Kalshi and Polymarket Eye $20B Valuations as Prediction Markets Enter New Era

Prediction market platforms Kalshi and Polymarket are in early talks to raise new funding rounds that could value each company near $20 billion, according to the Wall Street Journal. Both firms have recently engaged potential investors, following valuations of roughly half that amount last year. 

As per the report, the talks are still in the early stages, and there’s no guarantee that either company will reach these valuations, especially with regulators watching closely.

Kalshi, which operates in the U.S., lets people trade on everything from sports and politics to economic events and pop culture. The company raised $1 billion in December, pushing its valuation to $11 billion.

Co-founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi became the first regulated event-based exchange approved by the Commodity Futures Trading Commission (CFTC) in 2020. Its revenue run rate recently topped $1 billion and could now reach $1.5 billion, according to sources.

Polymarket, founded in 2020 by Shayne Coplan, currently blocks U.S. users, though VPN access is possible. The company plans a U.S.-regulated version of its app this year. Polymarket was last valued at $8 billion after Intercontinental Exchange agreed to invest up to $2 billion.

Regulatory pressure and controversy

Both platforms face scrutiny for markets related to U.S. strikes on Iran and the potential death of Supreme Leader Ayatollah Ali Khamenei. Polymarket’s military-action contracts generated over $529 million in trading volume. The unusual activity included large bets by newly created wallets before major events.

Kalshi handled a similar contract differently due to U.S. regulations. Its Iran’s leadership market attracted $50 million in trading volume. It included a “death carveout,” ensuring trades would settle at the last traded price if Khamenei died. 

CEO Tarek Mansour clarified on X, “The market rules were not changed. The death carveout and settlement based on last-traded-price were part of the published market rules from the outset.”

Legislative response and market risk

A recent class-action lawsuit accuses Kalshi of failing to pay $54 million to traders betting Khamenei would leave office. Lawmakers Blake Moore (R-Utah) and Salud Carbajal (D-Calif.) introduced legislation restricting markets on topics including war and sports. 

The move follows reports of the platforms aggressively targeting college students, including questionable bets on Jeff Bezos’ Super Bowl whereabouts and cash incentives to fraternities for recruiting new users.

As a result, both Kalshi and Polymarket face operational and regulatory challenges even as they explore high valuations. These platforms, therefore, must navigate heightened scrutiny and legal risks. Hence, the outcome of these funding rounds could signal the future of regulated prediction markets in the U.S.

Also Read: Binance Denies of Allowing $1.7B Transactions Linked to Iran