- Prediction market platforms Kalshi and Polymarket are exploring new funding.
- Kalshi raised $1B in December and reached an $11B valuation.
- Prediction markets are under scrutiny by regulators and legislators.
Prediction market platforms Kalshi and Polymarket are reportedly exploring new fundraising rounds that could significantly increase their market valuations, according to a Wall Street Journal report. Both firms have preliminarily negotiated with prospective investors to raise additional capital at valuations of about $20 billion each.
Prediction Market Fundraising Discussions Signal Potential $20B Valuations
Kalshi’s most recent funding round took place in December when the company raised $1 billion from investors, including venture capital firms Paradigm and Sequoia Capital. That round valued the prediction market platform at approximately $11 billion.
Founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi offers markets where participants can trade on event outcomes across multiple categories. These markets include contracts linked to sports, political developments, economic indicators, and cultural events.
The reports indicate that Kalshi recently reached a run rate of over a billion in revenue. Polymarket, which launched in 2020, has also attracted significant investment interest. The platform was founded by Shayne Coplan and currently operates primarily outside the United States.
In October, Polymarket was valued at approximately $9 billion following an agreement by Intercontinental Exchange, the parent company of the New York Stock Exchange, to invest up to $2 billion in the company. The platform has indicated that it intends to launch a regulated version for the U.S. market later this year, which could expand its accessibility to domestic users.
Prediction Market Platforms Face Regulatory and Legal Scrutiny
Lawmakers have begun examining whether new oversight measures may be needed as trading volumes and public interest increase. Members of the United States Democratic Party are currently preparing a bill to regulate prediction markets. The legislative initiative is based on the suspiciously timed betting on geopolitically related markets.
Particularly, concerns were raised following the number of prediction markets that followed the timing of possible United States and Israel military attacks on Iran. According to reports, certain accounts on Polymarket reportedly placed bets shortly before explosions were reported in Tehran.
Senator Chris Murphy expressed doubts about the activity and indicated that those with access to the advanced information might have participated in prediction markets, betting before the events occurred.
According to reports, several accounts allegedly accrued between one million and two million dollars in profits from bets made hours before the reported strikes.
Kalshi Lawsuit Points to a Controversy Over an Iran-related Market.
The market asked participants to predict whether Khamenei would step down by specific deadlines. Trading volumes associated with the contract reportedly reached approximately $54 million before the platform halted trading activity on February 28.
The dispute centers on contract terms related to potential outcomes. According to Bloomberg Law, traders argued that the contract language indicated that participants holding “yes” positions would receive payouts if the Iranian leader exited office.
According to the complaint, the rule was highlighted more prominently only after reports of U.S. and Israeli airstrikes began circulating during the Iran conflict. Traders also alleged that the platform continued allowing activity while reports of strikes spread on February 28. As those reports circulated, additional participants reportedly placed “yes” positions, expecting that the event could lead to a departure from office.
Two traders, Adam Risch and Yonatan Gliksman, filed the proposed class action. They are represented by the law firm Novian & Novian LLP in the United States District Court for the Central District of California. The proposed class includes U.S. traders who held “yes” positions across any expiration date at the time trading was halted.
