Kalshi Tops $4 Billion In Annualized Revenue as it Seeks $40 Billion Valuation
The Takeaway
- Kalshi seeks $40 billion valuation after annualized revenue doubled to $4 billion
- High marketing spend drives $300 million in June operating expense
- Prediction market faces state lawsuits over illegal gambling claims.
World Cup wagers helped double Kalshi’s revenue to a more than $4 billion annualized rate in July, from a pace of over $2 billion two months earlier, a person familiar with the matter said.
That growth is set to drive another jump in the prediction market’s valuation. Kalshi is in advanced talks to raise new funding at a $40 billion valuation, the person said, nearly double its valuation in a funding round announced in May. One potential wrinkle: Kalshi has been spending heavily to capture bettors’ attention and faces potential new expenses in the form of taxes in some of its biggest markets.
Kalshi’s operating expenses totaled $300 million for the month of June, mostly due to marketing spending, the person said. If Kalshi maintains its pace of spending, that could imply $3.6 billion operating expenses on an annualized basis. The marketing blitz included advertising campaigns featuring Timothée Chalamet and Lionel Messi, and a FIFA World Cup 2026 sponsorship deal it nabbed midway through the event for ads in stadiums, on TV and online.
The Financial Times had reported in June that Kalshi was exploring a new round at a $40 billion valuation, which it could complete as soon as the third quarter. Kalshi spokeswoman Elisabeth Diana declined to comment.
If that happens, Kalshi’s private valuation would top the market capitalization of crypto exchange Coinbase and would compare with trading app Robinhood’s market cap of around $85 billion. Robinhood has recently evolved into a competitor to Kalshi, with more of its revenue coming from trading event contracts than from stocks or crypto.
Robinhood has shifted some of its prediction market orders away from Kalshi to Rothera, a joint venture exchange between Robinhood and Susquehanna International Group. Robinhood orders made up only 17.5% of Kalshi’s trading volume in the second quarter this year, down from nearly 50% in the same period last year, according to data from Artemis.
Kalshi has been raising money in rapid-fire rounds, including $1 billion in fresh cash from its May funding round led by Coatue, which followed another $1 billion raised at the end of 2025 at an $11 billion valuation. Kalshi’s rapid growth, fueled mainly by sports betting, has prompted the company to hold informal conversations with bankers about an initial public offering as soon as next year.
Polymarket, Kalshi’s smaller rival, has meanwhile been in talks to raise about $1 billion at $20 billion valuation, Bloomberg reported last week.
Kalshi generates revenue mainly from fees charged on trading activity. With the popularity of event contracts attracting competition from Robinhood as well as apps like DraftKings, marketing is likely to remain a key battleground.
Growth in sports betting on prediction markets is meanwhile drawing pushback from traditional gambling apps as well as state gaming regulators. Kalshi is embroiled in several legal battles with state regulators who allege it offers illegal gambling. Sports contracts make up over 80% of the company’s trading volume.
New York state, for example, sued Kalshi last month for running an illegal gambling operation, seeking a court order to stop it from operating without licenses from the New York State Gaming Commission and to force it to forfeit its gains. Kalshi has said that it is regulated by the Commodity Futures Trading Commission and state regulators have no power to shut down a federally licensed exchange. The CFTC has sided with Kalshi and directed Kalshi to continue its operations under the agency’s emergency authority to “ensure market stability.”
Kalshi in recent weeks has focused in part on promoting bets on real-world events other than sports, including launching contracts on drug trial results and GPU compute prices. At the same time, the company is trying to attract big corporate users, pitching the contracts as a way for companies to hedge against outcomes that affect their businesses.
One possible resolution to Kalshi’s battle with states could involve the prediction market paying taxes, similar to those imposed on gambling companies. That would eat into Kalshi’s profits, but it would prevent an outright ban on prediction market offerings.
North Carolina, for example, last month passed a law to charge a 6% tax on prediction markets’ net trading fee revenue generated in the state, allowing them to do business under their CFTC licenses. Kentucky also enacted a new tax on prediction markets, but a coalition that includes Kalshi and Polymarket filed a lawsuit to block it.
Ahead of New York’s lawsuit, Kalshi had proposed paying a tax that would potentially generate billions in revenue for the state over the next five years, according to a person familiar with the matter.
The company also has faced questions about its benchmarks for settling bets and the potential for market manipulation by users. FlightAware sued Kalshi this week, saying that the prediction market used its flight-tracking data without the company’s permission and that flight-delay contracts could encourage consumers to try to disrupt flights.