Silicon Valley is piling into the promise of prediction markets. The valuations of Kalshi and Polymarket have surged in recent months as investors bet they can expand and reshape sports betting opportunities across the U. S. Sign Up For Our Daily Newsletter Thank you for signing up! By clicking submit, you agree to our terms of service and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters Kalshi is now valued at a staggering $11 billion after raising $1 billion in a round led by Sequoia and CapitalG, according to TechCrunch. The round more than doubles the startup’s previous valuation of $5 billion and brings its total funding to roughly $1. 6 billion. Kalshi declined requests for comment from Observer. Its rival, Polymarket, is reportedly nearing a valuation of between $12 billion and $15 billion as it pursues a new funding round. The investment would come on the heels of last month’s announcement that Intercontinental Exchange Inc., the owner of the New York Stock Exchange (NYSE), will invest up to $2 billion. The deal made Polymarket CEO Shane Coplan the world’s youngest self-made billionaire. Both fast-growing companies let users trade contracts based on the outcomes of elections, cultural moments, economic indicators and, increasingly, sports. Activity on the platforms has exploded, with notional trading volume surpassing $2 billion for the first time last month. These event contracts sit in a murky space between gambling and financial trading, remaining subject to extensive regulatory and legal scrutiny. The recent and upcoming investments in Kalshi and Polymarket effectively represent a wager on their legal future, according to Harry Crane, a statistics professor at Rutgers University who studies prediction markets. “It’s a bet on where the regulations will go,” he told Observer. Founded in 2018 by MIT grads Tarek Mansour and Luana Lopes Lara, Kalshi entered the U. S. market after receiving a federal license from the Commodity Futures Trading Commission (CFTC). Polymarket, by contrast, was banned from serving U. S. residents in 2022. Some users stayed active on the platform by using overseas-based VPNs. The company has since made moves to re-enter the market after acquiring QCEX, a derivatives exchange and clearinghouse. It is expected to relaunch in the U. S. soon and is currently beta testing. Prediction markets broke into the mainstream during last year’s U. S. Presidential election and have expanded quickly through new partnerships. Kalshi, for example, recently announced a collaboration with StockX, the sneaker marketplace, to introduce event contracts based on collectibles sales and pricing. But one of the biggest engines of growth is sports. During the first month of the NFL season, league-related contracts reportedly made up 42 percent of Kalshi’s trading volume, and sports overall accounted for 90 percent. And last month, the NHL signed multi-licensing deals with both Kalshi and Polymarket, becoming the first major U. S. sports league to partner with prediction markets. Significant challenges remain. Kalshi, which only began introducing sports-related contracts earlier this year, is facing pushback from state regulators and Native American tribes that claim it is benefiting from unregulated wagering. Still, the surge of investment suggests backers are confident these hurdles can be overcome. “I do think it’s tied heavily to the belief that they’re going to be able to offer those markets and expand them and grow,” said Crane. “If that were to change legally, I think that you’ll see those valuations change.” Beyond regulatory approval, prediction markets will soon face rising competition as more companies explore event contracts and their potential to operate outside state-level sports betting rules. DraftKings is preparing to launch an event-contracts app next year, while FanDuel plans to roll out a similar platform in December. “It’s also a bet on them being the winner,” Crane said of the soaring valuations for Kalshi and Polymarket. In the months ahead, the platforms will have to prove themselves against “the many, many competitors that are going to be flooding into this space.”.
https://observer.com/2025/11/kalshi-and-polymarket-soar-even-as-prediction-markets-navigate-murky-legal-waters/
Kalshi and Polymarket Soar Even as Prediction Markets Navigate Murky Legal Waters
