The prediction market operator’s valuation has climbed 82% in five months as it moves beyond event contracts to compete with established financial exchanges.
Prediction market operator Kalshi has raised $1 billion in a funding round valuing the company at $40 billion, as it accelerates plans to expand into cryptocurrency derivatives, stock perpetual futures and other financial markets.
The funding round, announced Thursday, was co-led by Sequoia Capital and Wellington Management, with participation from Tiger Global Management and Dragoneer Investment Group, according to Reuters.
Kalshi’s valuation has increased nearly 82% from the $22 billion it secured in May, when the company completed another $1 billion financing round led by Coatue Management.
The latest investment comes as Kalshi seeks to transform its business from a platform primarily known for sports and political event contracts into a broader financial exchange competing with established operators such as CME Group and Intercontinental Exchange.
The company plans to use the capital to develop new trading products, including leveraged event contracts, perpetual futures tied to individual stocks and markets for trading the price of AI computing capacity.
Kalshi is also expanding its institutional business, seeking to attract hedge funds, asset managers and professional trading firms.
The company said in September that it worked with approximately 500 institutional entities, which accounted for 25% of trading volume excluding market makers.
Kalshi expands into perpetual futures beyond prediction markets
Kalshi entered the perpetual futures market in May after receiving approval from the Commodity Futures Trading Commission, becoming one of the first federally regulated exchanges to introduce the popular crypto derivatives product in the US.
The platform initially offered cryptocurrency perpetual futures before expanding into equity indexes and precious metals, including gold and silver.
Unlike traditional futures contracts, perpetual futures have no expiration date, allowing traders to maintain exposure without periodically rolling positions into new contracts.
These products can also offer leverage, amplifying both potential gains and losses.
Kalshi now plans to extend its derivatives offerings to individual stocks, a move that would bring the company into more direct competition with traditional futures exchanges and crypto-native trading platforms.
The company is also exploring markets tied to computing capacity, potentially allowing investors and businesses to trade exposure to the price of AI infrastructure.
The expansion reflects Kalshi’s ambition to build a multi-asset trading platform rather than remain focused exclusively on predicting event outcomes.
Kalshi valuation surges as institutional demand grows
Kalshi’s latest financing follows a period of rapid growth driven by increased trading activity around major sporting events and elections.
The 2026 FIFA World Cup, NFL season and upcoming US midterm elections have contributed to rising demand for its event contracts.
The platform has also experienced growing interest in combination contracts, which allow users to take positions on multiple outcomes within a single trade.
Kalshi’s valuation has climbed from $5 billion in October 2025 to $40 billion a year later, an eightfold increase.
Its previous $1 billion funding round, announced in May, followed an 800% increase in institutional trading volume over six months, according to the company.
Kalshi has since overtaken rival Polymarket in prediction market share, according to Dune Analytics data cited by Reuters, as competition intensifies across the sector.
Chief Executive Officer Tarek Mansour has also discussed the possibility of taking Kalshi public, although he indicated in June that an initial public offering would not occur before 2027.
Kalshi faces regulatory challenges over sports contracts
Kalshi’s expansion comes amid growing legal scrutiny over whether sports-related prediction contracts should be regulated as financial derivatives or gambling products.
Earlier this week, Utah’s attorney general brought criminal charges against Kalshi and two senior executives, accusing the company of illegally promoting online gambling.
The dispute is part of a broader conflict between state authorities and federally regulated prediction market operators.
Two US appeals courts ruled in August and September that states have authority to regulate sports-related event contracts, while another appeals court previously sided with Kalshi’s argument that federal regulation takes precedence.
The conflicting decisions have raised the prospect of a Supreme Court review.
Kalshi maintains that its products operate under the CFTC’s regulatory framework and should not be treated as conventional sports betting.
Despite the legal uncertainty, the company is moving ahead with plans to develop leveraged trading products and expand institutional participation.
Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.
