According to TechCrunch, prediction market platform Kalshi has raised a massive $1 billion funding round at an $11 billion valuation, led by returning investors Sequoia and CapitalG. This comes less than two months after the seven-year-old startup announced its previous $300 million raise at a $5 billion valuation. The company’s main rival Polymarket was reportedly in talks last month for funding at a $12-15 billion valuation after closing its own $1 billion round. Kalshi reached $50 billion in annualized trading volume in mid-October, representing a staggering 1,000-fold increase from last year’s $300 million volume. The platform allows betting on events from Time Magazine’s Person of the Year to presidential elections across over 140 countries.
Valuation velocity
Here’s the thing: doubling your valuation in under two months is absolutely insane. We’re talking about a company that went from $5 billion to $11 billion in the time it takes most startups to schedule their next board meeting. And that $50 billion in annualized trading volume? That’s up from just $300 million last year. Basically, we’re witnessing hockey-stick growth on steroids.
But here’s what worries me. This kind of explosive growth often comes with equally explosive risks. Prediction markets operate in this legal gray area that makes regulators understandably nervous. When you’re dealing with thousands of percent growth in trading volume, you’re bound to attract attention from people who think you’re running a sophisticated gambling operation rather than a financial platform.
Legal battles ahead
Kalshi may have successfully sued the CFTC last year to secure Americans’ right to use its platform, but the company is currently engaged in legal disputes with numerous state regulators who claim its activities constitute illegal gambling. That’s not exactly a minor footnote—it’s a fundamental existential threat.
Meanwhile, rival Polymarket has been barred from serving U.S. residents since 2022, though they recently acquired a derivatives exchange and clearing house to reenter the market. Polymarket’s CEO publicly announced they’ve been “given the green light to go live in the USA by the CFTC.” So now we’ve got two heavily funded competitors about to go head-to-head in a market that’s still legally ambiguous in many states.
Marketing momentum
Kalshi’s New York subway campaign during the mayoral election was brilliant marketing—live odds displayed on subway cars showing real-time candidate probabilities. That kind of visibility doesn’t come cheap, but it clearly builds brand awareness in a way that digital ads can’t match.
The New York Times coverage of their trading volume milestones certainly helps too. But I wonder how sustainable this momentum really is. Prediction markets have historically been controversial, and we’ve seen similar platforms face regulatory crackdowns before. What happens when the next political cycle ends and the trading volume inevitably cools?
What’s next?
So where does this leave us? We’ve got two well-funded prediction market giants preparing for what could be an epic battle for U.S. market dominance. Both have raised billions, both have massive valuations, and both are pushing the boundaries of what’s legally acceptable in financial prediction markets.
The real question isn’t just who will win the prediction market war—it’s whether the entire category can survive the regulatory scrutiny that inevitably follows this level of growth and visibility. When you’re moving this fast, sometimes the biggest risk isn’t your competition. It’s whether the road ahead is actually paved or if you’re about to hit a regulatory wall at full speed.
