Kalshi has raised another $1 billion, valuing the prediction markets company at $40 billion just five months after its previous billion-dollar round. But its next target is considerably bigger than election forecasts or sports contracts: the traditional financial exchanges.
The financing was co-led by Sequoia Capital and Wellington Management, with Tiger Global and Dragoneer among the investors. In May, Kalshi was valued at $22 billion. The new round represents an 82% increase in five months, putting the New York startup among the world's most valuable private fintech companies.
Founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi allows users to trade contracts tied to the outcome of future events. Its markets cover everything from economic indicators and elections to sports and cultural events.
A contract pays out according to whether a specified event occurs, allowing traders to take positions on outcomes rather than conventional assets.
The company built its early reputation by challenging the regulatory boundaries of prediction markets. It operates under federal oversight from the Commodity Futures Trading Commission, although its sports-related contracts have triggered disputes with state authorities that argue some products constitute gambling.
That legal fight remains unresolved. Utah's attorney general recently brought criminal charges against Kalshi and two executives over alleged illegal online gambling activity, claims the company is contesting.
Despite that uncertainty, investor demand has intensified as trading activity has grown.
Kalshi is now moving into products more commonly associated with established exchanges. Earlier this year, following regulatory approval, it introduced perpetual futures, starting with cryptocurrencies before expanding to equity indexes and metals.
Unlike conventional futures contracts, perpetual futures have no fixed expiration date. They also introduce substantial leverage-related risks for traders.
The expansion puts Kalshi in more direct competition with companies such as CME Group and Intercontinental Exchange, the owner of the New York Stock Exchange.
There are questions about how much of Kalshi's extraordinary growth depends on sports trading. The company says it already generates more than $1 billion in annualized revenue from contracts outside sports, according to reporting by The Wall Street Journal. That figure suggests the business has developed revenue streams beyond its most controversial category.
Its principal rival, Polymarket, is also competing for a position in the growing prediction markets industry, although the two companies have followed different regulatory approaches.
Kalshi's latest valuation leaves little room for modest ambitions. Investors are increasingly pricing the company not as a niche prediction market but as a potential financial exchange operator capable of competing across multiple asset classes.
The next question is whether its success trading real-world events can translate into a sustainable business alongside the institutions that already dominate global derivatives markets.
Reporting: Reuters · The Wall Street Journal