Kalshi's $40 Billion Funding Push Puts Prediction Markets on the Private Market Map
Kalshi is finalising a new funding round at a valuation of around US$40 billion, according to Bloomberg, less than five months after it raised US$1 billion at US$22 billion. The prediction market operator, which lets users trade contracts on the outcome of events from elections to sports results, has become one of the fastest-rising private companies in the United States, and with rival Polymarket valued at US$21 billion, the two companies have turned a niche corner of financial markets into a recognised private market category.
From US$22 billion to US$40 billion in five months
Kalshi's May 2026 round, led by Coatue with Sequoia Capital, Andreessen Horowitz, Paradigm, Morgan Stanley and ARK Invest among the participants, raised US$1 billion at a US$22 billion valuation. At the time, the company said its annualised trading volume had tripled from US$52 billion to US$178 billion over six months, and that it held more than 90 per cent of US prediction market activity.
The new round, reportedly led by existing investor Sequoia, would value Kalshi at close to double that figure. Reports on the round also say the company has discussed an initial public offering in the coming years, which would make it one of the first prediction market companies to test public market investors' appetite for the category.
Polymarket has followed a similar path. It raised US$1 billion at a US$21 billion valuation in a round led by 1789 Capital at the end of August, having previously taken a large investment from Intercontinental Exchange, the owner of the New York Stock Exchange. Polymarket now runs both its original international platform and a US exchange licensed by the Commodity Futures Trading Commission.
What PitchBook thinks Kalshi is worth
PitchBook published a detailed analysis of Kalshi in September, and its conclusion was that the latest price leans toward the optimistic end. Analyst Franco Granda's report put Kalshi's base case value at US$30.4 billion, with a bear case of US$22.8 billion and a bull case of US$42.1 billion, as Fortune reported, and forecast revenue of US$6.4 billion by 2030.
The analysis also showed how dependent Kalshi is on sport. Sports contracts accounted for 69.9 per cent of Kalshi's event fees so far this year, rising to 82.4 per cent when more exotic sports wagers are included, which means the company's growth has been driven largely by a product that sits close to traditional sports betting.
The regulatory question hanging over the category
That dependence on sport is also the category's largest risk. Kalshi operates as a CFTC-regulated exchange, but a number of US states have challenged its sports contracts as unlicensed gambling, and PitchBook's analysis noted that a Supreme Court ruling on the legality of sports prediction markets is expected in 2027. It estimated that a 25 per cent reduction in sports-related fees would remove US$642 million from Kalshi's 2026 projections and US$1.4 billion from its 2030 estimates.
How that ruling lands will shape whether prediction markets are valued like exchanges, which earn fees on a broad range of financial activity, or like sports betting businesses operating under state-by-state licensing. Kalshi's push into institutional trading, including hedge funds, asset managers and trading firms, is partly an effort to broaden its revenue beyond sport before that question is settled.
What it means for private market investors
Prediction markets show how quickly a new category can form in private markets. Kalshi and Polymarket were valued at around US$11 billion and US$9 billion respectively as recently as March, and now carry a combined private valuation above US$60 billion, backed by some of the largest venture firms and, in Polymarket's case, by one of the world's biggest exchange operators.
For investors, that speed brings familiar private market trade-offs into sharp focus. The valuations depend heavily on growth continuing and on a legal outcome that has not yet been decided, the businesses are concentrated in a single product line, and any liquidity depends on a future listing or sale. Those are the kinds of factors covered in NonPublic's guides to private company valuation and private market risks, and they apply with particular force to a category this young.
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