Kalshi Seeks $40B Valuation Weeks After $1B Raise: FT

American prediction market platform Kalshi is actively negotiating with investors for a new funding round that could value the company at $40 billion. This figure is particularly striking given that just a month ago, in December 2024, Kalshi completed a $1 billion round at a $22 billion valuation. Essentially, the company aims to double its valuation in less than two months — an unprecedented growth rate even for the dynamic fintech world.

This pursuit of a record valuation occurs against a backdrop of escalating regulatory confrontation in the United States. The Commodity Futures Trading Commission (CFTC) and individual states are actively debating rules for regulating prediction markets, especially those allowing bets on political events. Kalshi pioneered the legalization of such markets in the US after a legal victory over the CFTC in fall 2024, when a court allowed the platform to offer contracts on election outcomes.

Prediction markets are experiencing a genuine boom following the 2024 US presidential election, where platforms like Kalshi, Polymarket, and PredictIt demonstrated forecasts that were sometimes more accurate than traditional polling. This success has attracted attention from venture capitalists and hedge funds who see potential in this segment for creating a new class of financial instruments. Kalshi, unlike the decentralized Polymarket, operates as a fully regulated American exchange, making it attractive to institutional investors.

The company's valuation growth isn't merely hype-driven. The platform demonstrates real trading volume growth: during the 2024 election period, daily trading volumes exceeded $100 million. Kalshi is also expanding its range of available markets — from economic indicators and weather to cultural events and sports outcomes. The company actively attracts retail investors through a user-friendly mobile app and low entry barriers, while simultaneously building infrastructure for institutional clients.

However, regulatory uncertainty remains a key risk. The CFTC and several states believe that prediction markets on political events are essentially gambling and could manipulate the electoral process. New York and California are considering legislation to restrict or ban such platforms. Federal legislators are also discussing a new regulatory framework that could significantly alter Kalshi's business model. This uncertainty makes the $40 billion valuation a risky bet on future regulation.

For the cryptocurrency and Web3 market, Kalshi's growth has ambiguous significance. On one hand, the success of a centralized regulated platform could divert attention from decentralized blockchain alternatives. On the other hand, Kalshi legitimizes the very concept of prediction markets, which could stimulate development of crypto analogues. Polymarket, built on Polygon, already demonstrates how blockchain can provide transparency and decentralization in this sphere. Competition between centralized and decentralized models will only intensify.

What does this mean for investors? Only accredited investors can directly invest in Kalshi through private rounds. For retail investors, it's worth monitoring public companies investing in Kalshi or crypto projects in the prediction market space. Recommendation — hold positions and observe regulatory developments. If Kalshi successfully navigates regulatory challenges, this could open a major new market. However, high regulatory restriction risk makes aggressive investments premature. Diversification between centralized and decentralized solutions appears the wisest strategy.