Kalshi #1: The Experiment (Intro)

Over the next year or so I'm conducting an experiment. I'm hoping that I can use a conservative betting strategy on Kalshi to get a much greater ROI on my relatively small amount of money than I would letting it sit in index funds in a retirement account. The idea/goal is to slingshot a little pile of money forward aggressively using Kalshi until I reach the point where I have too much money relative to the liquidity of the site. Then I'll move all my money into stocks, bonds, etc.

TLDR if you have a small enough net worth, there are plenty of financial "games" out there that, if you know how to play them, are worth playing in the short-to-medium term because they can give you a much greater % ROI than more conventional investments. However, once your pile of cash eclipses a certain threshold—$250k, let's just say for example—these "small games" are no longer worth playing because they aren't liquid enough, i.e. you can no longer keep generating the same % return without driving up prices when you go to make purchases, and you risk being unable to sell some or all of your position when the time comes to sell. At this point, you should just go back to boring, traditional investing and move on with your life. However, until you hit your time-to-call-it-quits-number, assuming you like money, it behooves you to partake in the market for small games.

My thinking is if I can generate 10% here, 20% there, on relatively safe bets that I think provide me a margin of safety by being both likely to pay out and mispriced (it must be both of these things in order to beat the house)—I can possibly more than double my money year after year until my pile gets too big.

I think where most people who bet on politics, events, and sports go wrong is they are constantly swinging for the fences and losing giant chunks of their bankroll. However, if they reframed how they view these betting markets and used the stock market as their point-of-comparison instead, I think you’d see a lot more winners. For example, if you found a way to get a return of 25% in the stock market year after year, you would go down alongside Warren Buffett as one of the greatest investors of all time—if you started with $10,000 and never deposited another penny, at 25% annual return you would have $1.4 million after just 20 years. And yet, how often do you hear the average gambler ever speak in terms of ROI, or even use the word “percent”? Never. It’s all fallacious junkie talk: ”ten baggers,” “hot streaks,” and rambling about parlays.

I think with these new betting sites there’s a good chance we’re in the golden age of gambling for people who are good at synthesizing and parsing the signal from the noise, creating a winning strategy, and keeping their emotions in check. I’m vain enough to think I might be able to succeed if I take a stab at it.

There's a lot more I could say about my personal history with betting on politics and events and my specific strategy going forward, but I'm going to wrap this post up and let my actual bets from here do the talking.

To start, I just purchased $100 worth of "No" shares on Auburn to win the 2025 NCAA Men's Basketball Championship at 85 cents per share. Kalshi markets are giving them a 16% chance of winning but both Nate Silver and Evan Miyakawa think they're overrated—largely based on strength-of-schedule factors—and have Auburn at ~12%. Sure, this is a tiny discrepancy between three already highly speculative forecasts, and honestly not the smartest bet to kick things off with in terms of the alpha I'm really after, but now we're in the game 🏀.