Regulators Clash with Kalshi as Prediction Market Soars to $5B Valuation

Kalshi, a U.S.-based prediction market platform, has secured $300 million in a funding round valuing the company at $5 billion, marking a significant milestone in the growth of the prediction market sector. The investment, led by Sequoia Capital, Andreessen Horowitz, Paradigm, CapitalG, and Coinbase Ventures, underscores investor confidence in the platform's potential to reshape financial markets through real-time event-based trading Prediction Market Kalshi Valued at $5B - CoinDesk^[1]. The funding comes as Kalshi expands its services to users in over 140 countries, a strategic move to broaden its global footprint and compete with rival platforms like Polymarket Kalshi’s $300M raise values firm at $5B as it tops Polymarket in …^[2].

The platform's rapid growth is evident in its projected annualized trading volume, which is expected to reach $50 billion in 2025, up from $300 million in 2024. Kalshi now holds more than 60% of the global prediction market share, surpassing Polymarket, which previously dominated the space Kalshi Starts Global Expansion With New $300M Raise^[3]. This growth has been driven by sports betting contracts, particularly parlays, which have drawn comparisons to traditional sportsbooks like DraftKings and FanDuel. Kalshi's integration with platforms such as Robinhood and Webull has further enhanced accessibility for retail traders Kalshi Raises $300 Million, Valuing Prediction Market Startup at …^[4].

Regulatory challenges, however, remain a critical hurdle. While Kalshi secured federal approval from the U.S. Commodity Futures Trading Commission (CFTC) earlier this year, several states have filed lawsuits alleging that its sports betting contracts circumvent existing gambling laws. Massachusetts, for instance, has accused Kalshi of operating unlicensed sports wagering products Prediction Market Kalshi Valued at $5B - CoinDesk^[1]. Meanwhile, Polymarket, which recently received a $2 billion investment from Intercontinental Exchange (ICE) at a $9 billion valuation, is preparing to re-enter the U.S. market under a newly acquired CFTC license Polymarket $8 Billion Valuation Steams Ahead of …^[5].

Kalshi's expansion into international markets excludes 38 jurisdictions, including Canada, France, and the United Kingdom, where regulatory restrictions apply. The company emphasized its commitment to compliance, highlighting its status as the first CFTC-regulated prediction market Kalshi Starts Global Expansion With New $300M Raise^[3]. Investors in the latest funding round, including General Catalyst and Spark Capital, have positioned Kalshi as a potential leader in the evolving financial infrastructure landscape Kalshi’s $300M raise values firm at $5B as it tops Polymarket in …^[2].

The prediction market sector is witnessing a surge in institutional interest, with forecasts suggesting a 46.8% annual growth rate over the next decade. Kalshi's valuation jump from $2 billion in June 2025 to $5 billion within months reflects the sector's volatility and the strategic importance of regulatory alignment Prediction Markets Rise: Kalshi, Polymarket Test Future of Finance^[6].