial process and weaponize it and go to state court and file these criminal charges, which, you know, we view as meritless and baseless. We see this as a total overstep and we look forward to fighting it in court.

Bloomberg Interviewer (34:28)

Well, experts are saying this could be the first of many charges such as these from, from other states too. How does it change your legal strategy?

Tarek Mansour (34:36)

Well, this is the whole point of federal preemption. So this is not about gambling. The, the charges that the Attorney General filed are not about gambling. They're not even about sports only. They're about prediction markets writ large. It's just, you know, attacking the entire business model. And nothing prevents from the same Attorney General or others from fighting the same criminal charges against derivatives markets writ large. They could file the same exact charges under the same analysis against CME or ICE or nasdaq. And that's the whole point of federal regulation of these financial exchanges is to prevent this sort of chaos and this, these sort of attacks on these businesses that could be political in nature or other. And that's a very important distinction.

Bloomberg Interviewer (35:14)

Well, I read the charging document from the Attorney general. It has 20 charges. They're mostly about betting and wagering. When it comes to sports. There's some election stuff in there. Would you ever consider limiting your business in Arizona or other states to, to things that these AG's don't seem to have problems with, like economic data, the price of Bitcoin, what markets are going to do, predictions around those things?

Tarek Mansour (35:39)

Look, I mean, the AG also claim that we have war markets, which is incorrect. It's either flat out the lie or misinformed take, which is unfortunate for someone, you know, filing criminal charges against the company. What's more important here again is this is not about the merits. If it's about the merits, let's let the judicial process run its course in federal courts. This is about something other than the merits, which is what I'm focused on. I don't know what the AG is focused on, but you know, she is up for re election. You know, it does, they did some press, it does seem to be making some buzz. But what I'm really focused on is building a great product for our millions of customers, out of which close to 400,000 are in Arizona and fighting any of these baseless cases in courts, which was, which we're going to continue doing.

Bloomberg Interviewer (36:21)

So you're fighting the cases. As I mentioned, Arizona is not the only state to take issue with your business. What happens ultimately if courts do side with states? What does it mean for the future of your company?

Tarek Mansour (36:33)

We believe in the rule of law. Right? We will always abide by court decisions. The law applies to us, but it also applies to the government, including state governments. And that's a very important thing. Right? This, this is really not about our business model. Again, if it was about our business model, we would be focused on the federal courts and the lawsuit about the merits. This is a broader attack. And you know, many states have sided with us and have grant us a preliminary injunction agreeing with our legal analysis. We have spent four years getting regulated by the federal government and we have a federal government in the CFTC that is coming strongly in favor of our position. Filing these charges is a total, total overstep and an overreach from an AG that's up for reelection. And we find that unfortunate. But we will stay focused on what we do best, which is building a great product.

Bloomberg Interviewer (37:26)

So certainly the cftc, we know where the CFTC stands and we know where Michael, Mike Selig stands on this. We don't know where courts stand on this. And I'm wondering if, if, if we see a state like Nevada, for example, block access to your business, what will you do? Will you continue to operate?

Tarek Mansour (37:45)

Well, first of all, let's get, let's get to that point. And you know, we'll have to make a decision as a company, what we do, what I can reiterate is we will 100% abide by the law. That's what we will do as a company. It's always been our position. That's why we spent four years Getting regulated upfront, regulatory first as a company and always abide by the law. But what I always say, the law applies to us as much as it applies to the government. And when government oversteps the law and goes out of bound, we're going to fight that in court, which we look forward to.

Bloomberg Interviewer (38:12)

How long does that process take? Because it seems like there's a regulatory limbo happening. You're, it's almost like your legal team is going to have to play whack a mole with all these states that are, that are filing suit or bringing criminal charges. How long is this going to take?

Tarek Mansour (38:26)

And gladly we have a legal team to handle these types of things and they're going to be focused on, on and you know, maybe it's a question for them. I mean, look, whatever, whatever long it takes, we're going to fight for prediction markets. I spent eight years building this company, four out of which half of which are getting regulated upfront. I really believe in this marketplace. I'm very excited about the growth that we're seeing, some of the fast growing company companies in America right now. And so what I'm going to be focused on is keep building a great product. And that's what's sort of most important for me. The more important sort of question is, you know, when, when it comes to this is not really about, you know, whether this is gambling or not. It's not really about state versus federal, which are both coexisting and both growing, both models. This really is turning into sort of some special interest that like the status quo, the status quo is working very well for monopolies, but not for the consumers that are flocking to prediction markets right now, which we're going to keep fighting for.

Bloomberg Interviewer (39:16)

Tarek, there is this perception though that people think this is gambling. And Ipsos survey from just a few weeks ago, for example, shows 61% of adults say prediction market trading is closer to gambling. 8% say it's closer to investing. So there is this public perception that doesn't necessarily match with what you say the platform is. How do you respond to that and how do you battle that? Like how is this not gambling?

