Federal Approval, State Pushback: Kalshi's $5B Prediction Market Gambit

Kalshi, a federally regulated online prediction market platform, has raised $300 million in a funding round valuing the company at $5 billion, according to reports. The investment was led by prominent firms including Sequoia Capital, Andreessen Horowitz, Paradigm, CapitalG, and Coinbase Ventures Prediction Market Kalshi Valued at $5B - CoinDesk^[1]. This marks a significant milestone for Kalshi, which has expanded its services to over 140 countries, marking its first major international expansion Kalshi Raises $300M, Targets $5B Valuation and Global Growth^[2]. The company projects annualized trading volume of $50 billion in 2025, up from $300 million in the prior year, and now holds more than 60% of the global prediction market share, surpassing rival Polymarket Prediction Market Kalshi Valued at $5B - CoinDesk^[1].

Kalshi's growth has been driven by increasing demand for event-based trading, particularly in sports betting, which has drawn regulatory scrutiny. The platform has faced lawsuits from several U.S. states accusing it of circumventing sports betting laws, despite clearing a federal hurdle with the U.S. Commodity Futures Trading Commission (CFTC) earlier this year Prediction Market Kalshi Valued at $5B - CoinDesk^[1]. The CFTC approved Kalshi as a Designated Contract Market (DCM), allowing it to operate under federal oversight as a derivatives exchange Is Kalshi Legal? The Regulatory Landscape of Prediction Markets^[4]. This regulatory distinction differentiates Kalshi from traditional gambling platforms and positions it as a hybrid of financial forecasting and retail trading.

The expansion of prediction markets has intensified competition with Polymarket, which recently secured a $2 billion investment from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange Kalshi Outpaces Polymarket in Prediction Market Volume Amid Surge in U.S. Trading^[6]. While Polymarket's valuation now exceeds $9 billion, Kalshi maintains a dominant position in trading volume, capturing 62% of the on-chain prediction market sector in late September 2025, compared to Polymarket's 37% . Kalshi's frequent trading activity-reflected in an open interest-to-volume ratio of 0.29-suggests a dynamic user base, whereas Polymarket's longer-term positions (0.38 ratio) indicate a different user strategy .

Kalshi's success is attributed to its integration with platforms like Robinhood and Webull, which have broadened access to event trading Prediction Market Kalshi Valued at $5B - CoinDesk^[1]. However, regulatory challenges persist, particularly in the U.S., where states like Maryland and Nevada have contested its operations under state-level gaming laws Polymarket $8 Billion Valuation Steams Ahead of Rival Kalshi^[5]. The platform's ability to navigate these legal complexities will be critical as it seeks to solidify its role in the financial ecosystem.