In less than one year, valuation soars 400%! "Prediction market giant" Kalshi's new round of funding values company at $22 billion.

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Prediction market platform Kalshi has completed a new round of $1 billion financing, with its valuation soaring to $22 billion. In less than a year, its value has increased by more than 400%, reflecting investors’ strong bets on this emerging sector.

On May 7, according to the Financial Times, Kalshi’s latest round of financing was completed on Thursday, led by Coatue, the investment firm of Philippe Laffont, with Sequoia Capital, Andreessen Horowitz and Morgan Stanley among the participating institutions. The latest valuation of $22 billion has surpassed the market capitalization of Flutter, the parent company of the world's largest listed online betting group FanDuel, which is about $17 billion, and is almost double that of competitor DraftKings.

Kalshi stated the new funds will be used to expand its recently launched block trading features and invest in “upcoming risk products” to enhance its appeal to financial institutions. Meanwhile, the platform’s annualized trading volume reached $178 billion in April this year, compared to only $5.5 billion in the same period last year.

Four jumps in valuation within a year, growth speed rivals AI sector

Kalshi’s valuation trajectory is quite unusual.

According to the Financial Times, the platform’s valuation was only $5 billion during a funding round last October. By December, during another round, it had risen to $11 billion, and in the latest round, the valuation doubled again to $22 billion—an overall increase of more than 400% in less than a year.

Kalshi CEO Tarek Mansour said:

"In recent years, there are very few sectors that can expand at such a speed—aside from artificial intelligence."

Behind this growth rate is the rapidly rising popularity of prediction markets as a whole. Prediction market platforms offer users “shares” similar to bets, with binary outcome events as the target—for example, a certain team winning or losing a match. Kalshi successfully predicted Trump’s victory in the 2024 US presidential election, after which the platform saw a significant surge in traffic and trading volume.

In terms of revenue structure, Kalshi currently makes its main income from sports betting. According to data from the analytics platform DeFi Rate, sports contracts and “other” contracts (including multi-leg sports bets) together accounted for about 85% of Kalshi’s trading volume last month.

However, the platform’s strategic focus is shifting toward financial institutions. Kalshi said the new financing will be mainly used to expand block trading capabilities and risk products, to attract institutional clients.

Bernstein analyst Gautam Chhugani predicted in April that prediction market trading volume could break $1 trillion by 2030, and pointed out that sports contracts are “just the entry point, not the end point” for platforms like Kalshi.

Ongoing regulatory controversy, multiple states sue for illegal operation

While expanding rapidly, Kalshi is also facing increasingly severe regulatory pressure.

Both the platform and its competitor Polymarket are under increasing scrutiny, and there is rising controversy about whether they should be classified as derivatives exchanges or betting operators.

Kalshi insists that its contracts should continue to be regulated as derivatives by the US Commodity Futures Trading Commission (CFTC), a classification that allows it to circumvent state sports betting bans and gambling taxes.

However, multiple state-level gambling regulators have filed lawsuits against it, accusing it of operating as an illegal sports betting platform.

Earlier this week, a federal judge issued an injunction to stop Arizona Attorney General Kris Mayes from launching a criminal case against Kalshi, giving the platform some temporary legal breathing room.

Analysts point out that the direction of regulation is still the biggest uncertainty hanging over Kalshi, and it will largely determine whether the current rapid growth can be transformed into a sustainable business model.

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