Kalshi Secures $185 Million Funding After CFTC Regulatory Victory

Kalshi, a federally regulated prediction market platform, has secured $185 million in fresh capital, achieving a valuation of $2 billion. This significant funding round was led by Paradigm, a crypto-focused firm, with additional backing from Sequoia Capital, Multicoin Capital, and other investors. The capital injection comes at a critical juncture for Kalshi, following a regulatory breakthrough with the U.S. Commodity Futures Trading Commission (CFTC).

The CFTC's decision to drop its appeal in May 2025 has cleared the way for Kalshi to expand its offerings of event-based derivatives. This regulatory victory is a major milestone for the company, as it had been locked in a legal battle with the CFTC over whether political event contracts violated gambling laws. With this hurdle removed, Kalshi is now poised to leverage its newfound resources to enhance its product offerings and reach a broader audience.

Tarek Mansour, co-founder and CEO of Kalshi, has outlined plans to use the new funds for hiring engineers and deepening integration with brokerage platforms. The company’s prediction contracts are already live on popular platforms such as Webull and Robinhood, indicating a strong market presence and user interest. This strategic move is aimed at strengthening Kalshi's technological infrastructure and expanding its market reach, ensuring that the company remains competitive in the rapidly evolving financial landscape.

Kalshi's success in securing this funding round positions it ahead of its main rival, Polymarket. While Polymarket is reportedly finalizing a $200 million raise at a $1 billion valuation, Kalshi's approval to operate in the U.S. under CFTC oversight gives it a significant advantage. This regulatory clearance allows Kalshi to operate within a well-defined legal framework, providing a level of security and stability that is crucial for attracting investors and users.

Founded in 2018 by Mansour and Luana Lopes Lara, Kalshi has now raised over $340 million in total. The latest round reflects growing investor interest in prediction markets, which some view as a more accurate alternative to polling by harnessing the collective expectations of traders. Kalshi allows users to bet on the outcome of events ranging from macroeconomic indicators and crypto moves to sports and the weather, offering a diverse range of derivatives that cater to various market needs.

Kalshi's focus on sports-related event contracts has attracted scrutiny from state regulators in recent months. Earlier in March, the company filed lawsuits against the Nevada Gaming Control Board (GCB) and New Jersey Division of Gaming Enforcement (DGE) after both state regulators ordered Kalshi to halt its sports-related event contracts. Kalshi argues that as a federally regulated commodities exchange, it falls under the jurisdiction of the CFTC, not state gambling regulators. The company is pushing back against state actions, claiming that its event contracts function as financial derivatives and fall within the regulatory framework established by Congress via the Commodity Exchange Act.

The core of the dispute is whether event contracts, such as betting on a sports game outcome or an election result, should be classified as gambling, traditionally regulated by states, or regulated financial trading, overseen at the federal level. Kalshi's legal battles highlight the complex regulatory landscape surrounding event-based derivatives and the need for clear guidelines to ensure compliance and innovation in the market.