Kalshi is reportedly in advanced talks to raise new funding at a valuation of about $40 billion, marking another sharp increase for the U.S.-regulated prediction market platform as investor demand accelerates across the event-contract sector.

The reported valuation would nearly double Kalshi’s most recent disclosed mark. In May 2026, the company announced a $1 billion Series F round at a $22 billion valuation, led by Coatue with participation from Sequoia Capital, Andreessen Horowitz, IVP, Paradigm, Morgan Stanley and ARK Invest. That followed a December 2025 funding round that valued the company at $11 billion, underscoring how quickly investor expectations have shifted around prediction markets.

The Financial Times reported that Kalshi could close the new fundraising as soon as the third quarter of 2026, citing people familiar with the matter. The company has not formally announced the round, and the final size, investor lineup and valuation could still change.

Kalshi’s rise has been driven by surging interest in event-based trading, where users buy and sell contracts tied to real-world outcomes. The platform offers markets across politics, economics, weather, sports, crypto, financial indices and cultural events. Unlike offshore crypto-native prediction markets, Kalshi operates as a federally regulated U.S. exchange under the oversight of the Commodity Futures Trading Commission.

Prediction Markets Draw Wall Street Capital

The reported $40 billion valuation reflects how quickly prediction markets have moved from a niche forecasting category into a major fintech and market-structure theme. Investors increasingly view platforms such as Kalshi as a hybrid of brokerage, exchange, data platform and consumer trading app, with potential to capture activity from both financial traders and sports-betting users.

Kalshi said in May that institutional trading volume had increased 800% over six months, a key metric behind its earlier $22 billion valuation. The Financial Times reported that the platform processed more than $17 billion in trading volume last month, compared with about $5 billion a year earlier. That growth has strengthened the view that event contracts could become a new asset class inside mainstream brokerage and trading ecosystems.

The competitive landscape is also intensifying. Polymarket has expanded rapidly in crypto-native prediction markets, while Cboe recently launched Cboe Predicts, a regulated suite of binary options tied initially to Mini-S&P 500 Index outcomes. Meta is also reportedly developing a standalone prediction markets app called Arena, suggesting that Big Tech sees the format as a potential engagement product.

Regulatory Battles Remain Central to Valuation

Kalshi’s valuation surge comes despite unresolved legal and regulatory challenges. Several U.S. states, including Arizona and Massachusetts, have challenged the platform over whether certain contracts amount to unlicensed gambling rather than federally regulated event derivatives. Kalshi has argued that its products fall under CFTC jurisdiction, setting up a broader conflict between federal commodities oversight and state gaming regulators.

The dispute is especially important as sports-related contracts become a larger part of prediction market volume. Reports have indicated that sports and multi-leg event wagers account for a substantial share of Kalshi’s activity, increasing scrutiny from gambling regulators and public-health advocates concerned about addiction risk.

The regulatory implications are significant. If Kalshi successfully defends federal preemption for event contracts, it could open the door to a national prediction market model that competes directly with state-licensed sportsbooks and offshore platforms. If state regulators prevail, the company’s growth path could become more fragmented and compliance-heavy.

For investors, the reported $40 billion valuation signals confidence that prediction markets can become a mainstream financial category. But it also prices in aggressive growth, continued liquidity expansion and favorable regulatory outcomes. Kalshi’s next funding round, if completed, would be a major test of whether public and private markets are ready to treat prediction markets as one of the defining fintech opportunities of 2026.