Kalshi eyes $40B valuation, nearly triple rival Polymarket, as prediction markets split in two

Prediction market platform Kalshi is in talks to raise a new round at a $40 billion valuation, according to reports — nearly triple the $15 billion its closest rival Polymarket is seeking, and a sign of a widening gap between the sector's two leaders.

Prediction markets have moved from niche to mainstream, drawing huge attention through the 2024 US election cycle and a subsequent surge in sports markets. Kalshi's annualised trading volume tripled in six months to roughly $178B, with annualised revenue topping $1.5B — nearly 90% of it from sports in 2025. Investors are racing to back the category leaders while volumes run hot.

The valuations are steep, and the regulatory question is genuinely unsettled. Kalshi argues its contracts are CFTC-regulated derivatives, not state-regulated bets — but a Massachusetts court ruled in January 2026 that it was operating as an unlicensed sportsbook and blocked its sports markets there. With Kalshi's appeal before the state Supreme Judicial Court still pending and sports driving the bulk of revenue, an adverse ruling that other states follow would be an existential threat. A $40B target leaves little room for error.

The valuation gulf shows investors are picking favourites as prediction markets consolidate around two heavyweights. Both Kalshi and Polymarket are being priced as if the legal question is already resolved — which it isn't. If the federal-jurisdiction bet pays off, Kalshi could become one of the most valuable financial platforms of the decade; if it doesn't, the business model faces a forced rebuild.