Kalshi, the New York-based prediction market startup, has announced a successful funding round that values the company at an impressive $2 billion. The Series C round, which raised $185 million, was led by Paradigm, a renowned venture-capital firm with a strong background in crypto investments. Notable investors such as Sequoia Capital, Multicoin Capital, and Citadel Securities CEO Peng Zhao also joined in the funding round, providing a significant financial boost to the platform, as reported by The Wall Street Journal. This marks a pivotal moment in Kalshi’s growth trajectory, cementing its status as a “unicorn” in the business world.
The funds will primarily be allocated toward scaling Kalshi’s technology and infrastructure, which has already led to integrations with major brokers like Robinhood and Webull. These broker partnerships make Kalshi’s contracts available to millions of users, expanding its reach across the United States. Kalshi’s CEO and co-founder, Tarek Mansour, noted that this new funding will allow the company to accelerate its broker integrations, which could soon exceed a dozen new partners, further boosting its market presence, according to the news agency.
Kalshi’s Shift to Sports Contracts and Legal Hurdles
Originally launched as a platform for betting on political and economic events, Kalshi has experienced a significant shift toward sports betting. The platform began offering sports-related contracts in early 2023, and by March 2024, 79% of its daily trading volume was sports-related, according to Bloomberg Intelligence. This pivot to sports has been marked by high-profile contracts, including those surrounding the NBA Finals, which saw Kalshi take over $130 million in trading volume, with $41 million on a single Game 7 alone.
Despite its growing success, Kalshi has faced resistance from state-level regulators in Nevada, New Jersey, and other states that have issued cease-and-desist orders. The regulators argue that Kalshi’s sports-related event contracts should fall under state-level gambling laws. However, Kalshi has largely prevailed in court, asserting that its federally regulated Commodity Futures Trading Commission (CFTC) license covers its offerings, thus allowing the platform to operate nationwide without needing state-level licenses.
Kalshi’s legal battles continue as some sports betting stakeholders, including the NBA and MLB, voice concerns about the unregulated nature of these contracts. Despite the controversy, Kalshi has pushed forward with its growth strategy, aiming to expand its market offerings, which have increased from 100 markets in 2023 to approximately 1,500 in 2024.
Facing Competition from Polymarket and Other Platforms
Kalshi is not the only platform exploring the prediction market space, as rival Polymarket also seeks to carve out a niche. Polymarket, unlike Kalshi, operates without a CFTC license, focusing on a crypto-based platform that restricts access to U.S. residents to avoid regulatory issues. Despite this limitation, Polymarket has been gaining traction, recently announcing its own funding round poised to value the platform at $1 billion.
Kalshi’s expansion has spurred conversations within the sports betting industry, with some viewing the growth of prediction markets as a potential challenge to traditional sports betting platforms. The ability for Kalshi and Polymarket to offer in-game contracts and parlays is seen as a possible disruption in the betting industry. With significant capital injections and a growing user base, both platforms have the potential to reshape how sports betting is perceived and regulated in the U.S.
As Kalshi continues to develop and expand its offerings, it remains to be seen how future regulatory challenges and competition from rivals like Polymarket will shape its future.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
