Key Takeaways:
Kalshi is in advanced talks to raise at least $750 million at a $40 billion valuation, nearly double its May round, as World Cup wagers pushed annualized revenue past $4 billion in July.
Kalshi is in advanced talks to raise at least $750 million at a $40 billion valuation, nearly double its May round, as World Cup wagers pushed annualized revenue past $4 billion in July. Sequoia Capital and Wellington Management are in discussions to co-lead the round, according to a person familiar with the matter, with the final size still subject to change.
"Kalshi looks forward to educating the New York City Council about our business model and practices," Dani Lever, a Kalshi spokesperson, said, as the platform faces a widening state-level legal fight over whether its event contracts constitute illegal gambling.
The $40 billion valuation is nearly double the $22 billion Kalshi commanded in May, when it raised $1 billion in a round led by Coatue, following another $1 billion at an $11 billion valuation in late 2025. Annualized revenue more than doubled to $4 billion in July from about $2 billion two months earlier, driven by World Cup contracts that account for more than 80 percent of trading volume. The company processed $1.7 billion in notional volume in a single month.
The valuation would top Coinbase's market capitalization and approach Robinhood's roughly $85 billion, showing investor appetite for event-based trading as the sector moves from niche to mainstream. Prediction markets captured 27 percent of total sports betting volume during the tournament, up from less than 5 percent in the 2022 World Cup. But Kalshi's path to a public listing — it has held informal talks with bankers about an IPO as early as next year — runs through a regulatory thicket. New York Attorney General Letitia James sued Kalshi on July 31 seeking more than $36 billion, while the CFTC invoked emergency authority to keep the exchange operating. June operating expenses hit $300 million, mostly marketing, after a blitz featuring Timothée Chalamet and Lionel Messi plus a FIFA World Cup 2026 sponsorship.
The regulatory battleground
The core dispute is whether event contracts on a CFTC-registered exchange are federally regulated derivatives or state gambling products. The CFTC has filed lawsuits against nine states, arguing New York's enforcement action threatens a federally regulated derivatives exchange. "The New York Attorney General does not get to set the rules for the national derivatives markets," Brooke Nethercott, a CFTC spokesperson, said. A first appellate ruling is expected from the Sixth Circuit, and a circuit split would likely send the question to the Supreme Court. New York collected about $2.4 billion in sports betting tax revenue in fiscal 2025, giving states a direct financial stake in how the courts classify prediction markets.
Competition heats up
Kalshi faces pressure on multiple fronts. Robinhood, once its top volume source, has shifted orders to Rothera, its joint venture with Susquehanna International Group, cutting its share of Kalshi's second-quarter volume to 17.5 percent from nearly 50 percent a year earlier. Rival Polymarket is in talks to raise about $1 billion at a $20 billion valuation. Wellington's entry, a pre-IPO pattern for the asset manager, aligns with Kalshi's informal IPO timeline. Jeff Bandman, who helped secure Kalshi's CFTC license in 2020, returned this week as CEO of Kalshi Prime, the company's margin perpetual futures unit.
If the round closes at $40 billion, Kalshi would cement its position as the leading regulated prediction market, with capital to fund product innovation and liquidity ahead of a potential listing. But the outcome of the state-federal jurisdiction fight, and whether the World Cup surge converts into durable revenue, will determine whether that valuation holds once the tournament ends.
This article is for informational purposes only and does not constitute investment advice.
