Prediction Market Kalshi's Valuation More Than Doubled to $5B in Just 3 Months. Here's Why.

Key Takeaways

• The valuations of prediction markets Kalshi and Polymarket have soared in recent months as the online betting platforms have expanded into new categories and jurisdictions.
• Their push into contracts tied to sporting events, which pits them against more-heavily regulated online sports betting operators, has been particularly lucrative.
• Bank of America analysts in a note earlier this week referred to Kalshi and Polymarket's sports contracts as "untaxed gambling."

Prediction markets are booming, and so are their valuations.

Kalshi in August closed a funding round that valued the prediction market platform at $5 billion, more than double the $2 billion valuation it disclosed in June. According to a spokesperson, Kalshi raised $300 million from backers including Sequoia Capital, Andreessen Horowitz, and Coinbase Ventures. News of the funding round was previously reported by The New York Times.

Why This Is Important

Online prediction markets have seen volumes and investor interest skyrocket this year as companies have expanded into new offerings and markets. Their soaring valuations underscore both the strength of their recent growth and Wall Street's willingness to bet big on emerging businesses.

Prediction markets have taken off this year as they’ve expanded their offerings and entered new jurisdictions. According to a spokesperson, Kalshi’s trading volume exceeded $1 billion in the week ending October 6, a huge jump from the $300 million reportedly booked last year. The company's share of global prediction market volume has grown from 3% a year ago to more than 60% in September, according to data provider Dune.

Kalshi, which launched exclusively in the U.S. in 2021, announced this week that it is expanding to more than 140 countries. And chief rival Polymarket last month received the go-ahead from federal regulators to relaunch in the U.S., according to CEO Shayne Coplan.

Sports betting has been a major driver of growth. Kalshi in January began offering contracts tied to major sporting events like the Super Bowl, and last month expanded its sports-related offerings with pre-made and custom parlays. Kalshi had its highest-volume day ever on September 14, the second Sunday of the 2025 NFL season, "highlighting the platform’s recent growth in the sports category," according to the company.

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Prediction markets' rapid push into sports betting has been aided by minimal regulatory pushback. Online sports betting companies like DraftKings (DKNG) and Flutter Entertainment's (FLUT) FanDuel are subject to regulations that have not been applied to prediction markets, despite the similarity of their products.

"It's as if [the Professional and Amateur Sports Protection Act of 1992] had been repealed with no state level legislation, no oversight requirements, and no gaming taxes," Bank of America analysts wrote of prediction markets in a note earlier this week. "There are few businesses better than untaxed gambling," they added.

As a result, investors, like bettors, are piling into prediction markets. Polymarket earlier this week announced New York Stock Exchange parent Intercontinental Exchange (ICE) would invest up to $2 billion. The deal values Polymarket, which made headlines last year when users accurately predicted the outcome of the U.S. presidential election, at $8 billion, eight times its valuation in August. 

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