Prediction Markets Eye $20B Valuations
Prediction market platforms Kalshi and Polymarket are reportedly in funding talks that could push their valuations toward $20 billion, according to the WSJ. The sector is seeing explosive growth, aggressively expanding onto college campuses with influencer campaigns and club funding, even as it faces insider trading probes.
The potential new valuations would roughly double Kalshi's $11 billion and Polymarket's $9 billion valuations from late 2025. Kalshi's recent funding round in December 2025 brought in $1 billion from investors like Paradigm and Sequoia Capital. Polymarket's valuation was boosted in October 2025 by a commitment of up to $2 billion from Intercontinental Exchange, the parent company of the New York Stock Exchange. This rapid financial growth is mirrored in the sector's trading volume, which surged from under $100 million per month in early 2024 to over $13 billion by the end of 2025. Kalshi has surpassed a $1 billion annualized revenue run rate, with some estimates putting it closer to $1.5 billion. This growth comes as established financial players like Coinbase, Robinhood, Nasdaq, and Cboe are also exploring prediction market products. Regulatory headwinds are significant, with a jurisdictional battle brewing between the federal Commodity Futures Trading Commission (CFTC) and state gaming regulators. States like Nevada, Massachusetts, and New York argue that many prediction market contracts, especially those on sports, function as illegal online gambling. A federal court recently sent a case brought by Kalshi against Nevada regulators back to state court, a setback for the argument that federal oversight should preempt state laws. Both platforms are also under scrutiny for potential insider trading. Kalshi has disclosed enforcement actions against a California gubernatorial candidate who bet on his own race and a YouTube editor who traded on non-public information about a streamer's content. On Polymarket, suspiciously timed bets on geopolitical events, such as the capture of Venezuelan President Nicholas Maduro and military strikes in Iran, have prompted calls for legislative action from senators. To fuel user growth, both companies are targeting college students with aggressive marketing tactics. Polymarket has offered to pay fraternities for user sign-ups to fund parties, with one fraternity at Columbia University reportedly raising $30,510 in two weeks. Kalshi has sponsored student clubs, including the Duke Poker Club and a Yale hedge fund competition, and both platforms have paid student influencers and athletes to promote their services. The rivalry between the two companies, led by Kalshi's Tarek Mansour and Polymarket's Shayne Coplan, has become intensely personal. After the FBI raided Coplan's apartment in 2024, Kalshi staff reportedly promoted memes mocking him. The competition for market dominance has also led to public relations stunts, such as both companies opening competing "free" grocery stores in Manhattan to attract users. A network of high-profile investors and advisors are backing these platforms. Billionaire Peter Thiel's Founders Fund has invested in Polymarket, while Charles Schwab and Henry Kravis are early investors in Kalshi. Donald Trump Jr. serves as an advisor to both companies and his venture capital firm, 1789 Capital, has invested in Polymarket. Additionally, former CFTC Commissioner Brian Quintenz sits on Kalshi's board of directors.
