Prediction market giant Kalshi completes $1 billion in financing, with valuation skyrocketing to $11 billion.

In November 2025, the prediction market platform Kalshi completed a massive financing of 1 billion USD, with a valuation soaring to 11 billion USD. This round of financing was jointly led by existing shareholders Sequoia Capital and CapitalG. This comes less than two months after the startup's previous round of 300 million USD financing, achieving a doubling in valuation in a short period.

At the same time, its main competitor Polymarket is also seeking to raise a new round of financing at a valuation of between $12 billion and $15 billion, indicating that the prediction market sector is experiencing explosive rise. Industry data shows that Kalshi's annualized trading volume has reached $50 billion, an increase of over a thousand times compared to $300 million during the same period last year, demonstrating the enormous potential of decentralized prediction markets.

Capital Feast: Prediction Market Welcomes Historic Financing Wave

The prediction market sector is experiencing an unprecedented capital frenzy. In November 2025, Kalshi, which was founded just seven years ago, successfully completed a $1 billion financing round, with a valuation reaching an astonishing $11 billion, a figure that was only $5 billion less than two months ago. Such a rapid doubling of valuation not only reflects investors' high recognition of the prediction market track but also reveals the industry trend of decentralized financial applications moving from the margins to the mainstream.

The lineup of leading investors in this round of financing can be described as luxurious, with Sequoia Capital and CapitalG, as existing investors, choosing to continue to increase their stakes, demonstrating strong confidence in the project's development path. At the same time, other well-known venture capitalists participating in this round include Andreessen Horowitz, Paradigm, Anthos Capital, and Neo, all of which have rich experience and successful cases in the cryptocurrency field. Their collective investment strongly endorses the business model of the prediction market. From an investment strategy perspective, this type of multi-round continuous investment led by top venture capitalists often indicates that they see the potential for the platform to become an infrastructure-level application.

The synchronized activity of competitors further confirms the heat of the track. According to Bloomberg, Kalshi's main competitor Polymarket is in talks for a new round of financing, with a valuation range expected to reach between $12 billion and $15 billion. It is worth noting that Polymarket just completed a $1 billion financing at a valuation of $8 billion a few weeks ago, and this pace of financing and the speed of valuation increase is rare even in the rapidly developing crypto industry. The competition for financing between these two leading companies marks the prediction market as another capital-intensive area following DeFi and NFTs.

Explosive Rise: The Logic Behind the Thousandfold Surge in Trading Volume

Kalshi's rise data provides strong support for its high valuation. According to a report by The New York Times, by mid-October 2025, the platform's annual trading volume had reached $50 billion, a figure that represents an increase of over a thousand times compared to approximately $300 million during the same period last year. Such an exponential rise trajectory is extremely rare even among tech startups known for high growth, fully proving the fit between prediction market products and market demand.

The analysis of the driving forces of the rise reveals multiple factors. During the 2024 U.S. presidential election, both major prediction market platforms opened betting on the election results, attracting significant attention from traditional political observers and the general public. The subsequent accurate predictions in the New York City mayoral election further solidified the platform's reputation as a “collective intelligence” aggregator. Notably, Kalshi innovatively purchased advertising space in New York subway cars during the Mamdani and Cuomo campaigns, displaying the winning probabilities of each candidate in real-time, a marketing strategy that greatly enhanced brand awareness among key audiences.

The inclusivity and diversity of product design are also key to the rise. Kalshi is currently open to users in over 140 countries, with betting topics covering a wide range of areas from Time magazine's 2025 Person of the Year selection, the Rotten Tomatoes score of the movie “The Witches,” to the results of the next U.S. presidential election. This comprehensive coverage from entertainment culture to serious politics not only meets users' entertainment needs but also provides practical information discovery functionality, creating a unique value proposition.

Comparison of Key Operating Metrics between Kalshi and Polymarket

• Kalshi Valuation: $11 billion (after latest financing)
• Polymarket Valuation: $8 billion (last funding round), $12-15 billion (target valuation)
• Kalshi Annual Trading Volume: 50 billion USD
• User Coverage: Over 140 countries
• Financing Pace: Kalshi completed two rounds of financing totaling $1.3 billion within two months.

