Kalshi is on the verge of raising about $1 billion in funding from previous and new investors, Reuters reports.
The deal would value Kalshi at about $40 billion, by far the largest amount of any prediction market platform.
- The funding will include new and existing investors.
- Polymarket, Kalshi’s top rival, was recently valued at $21 billion.
- Kalshi’s CEO said the company is hoping for stronger industry guardrails.
Kalshi finished a $1 billion round of funding that valued the company at $22 billion in May. Its near-doubling in valuation reflects the extraordinary momentum experienced by prediction markets and Kalshi’s success in the industry.
According to anonymous sources referenced by Reuters, the new funding will be led by existing investor Sequoia Capital and Wellington Management, and is also expected to include Tiger Global Management and Dragoneer Investment Group, among others.
Alfred Lin, one of Sequoia’s co-founders, is one of five members of Kalshi’s board of directors.
The Information reported that Sequoia and Wellington were in discussions with Kalshi in August.
Kalshi already occupies a huge chunk of the prediction market industry, maintaining a hold on over 80% of the entire industry. It also just produced a new daily high in trading volume ($3.2 billion), part of $15.7 billion traded on the platform during the week that ended on Sept. 27.
Even still, achieving a $40 billion valuation would cement Kalshi as the undisputed leader in prediction markets. Its top competitor, Polymarket, was valued at $21 billion — barely half of Kalshi’s target value — in a $1 billion round of funding that was cemented at the end of August.
Kalshi pushes ahead
Kalshi’s ambitious fundraising is part of its vision to expand its operations beyond areas in which it is already dominating, such as sports and election prediction contracts. It is now looking to grow into an all-encompassing trading platform for other asset classes that will allow it to rival other preeminent exchanges.
The company, which was founded in 2018, has recently held discussions about an initial public offering in the coming years, Reuters sources claimed.
Kalshi’s extraordinary growth has not been without controversy. State regulators across the country have taken exception to prediction markets, which they argue allow platforms to offer illegal gambling services without paying state gaming taxes.
The Commodity Futures Trading Commission (CFTC)— the federal body in charge of prediction markets — has largely supported platforms through legal squabbles. However, a piling number of court losses have forced platforms to cede ground and left them susceptible to enforcement action and litigation.
A recent report from Front Office Sports also claimed the CFTC was prepared for “imminent action” regarding misleading promotions offered by prediction platforms. It is unclear what steps will be taken and which platforms would be targeted.
Kalshi CEO Tarek Mansour said this week in an interview with PBS NewsHour that his company welcomed regulation and felt the industry needed more “guardrails.” He also said that setting a sustainable long-term course was a priority for the company to ensure the success of the prediction industry as a whole.
“We said, let’s get regulated before we do anything,” Mansour said.