Tarek Mansour (39:41)

I haven't really looked at these polls. The thing I will say is there's always been a battle of whether financial derivatives are gambling. Grain futures were called gambling in the 1800s and there was a Supreme Court decision that said even though there is speculation, these products have financial structures of financial markets and thus are going to fall under financial market jurisdiction. So I always say this, you know, Whether something feels and looks like gambling doesn't necessarily make it gambling. Speculation exists in all financial markets. If we're going to take a line that speculation is gambling, then the stock market will with retail participation is gambling. Then buying options for retail or zero day to expiry options is gambling. Then retail buying crypto is gambling. The more important line and the historical line that we've been taking under the law, but also, you know, as we think about it societally is, is the business model a gambling business model, which is a model where the revenue of the business and the profits are equal to the customer's losses, in which case the incentive is to promote more losses and block the winners. Or is it an open, free and fair marketplace place where people can enter in and out freely and transparently, which is a financial exchange which Kalshi falls under.

Bloomberg Interviewer (40:49)

That's Kalchi co founder and CEO Tarek Mansour. An exclusive interview on Bloomberg. Let's stay on call. She and prediction markets overall. Here with us is a member of our team who keeps track of them. She reports on them. She's Bloomberg News cross asset reporter Denise Sokova. She's here in our Bloomberg Interactive Brokers studio. Denise of the last question about gambling that, that this. When I got off air after this interview, I had Ibs from customers, from colleagues. Some people came up to me. Every single one of them said to me, how is it not gambling? That seems to be the question that will be the biggest uphill battle for this company because that's what the courts are going to decide.

Denise Sokova (41:30)

It has been the big question we have been covering for months. If you speak to a lot of those CEOs, they're going to tell you we are a truth machine. We're so important. From probability hedge funds we were able to hedge those super niche markets. But if you look at the volumes, it's often 60, 80% in certain cases, 90% sports bets. And then it becomes really hard to explain to people how this will have economic hedging or any other value. That said, every platform is different. Kalshi is especially strong when it comes to sports betting. Polymarket is seeing slightly different, different breakdown there. But for example, crypto markets are really big there, political markets are really big there and of course sports is big there. But so far they've seen all that pushback. It's not gambling. We're regulated by the cftc. Like in the interview he talked a lot about, oh, if they sue us, they can sue the cme. And I think that's kind of a complicated argument to make considering there aren't really other companies opening anything like that. Obviously they were under a lot of scrutiny for sports, but we got scrutiny for war contracts for a lot of things.

Bloomberg Interviewer (42:35)

There are other companies that offer this. It's like FanDuel and DraftKings.

Bloomberg Host (42:38)

Exactly.

Bloomberg Interviewer (42:39)

And those are regulated by states.

Denise Sokova (42:40)

Exactly.

Bloomberg Host (42:41)

What do the states want? I mean, is it that they want to be able to regulate these companies under state gambling rules? What is it?

Denise Sokova (42:47)

I mean, of course those don't have the same protections as sports markets, but you can also imagine that states are losing a lot of revenue that usually they take from those companies. Nevertheless, we seen some of the sports betting activity fall in some states. We've seen a really.

Bloomberg Host (43:04)

I was buying about that at the traditional gambling sites. Are they losing some activity?

Denise Sokova (43:08)

Yeah, we've definitely seen that. And when it comes to up downloads is really Kalshi soaring. It's like, I don't know, 3 million downloads a week, a month. And that has nothing to do with like the numbers we've seen, for example, from DraftKings, which was kind of a leader in that space. So they're definitely taking over. But at the same time, we're seeing seeing kind of states combine forces and file all those lawsuits at the same time. So there is a lot of unity on the state side when it comes to their response.

Bloomberg Host (43:33)

I thought it was interesting too, Tim, your question about like, if they limit their, what type of activity? So maybe they walk away from the sports gambling. Right. And then it's economic, like, is that still a viable business?

Bloomberg Interviewer (43:44)

I mean, look what Denita said, 60 to 80% in some cases, some cases up to 90% of the activity on, on these platforms. I'm not going to say Kalshi specifically and it varies based on what's going on in the news. But that, that is the bulk of the activity on the platform. So if they were to do that, Denise, it would really limit what they offered.

Denise Sokova (44:03)

Yeah, for sure. And even you can see a lot of their marketing campaign, ad campaign. There is a whole new campaign house. You can win 1 billion if you get all the brackets in. In March Madness. And I don't know how can you explain that? This is like, oh, this truth machine. If you're, if you're offering a contract like that and you're really emphasizing those super long short bets, like it's 1 in 120 billion chance.

Bloomberg Host (44:25)

30 seconds. Got to ask both of you, is this something that ultimately makes its way to the Supreme Court? Like where does it. Because the momentum seems to be building, certainly the legal momentum.

Denise Sokova (44:33)

Yeah, I think that's pretty much the consensus. We have a pretty good estimate by the by Bloomberg Intelligence they say pretty much headed there. That said, they give Cauchy 60% chance of winning in high court. Is that a pretty interesting can you predict.

Bloomberg Host (44:47)

Can you predict that on market polymarket oh my God.

Bloomberg Interviewer (44:55)

We'll save that for next time.

Bloomberg Host (44:56)

Incredible stuff. Great interview by you Tim.

Bloomberg Interviewer (44:59)

Thank you.

Tarek Mansour (45:00)

Really appreciate a big thank you to

Bloomberg Interviewer (45:01)

Denise and her team for helping out with that interview too.

Bloomberg Host (45:04)

Great stuff.

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Tarek Mansour (47:09)

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