Kalshi valued at USD 40 billion as Utah takes it to court
Kalshi raised $1 billion in a new funding round, reaching a valuation of $40 billion. The round was co-led by Sequoia Capital and Wellington Management, with participation from Tiger Global Management and Dragoneer Investment Group, according to a source cited by Reuters, bringing the company's total funding to around $3.6 billion.
That represents a jump of nearly 82 percent from its previous round. In May, the company raised another $1 billion led by Coatue, which valued it at $22 billion at the time. This year, the same amount of capital bought less than half the equity stake: $1 billion represented 4.5 percent of the company's valuation in May, compared to 2.5 percent today.
Another metric helps put the figure into perspective. With annualized revenue estimated at $4 billion as of July, according to The New York Post, the valuation stands at 10 times revenue. And with sports accounting for up to 70 percent of that total, roughly $2.8 billion stems directly from the business line currently being challenged by state courts.
That is the core tension behind the deal. Capital flowed into a company whose most profitable product is embroiled in legal battles across multiple fronts, and investors moved forward despite two federal appeals court rulings issued since August affirming states' authority over contracts tied to sports outcomes. That precedent contradicts Kalshi's position, which maintains that its products fall under exclusive federal jurisdiction.
The sharpest conflict is unfolding in Utah. This month, Attorney General Derek Brown filed criminal charges against the company, CEO Tarek Mansour, and executive Luana Lopes Lara for unlawfully promoting online gambling, with allegations including allowing an undercover agent to place sports bets. The attorney general cited "a brazen pattern of unlawful conduct" and labeled the company the operator of an illegal gambling den.
The pushback came not from the company, but from the federal regulator. The Commodity Futures Trading Commission filed a lawsuit to block Utah from enforcing its gambling restrictions against Kalshi, turning the matter into a jurisdictional dispute between a state and a federal agency rather than a conflict between a state and a private company.
The legal battlefield is even broader. New York and Nevada have also sought to restrict operations, while three lawsuits filed by Native American tribes argue that offering sports betting on tribal lands infringes upon their tribal sovereignty. In one of those cases, the Ninth Circuit Court of Appeals ruled against the company last month, and Mansour has signaled his readiness to take the jurisdictional fight all the way to the Supreme Court.
The company's legal argument hinges on the classification of the financial instrument. It argues that its event contracts—in which users take a 'yes' or 'no' position on an outcome—are swaps, meaning financial derivatives regulated by the CFTC. If that interpretation prevails, the sports wager is not the subject matter of the contract itself, but rather its underlying asset, placing jurisdiction squarely under federal authority.
The commercial growth reported by the company stemmed from three main sources: the FIFA World Cup, NFL games, and markets tied to the U.S. midterm elections. According to Dune Analytics data cited by Reuters, Kalshi gained market share over Polymarket throughout the year, during a period when its rival faced delays launching its U.S. platform alongside an ongoing CFTC investigation.
Beyond prediction markets, the company entered the perpetual futures business in 2026 with CFTC approval, initially with cryptocurrency contracts and later expanding into stock indices and commodities. These are non-expiring derivatives that allow substantial leverage, designed to compete with CME Group and Intercontinental Exchange, the parent company of the New York Stock Exchange. Investors consulted by The New York Post noted that this deeper financial integration could make it politically harder to restrict the platform in the future. Donald Trump Jr. holds an equity stake in the firm, having joined as a strategic advisor last year.
One timing detail is worth noting alongside the funding round. Just four days before the announcement, the NBA designated Kalshi and Polymarket as its preferred prediction market platforms and signed a memorandum of understanding with the CFTC itself. As a result, the company secured the institutional backing of a major sports league and faced state criminal charges within the span of a few weeks, with the funding round closing right in between.
Kalshi is an event market regulated as a designated contract market by the Commodity Futures Trading Commission, allowing it to offer contracts in the United States that settle against verifiable real-world outcomes. A swap is a derivative contract through which two parties exchange cash flows based on the performance of an underlying variable, and the core debate before U.S. courts is whether a contract settled on the outcome of a game fits that definition or constitutes sports betting subject to state law.
Tags: Kalshi, prediction markets, CFTC, funding