Kalshi Targets $40 Billion Valuation in New Funding Round
The U.S. prediction market is growing fast, but it is also clashing with Illinois over sports contracts and CFTC oversight.
Key Takeaways
- Kalshi is negotiating new capital at a target valuation of about $40 billion.
- Its earlier $1 billion Series F round valued Kalshi at $22 billion last month.
- Kalshi is fighting Illinois law SB 3019, which classifies sports predictions as gambling wagers.
Prediction market Kalshi is in talks to raise new capital at a valuation of about $40 billion. According to people familiar with the matter, cited by the Financial Times, the funding round could close in the third quarter. That follows an earlier $1 billion Series F round that closed last month, which set Kalshi's valuation at $22 billion.
Rapid Valuation Growth and Investors
Kalshi has seen impressive valuation growth: at the start of 2025, it was worth around $5 billion, in December 2025 that rose to $11 billion, and more recently it hit $22 billion. This fast growth shows how much Wall Street capital is flowing into prediction markets. Major investors like Coatue, Sequoia Capital, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley, and ARK Invest have backed Kalshi.
Legal Fight With Illinois
At the same time, Kalshi is locked in a legal fight with the state of Illinois. The company has filed a lawsuit against the state over SB 3019, which classifies predictions tied to sports games as "exchange wagers" and requires Kalshi to get an expensive gambling license. Kalshi says the law violates the Supremacy Clause because the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over event contracts on federal markets. The CFTC regulates Kalshi as the first U.S. prediction market exchange with Designated Contract Market status.
Kalshi warns that the law takes effect on July 1, and that the company would then face an impossible choice: shut down the contracts, submit to a costly state licensing system, or risk criminal prosecution.
The case is part of a broader fight over who gets to regulate prediction markets. In Kentucky, a similar clash recently played out between the state and the industry, with the federal regulator stepping in to stop state action.
Why This Matters for European Crypto and Financial Markets
Even though Kalshi is a U.S. market player, the move around regulation of prediction markets could also matter for European crypto and financial markets. It shows how quickly new investment products can attract capital, but also how complicated the legal framework can get when federal and state rules collide. European investors and regulators may want to watch this case as an example of the challenges around innovative financial products and how they are regulated.
