Prediction market Kalshi is reportedly in discussions to secure new funding at a valuation of approximately $40 billion, according to The Financial Times. This funding round, which could be finalized as early as the third quarter, would represent a near doubling of Kalshi’s valuation from just last month, when it raised $1 billion from investors including Sequoia Capital, Andreessen Horowitz, Coatue, and Morgan Stanley.
This valuation surge marks a dramatic ascent for Kalshi, which was valued at around $5 billion in October 2025 and $11 billion by December of the same year.
Public Listing on the Horizon?
A public listing may follow the funding round. CEO Tarek Mansour indicated to CNBC on Wednesday that Kalshi is “basically thinking about” an initial public offering, though not within the current year. “A company of our financial profile with the rate of growth that we’re seeing, that sort of conversation has to happen,” he stated. The Information has previously reported that a listing is unlikely before late 2027 or 2028.
Explosive Growth Amidst Legal Battles
Kalshi has experienced explosive growth, claiming an annualized trading volume of $178 billion by April 2026, a 32-fold increase year-on-year. However, the platform is also embroiled in an intensifying legal dispute between state and federal authorities over regulatory jurisdiction of prediction markets.
Last week, derivatives giant CME Group filed a lawsuit against the Commodity Futures Trading Commission (CFTC) over the latter’s approval of Kalshi’s “perpetual” futures. These contracts allow traders to speculate on cryptocurrency prices, directly competing with CME’s own products. Kalshi maintains that its event contracts fall under the exclusive jurisdiction of the CFTC as swaps, a position shared by the Trump-appointed agency.
States, however, view the situation differently, characterizing the sports markets as unlicensed gambling operations. Arizona initiated criminal charges in March, a Massachusetts judge prohibited Kalshi’s sports markets in January, and Nevada has extended a ban on prediction markets. This month, Kentucky filed a lawsuit against Kalshi and rival platform Polymarket, accusing them of operating illegal sportsbooks.
The CFTC responded on Tuesday by suing Kentucky to prevent its enforcement actions, marking the ninth state the agency has taken to court and the first led by a Republican attorney general. Former President Donald Trump has emphasized the “critically important” nature of federal authority over these markets, and his son, Donald Trump Jr., serves as an advisor to both Kalshi and Polymarket.
Regulatory Uncertainty Looms
The ultimate outcome of these legal challenges remains uncertain. A federal judge in Michigan recently ruled that sports prediction markets do not constitute swaps, and former CFTC and SEC chair Gary Gensler has filed a brief arguing in support of this stance. With multiple states engaged in active litigation and conflicting rulings accumulating, the question of regulatory authority over prediction markets appears destined for the Supreme Court.
For Kalshi’s potential investors, the resolution of these regulatory battles carries significant weight. Kentucky alleges that 89% of the platform’s 2025 volume originated from sports-related contracts, the very markets that states are attempting to ban. Furthermore, according to The Financial Times, approximately two-thirds of bets placed on Kalshi result in losses for users.
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