From a business model perspective, the revenue of the prediction market platform mainly comes from transaction fees, usually 1-2% of the bet amount. Based on an annual trading volume of $50 billion, Kalshi's potential annual revenue could reach $500 million to $1 billion, which provides a certain fundamental support for its high valuation. More importantly, the data assets accumulated by the prediction market platform possess unique value, and the probabilistic predictions generated by this collective intelligence have broad application prospects in areas such as insurance, finance, and political risk assessment.

Regulatory Maze: Legal Challenges and Compliance Breakthroughs

The development of prediction markets has always been accompanied by legal challenges and uncertainties. This industry traditionally occupies a gray area between financial instruments and traditional gambling, and thus often faces scrutiny and restrictions from regulatory bodies. Kalshi is currently embroiled in legal disputes with several state regulators, who claim that its activities fall within the realm of illegal gambling. This regulatory pressure is almost inevitable in the early stages of industry development, and how to balance innovation with compliance has become an important issue for the platform.

However, Kalshi has made significant breakthroughs in regulatory compliance. In 2024, the company successfully obtained the right to operate in the United States by suing the Commodity Futures Trading Commission (CFTC), which laid the foundation for the legal status of prediction markets. Legal experts analyze that the court's ruling effectively recognizes the value of prediction markets as an information aggregation mechanism, rather than purely a gambling tool, and this legal recognition has a profound impact on the developmental direction of the entire industry.

The regulatory journey of competitor Polymarket is equally enlightening. The company has been banned from providing services to U.S. residents since 2022, but in July 2025, it successfully gained the right to re-enter the U.S. market by acquiring a derivatives exchange and clearinghouse. Polymarket founder and CEO Shayne Coplan publicly stated in September, “The CFTC has given the green light for Polymarket to go live in the U.S.” This development indicates that regulators are gradually forming a specific regulatory framework for prediction markets, rather than simply imposing bans.

From the perspective of global regulatory trends, there are significant differences in attitudes towards prediction markets across different jurisdictions. Some EU countries have incorporated them into existing financial regulatory frameworks, while some Asian countries adopt a more cautious stance. This fragmented regulatory environment has not only brought operational complexities but also provided platforms with regulatory arbitrage opportunities. In the long run, establishing a regulatory framework that both protects consumers and promotes innovation is crucial for the sustainable development of the industry.

Founding Gene: A Team of Technical Elites with MIT Background

The success of Kalshi is backed by a founding team with a strong academic and professional background. Co-founders Tarek Mansour and Luana Lopes Lara were both hedge fund traders, and this financial background provided them with a unique advantage in understanding market mechanisms and risk management. The two met while pursuing their undergraduate degrees in computer science and mathematics at MIT, and this cross-disciplinary combination of technology and non-finance laid a solid foundation for building a complex prediction market engine.

The background of the founding team has left a clear mark on the platform design. MIT's academic tradition emphasizes systems thinking and mathematical models, which is reflected in Kalshi's precise probability calculations and risk management system. The team's experience working in hedge funds has given them a deep understanding of market microstructure and liquidity management, and this expertise directly translates into the platform's core competitiveness. From the perspective of the entrepreneurial ecosystem, the MIT alumni network also provides talent and technical support for the company's early development.

Comparing the founding backgrounds of the competitor Polymarket, some interesting differences can be found. Polymarket's founder Shayne Coplan also has a technical background, but entered the crypto industry earlier. This different path dependency explains to some extent the subtle differences in product design and market strategies between the two platforms. Kalshi places more emphasis on the connection and compliance with traditional finance, while Polymarket tends to embrace crypto-native users and community governance.

Market Prospects: From Prediction Tools to Information Infrastructure

The long-term value of the prediction market may far exceed the current positioning of the platforms. With the rise in platform trading volume and the accumulation of data, these probability predictions generated by collective intelligence are gradually becoming a reliable source of information. The accurate predictions in the 2024 U.S. presidential election and the 2025 New York City mayoral election have demonstrated the effectiveness of prediction markets as information aggregation tools, a capability that is particularly valuable in the context of traditional polls becoming increasingly inaccurate.

The expansion of potential application scenarios paints a broader imagination space for the industry. In the insurance sector, prediction markets can be used to price climate risks or disaster events more accurately; in corporate management, internal prediction markets have become an effective tool for decision support; in the financial sector, derivatives based on prediction markets may offer alternatives beyond traditional risk hedging tools. The realization of these application scenarios will promote prediction markets from mere betting platforms to important information infrastructure.

