Prediction markets platform Kalshi Inc. found itself at the center of controversy this week after it abruptly reversed course on a claimed partnership with Elon Musk’s artificial intelligence firm, xAI. What began as a confident rollout of a new collaboration turned into a hasty retreat, drawing criticism and confusion about the firm’s internal communications and public strategy.

On Tuesday morning, Kalshi made waves by proclaiming a deal with Musk’s xAI, suggesting that the two companies would collaborate to integrate custom AI-generated data into Kalshi’s prediction markets. Kalshi CEO Tarek Mansour was vocal about the development, posting on X (formerly Twitter) and LinkedIn that the partnership would push prediction markets further into the mainstream and revolutionize the way users interact with global information.

“Prediction markets capture what people know — AI scales what people can know,” Mansour posted, while also stating, “I could not be more excited to announce Kalshi’s upcoming partnership with xAI to further take prediction markets mainstream. Together, we’ll shape the future of news and information.” These statements were later removed from all platforms without explanation.

Sudden Turnaround Sparks Media Retractions and Public Confusion

By the afternoon, the narrative had shifted dramatically. Bloomberg, which had initially reported on the deal based on Kalshi’s statements, took the unusual step of retracting its article, citing the company’s walk-back of the announcement. The revised Bloomberg article noted that Kalshi had rescinded the claim and acknowledged that the details of the arrangement had not been “mutually confirmed” by both parties.

A spokesperson for Kalshi provided a brief explanation: “There were miscommunications about the timing of the announcement between us and xAI, so we retracted the story. Unfortunately, that is all I can say on the matter.” The company has not clarified whether an agreement with xAI is still in progress or was ever finalized.

A Communications Breakdown in Full View

The swift retraction and deletion of social media posts drew sharp criticism from observers and industry insiders, many of whom questioned the credibility of Kalshi’s communications. One commentator on social media remarked, “It’s hard to understate what a f*** up it is to give Bloomberg a scoop and then make them retract it later the same day.” Critics also pointed out the inconsistency between Kalshi’s public messaging and the actual status of the supposed partnership.

“If the announcement wasn’t mutually confirmed, why was it pitched to Bloomberg and paraded on social media by the CEO?” asked another analyst. The lack of transparency has fueled speculation that the partnership was either announced prematurely or collapsed before finalization.

Broader Implications and Political Ties Add Pressure

Kalshi, a federally regulated prediction market, has risen in prominence ahead of the 2025 U.S. elections, offering users the ability to trade on the outcomes of political and economic events. Its growing influence has also drawn attention to its political connections. Donald Trump Jr. serves as a strategic advisor to the platform, and President Trump appointed Kalshi board member Brian Quintenz to lead the Commodity Futures Trading Commission (CFTC), the agency responsible for overseeing such platforms.

xAI, Elon Musk’s AI venture, also has links to Trump’s circle. Eliezer Mishory, previously Kalshi’s general counsel, now leads regulatory affairs at xAI, focusing on AI and blockchain policy. Musk himself has been associated with Trump administration initiatives, including the Department of Government Efficiency, although he recently hinted at reducing his involvement in public roles.

The potential collaboration between these two politically connected entities was always likely to be scrutinized. The chaotic manner in which the announcement was made—and then retracted—has only intensified that scrutiny.

CFTC Lawsuit Dropped Amid Corporate Turbulence

Adding to Kalshi’s complex regulatory landscape, the CFTC recently dropped its appeal in a case challenging the legality of Kalshi’s election-related contracts. Filed on May 5, 2025, the dismissal of the appeal included a note that both parties would bear their own legal costs. No explanation was provided by the CFTC for the decision to halt the appeal, though it removes an immediate legal hurdle for the company.

As of now, both Kalshi and xAI have declined to offer further comment on the state of their relationship. Whether the partnership is merely delayed or has completely fallen through remains unanswered. What is clear, however, is that the episode has raised serious questions about Kalshi’s corporate communication practices and decision-making process.