Kalshi Sparks New Controversy with Removed xAI Announcement

Kalshi sparked a wave of confusion and outrage on Tuesday after unexpectedly withdrawing an announcement of a deal with Elon Musk's AI company, xAI. The action came just hours after CEO Tarek Mansour announced the agreement on social media, sending shockwaves of media coverage, including an exclusive Bloomberg News report.

Earlier today, Mansour posted on X (formerly Twitter) and LinkedIn to make public what he called a historic alliance. He praised Musk's influence and claimed that the partnership would assist in "shaping the future of news and information" by combining xAI's technology with Kalshi's prediction markets.

The website, on which users can make real-money predictions on everything from election outcomes and macroeconomic activity to celebrity marriages and sports scores, appeared destined to push further into politically charged and high-stakes forecasting.

In its since-rescinded report, Bloomberg stated that xAI would provide AI-powered insights tailored to Kalshi customers to allow them to make well-educated bets. The report stated a significant tech partnership with the goal of integrating cutting-edge language models into political and financial forecasting.

But by the afternoon, Kalshi had removed its statement, and Bloomberg issued a rare retraction, taking down its original report which now links to an error page.

Kalshi and xAI haven't commented on the issue.

More Questions than answers

The optics of the failed rollout are especially interesting, considering the political dynamics of both groups. Kalshi has raised its profile due to its unique regulatory status and its products, which facilitate predictions on US policy and political happenings. Users have taken advantage of Kalshi promo codes along the way.

The company also has strong links to influential political figures. Donald Trump Jr. serves as a strategic advisor, and Brian Quintenz, a member of Kalshi's board of directors, was President Donald Trump's choice to lead the Commodity Futures Trading Commission.

The botched launch has increased the focus on Kalshi's public communications and governance during a period when the company is pushing for more mainstream usage. The company is also in the spotlight due to several legal battles, including the Kalshi case in Nevada, where a judge recently promised quick action. 

Yet the xAI partnership misstep is also worrying, as it suggests the platform may be immature in how it operates and can handle collaborations in a public environment.

The incident also brings xAI into the limelight once more. The company, which aims to compete with OpenAI and Anthropic in the large language model market, has largely avoided publicity from scandal. Its participation in what now appears to be a failed or premature partnership could raise eyebrows about its communications tactics and willingness to play in derivative markets.