The evolution of technology has provided new momentum for industry development. The transparency and immutability of blockchain technology are naturally suited to the prediction market's demand for a trustworthy computing environment. The maturity of privacy protection technologies such as zero-knowledge proofs makes it possible for participants to contribute their insights while protecting their privacy. Moreover, the improvement of cross-chain interoperability has cleared technical barriers for the formation of global prediction markets. The combination of these technological advancements with prediction markets may give rise to the next generation of decentralized applications.

From an investment perspective, the valuation logic of the prediction market platform is undergoing a change. The early traditional internet valuation model, which was mainly based on user growth and trading volume, is gradually shifting towards a comprehensive valuation framework that combines data asset value, intensity of network effects, and potential of platform ecology. Especially as the platform begins to provide data services and customized prediction solutions to enterprise clients, the diversification of its revenue sources will further enhance valuation stability.

Investment Perspective: A New Emerging Track with Opportunities and Risks

For investors focused on the prediction market sector, the current stage is both full of opportunities and fraught with risks. From the perspective of market development stages, the prediction market is still in the early explosion phase, and the thousandfold rise in trading volume of leading platforms indicates that the product-market fit has been validated. At the same time, the competitive landscape of the industry has not yet fully solidified, and new entrants still have the opportunity to find breakthroughs in vertical fields or specific regional markets.

Regulatory risk is a factor that needs to be assessed with priority. Although Kalshi and Polymarket are both finding ways to coexist with U.S. regulators, changes in the policy environment may still have a significant impact on their business. In particular, the independence of state-level regulatory agencies means that platforms need to address potential challenges in each state, and this decentralized regulatory environment increases compliance complexity and costs. Investors need to closely monitor legislative dynamics and court rulings in various states, as these legal events may become important catalysts for stock prices.

Technical risks should not be ignored either. The prediction market platform handles a large amount of funds and sensitive data, and security vulnerabilities could lead to catastrophic consequences. At the same time, the platform's reliability and performance directly affect user experience, and any service interruption may damage brand reputation. As trading volume rises, the platform needs to continuously invest in technological infrastructure and security protection, and these capital expenditures may impact short-term profitability.

From a valuation perspective, the valuation of the prediction market sector has already incorporated high rise expectations, and any performance below expectations could trigger a valuation correction. Investors should carefully analyze the platform's key operational metrics, such as user retention rate, average transaction amount per user, and changes in market share, as these data points better reflect the platform's health than mere growth in trading volume. Diversifying investments across multiple projects within the sector may be a rational strategy to reduce the risks of individual projects.

As Kalshi and Polymarket compete for financing in the capital markets, and as the prediction market grows from a fringe experiment into a hundred billion dollar industry, we witness not only the success of a number of startups but also a historic moment in the monetization of human collective intelligence. From the real-time changing probabilities of elections in the New York subway to the precise pricing of future events by global investors, the prediction market is reshaping the way we understand uncertainty. Although the fog of regulation has not completely lifted, the choice of capital has already pointed the way — in this era where information is power, platforms that can effectively aggregate collective intelligence will ultimately gain the value recognition they deserve.

FAQ

What are the essential differences between prediction markets and traditional gambling?

The core function of the prediction market is information discovery and risk pricing. Participants express their beliefs about the outcomes of events through betting, generating a collective wisdom probability that has real reference value, while traditional gambling primarily provides entertainment functions and relies on probability advantages for profit.

What are the main regulatory challenges Kalshi faces in the United States?

Despite obtaining operational permission from the CFTC through litigation, it still faces challenges from multiple state regulatory agencies, as there are differences in the legal characterization of prediction markets among the states. Some states insist on treating them as illegal gambling and attempt to restrict residents' access.

How do prediction markets ensure the fairness and accuracy of results?

The platform relies on trusted third-party data sources as the basis for result determination, smart contracts ensure that fund allocation is executed automatically, and the transparency of the blockchain makes the entire process verifiable, with multiple mechanisms working together to maintain the fairness of the system.

What risks should ordinary users be aware of when participating in the prediction market?

It is important to recognize the potential loss risks of betting funds, understand the differences between probability pricing and traditional investments, pay attention to the regulatory compliance status of the platform, and avoid excessive investment that may affect normal financial conditions.

What are the aspects in which the commercial value of prediction market data is reflected?

The probability forecasts generated by collective intelligence can provide references for insurance pricing, corporate decision-making, and policy evaluation. With the accumulation of data and algorithm optimization, the value of these data assets is expected to continue to rise.