The boom in regulated prediction markets is showing no signs of slowing down. US-based trading platform Kalshi is reportedly in talks to secure fresh capital at a staggering $40 billion valuation, according to a recent report by the Financial Times. If finalized, this round would nearly double the company’s previous $22 billion valuation from May, signaling immense investor confidence in the sector.
Insiders suggest that Kalshi could close this latest funding round as early as the third quarter of this year. The company’s valuation trajectory has been nothing short of meteoric. Kalshi just wrapped up a $1 billion Series F round in May—backed by heavyweights like Coatue Management, Andreessen Horowitz, Sequoia Capital, Morgan Stanley, and Ark Invest. That $22 billion price tag was already double its December valuation of $11 billion and a massive leap from the $5 billion it was pegged at back in October.
Should this new $40 billion round cross the finish line, Kalshi’s market value will have grown eightfold in less than a year. This explosive growth also widens the gap between Kalshi and its main crypto-based rival, Polymarket, which was last valued at $15 billion in April.
The Turning Point: Robinhood Partnerships and Soaring Volumes
Founded in 2018 by Tarek Mansour and launched to the public in 2021, Kalshi truly caught fire during the run-up to the 2024 US presidential election. While Polymarket initially dominated early trading volumes, the tides turned dramatically around September of last year.
The game-changer came when Kalshi partnered with retail trading giant Robinhood. This integration allowed everyday investors to seamlessly trade on real-world outcomes, starting with NFL and college football games. Since that pivot, Kalshi has consistently outperformed its competition. According to data from Token Terminal, Kalshi’s monthly notional trading volume reached a massive $17.9 billion in May, leaving Polymarket trailing at $7.1 billion.
This massive financial success has caught the attention of Silicon Valley elite and legacy financial institutions alike. Meta CEO Mark Zuckerberg has reportedly ordered his team to develop a standalone prediction markets app code-named “Arena.” Meanwhile, mainstream market operators are jumping into the sandbox; Cboe Global Markets just launched “Cboe Predicts,” offering binary contracts tied directly to the S&P 500.
Navigating a Fierce Regulatory Tug-of-War
Despite the massive inflows of cash, Kalshi and its peers are flying straight into a dense legal storm. The core issue rests on a single question: Are these platforms offering financial contracts, or are they just slick, unlicensed sportsbooks?
Several US states argue it’s the latter. Kentucky recently became the latest state to crack down, suing five major prediction platforms—including Kalshi and Polymarket—accusing them of operating illegal gambling operations. State regulators want the authority to police these markets under local sports betting laws.
However, the federal government has a very different view. The US Commodity Futures Trading Commission (CFTC) maintains that it has exclusive oversight because these platforms are registered federal derivatives exchanges. The regulatory fight has become so intense that the CFTC has actually sued state authorities, including Kentucky, to block local governments from interfering with federally regulated platforms. How this jurisdictional battle plays out will ultimately decide if Kalshi can truly live up to its new $40 billion price tag.
